Closing Drug 'Doughnut Hole' Saves $687 Million in 2012

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In the first six months of this year, more than 1 million seniors and people with disabilities saved $687 million on prescription drugs in the doughnut hole — or the gap between traditional and catastrophic coverage in the Part D drug benefit — as part of the health-care law, Health and Human Services plans to announce Wednesday.

That's an average of $629 per patient.

As part of the 2010 health care law, drugmakers participating in the program had to give the government a 50 percent break on premium drugs and 14 percent on generic drugs, which the government then passed on to seniors. In 2012, the coverage gap is $2,930. The health-care law eliminates the doughnut hole by 2020.

"More people are benefiting from the discounts than at this point last year," said Jonathan Blum, director of the Center for Medicare. "As seniors across the country go to their pharmacies to fill prescriptions, they will automatically receive these discounts and see lower prices at the cash register."

Administrators expect to see larger savings in the second half of the year because more people will have hit their coverage limit by then. Patients with expensive drugs and treatments, such as for cancer, reach the gap early in the year.

So far, the most savings were about $88 million for diabetes medications, $65 million for asthma, $58 million for autoimmune system drugs, $44 million for cholesterol-lowering drugs and $42 million for HIV infection drugs.

Some groups have raised concerns about the program. The American Action Forum, a conservative think tank, said reducing prices for Medicare beneficiaries would raise drug costs for everyone else. No research has yet shown a correlation, though industry experts say it may be too soon to tell as the discounts just began in 2011.

The group also predicted that premiums would go up for Medicare beneficiaries.

"All the evidence suggests the opposite," Blum said. "As out-of-pocket costs have gone down, average premiums for a Medicare prescription drug plan have fallen."

There was also a concern that seniors would avoid generic medications and head for the premium medications, which could potentially lead them to the gap sooner, as well as cost the government more money. Blum said as the discounts grow for generic medications — they were 7 percent in 2011 and are 14 percent in 2012 — more people would use the generic medications, "which will save patients and Medicare money over the long run."