Prescription Drug Donut Hole: ‘Sweetheart Deal’ for Big Pharma

by Mike Hall, Jul 14, 2009

Phil Feaster

Phil Feaster, a retired truck driver from Fort Washington, Md., is one of more than 24 million seniors in Medicare’s prescription drug program, the program that is supposed to cover most of the prescription drug expenses for participants.

But Feaster, a member of the Alliance for Retired Americas, like 3.4 million other Medicare Part D enrollees, falls into a very expensive “donut hole.”

For Feaster, it’s a $700 a month hole that he hopes will be closed by comprehensive health care reform legislation introduced today in the House of Representatives.

Speaking at a Capitol Hill press conference yesterday, Feaster said:

My generation likes to tell it like it is: The donut hole is a rip-off. You pay money, but get nothing in return. Can you imagine going to a restaurant where all they give you is an empty plate—but yet they still force you to pay for a full meal? Of course not.

The Medicare Part D rules on prescription drugs pushed by the Bush administration and passed by Congress in 2003 left seniors on the hook for the entire cost of their prescription medicines when they hit an annual limit and before they reach an amount considered “catastrophic.” That gap was dubbed the “donut hole.”

For example, in 2008 the donut hole was the cost between $2,510 and $5,726—a gap of more than $3,200. When Medicare Part D deductibles and co-pays are added, seniors faced $4,050 in out-of-pocket expenses

Last year, according to the Alliance for Retired Americans, an estimated 3.4 million of the 24 million Part D enrollees paid the $4,050 in out-of-pocket expenses before Medicare kicked back in and provided catastrophic care coverage, paying 95 percent of those prescription costs.

Feaster says he is struggling to stay healthy and takes eight prescription medicines a day to help control high blood pressure, diabetes and a sinus condition. He pays $85 a month in premiums, the full cost of the first $250 in prescriptions and a 25 percent co-pay, until he hits the donut hole.

For the first six months of the year, I pay $85 in monthly premiums, and in exchange I receive my Part D benefits for my eight daily medicines. But then I hit the donut hole. For the remaining six months of the year, I must pay both my $85 monthly premiums and full price for my medicines. These drugs cost me $700 per month when I am forced into the donut hole. And again, this is $700 per month on top of the $85 monthly premiums I must pay. For half of the year, I am forced to pay these premiums while receiving absolutely nothing in return.

If Feaster or other seniors in the program wanted to save the $85 a month premium and drop out of the program after they hit the donut hole, he says there’s a penalty to be paid.

Why do I keep paying these premiums? Under the Medicare Part D rules, if I stop paying my premiums, I am out of the program for next year. The donut hole sure seems like a sweetheart deal for the big drug and insurance companies.

I am hopeful that this will finally be the year we fix our health care mess….I am grateful that this legislation will start closing the Part D donut hole and finally finish it off.

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