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Affordable Care Act Eroded by Skyrocketing Prescription Costs
While President Obama’s Healthcare Reform Law touts big savings on prescription drugs under Medicare Part D, a Kaiser Family Foundation Study reveals minimal savings for years to come. Additionally, these savings and the manufacturer discount will likely be offset by significant increasesin retail drug prices.
Obama’s Affordable Care Act
The Affordable Care Act was designed to strengthen the Medicare Part D program and ensure that itwill continue to provide health security to seniors for many years to come. The Act proposes to reducePart D enrollees’ out-of-pocket costs when they reach the coverage gap, commonly referred to as the“doughnut hole.” The Medicare Part D “doughnut hole” has provided difficulties to cash strappedAmericans, who need help to pay for life saving medications since the inception of the program. Oftenthe coverage gap affects a patient when financial help and prescriptions are needed the most.The Kaiser Family Foundation, a non-profit private operating foundation that’s dedicated to researchand analysis on health issues, has delved into the effects that the “doughnut hole” has had onprescription costs for seniors.According to the foundation, since the Medicare Part D drug benefittook effect in 2006, beneficiaries enrolled in Part D planshave been required to pay 100 percent of their prescription drug costs after their total drug spending exceeds an initial coverage limit until theyqualify for catastrophic coverage. The gap in coverage was $3,610 in 2010 and is projected to exceed
Date Source: Kaiser Family Foundation 
 
$6,000 by 2020. In 2007, an estimated 3.4 million Part D seniors reached the coverage gap and wereforced to pay 100 percent of the cost for prescribed drugs.The Affordable Care Actwas created to address the “doughnut hole” problem head on, with a rebate,drug manufacturer discounts and federal subsidies. By 2020, 75 percent of the price of brand nameand generic drugs will be covered under these measures.Already in 2011, the Affordable Care Act has begun to address the gap, beginning with a 50 percentdiscount on the total cost of brand-name prescription drugs that fall into the “doughnut hole.” Eachyear, prescription costs will be reduced further, and people with Medicare will be required to pay their normal cost-sharing amount for prescriptions until they reach the annual out-of-pocket limit.While the aims of the Affordable Care Act seem beneficial to Americans on the surface and a feel-good fix for the Obama administration, the pharmaceutical industry stands to make gigantic profitsfrom the legislation through price inflation, price fixing and governmental lobbying – and millions of Americans are already being affected by this inflation.
Price offsets likely to negate discounts
Recentinvestigationfound, while manufacturer discounts attempt to close the “doughnut hole”,escalating drug prices would quickly offset the benefits of discounted medications.
 
As PresidentObama and other politicians continue to push for a fair deal for American patients frompharmaceutical manufacturers, the prices of brand-name prescriptions are skyrocketing.
Date Source: Kaiser Family Foundation 
 
In late 2010,Amgen, the worlds largest biotech companyprojected revenues of $15.1 billion for theyear and exceeded analysts forecasts. Amgen’s star pharmaceutical, Enbrel prescribed to treat thesymptoms of rheumatoid arthritis, increased in sales by 3 percent to $939 million. The sales wereenhanced by a nearly 5 percent price increase. In the second quarter of 2011, profits from Enbrelrose 9 percent on the wings of price increases. With America in economic recession and record highunemployment sparking rallies in the streets, new research from October 2011 reveals thatemployment in the biotech industry rose by an incredible 632 percent in the past five years in thestate of California alone, including Amgen.Barclays Capitalrecently crunched the numbers for 130 top selling pharmaceutical drugs as indicatedby sales. Brand name prescriptions have increased in price as much as 29 percent since 2010. Plavixhas increased over 13 percent. In early 2010, Benicar, was one of the most affordable medicationsused to treat high blood pressure in its class. Within the year, a monthly supply of 20 milligram tabletstopped out at $88.80, a 29 percent price increase.
Seniors may only see a small amount of savings until 2020
Seniors will see subsidies in the coverage gap for brand-name drugs beginning in 2013 of only 2.5percent. At that point, the cost sharing will break down to 47.5 percent paid by the senior and 2.5percent paid by the government plans, with the remaining 50 percent covered by a manufacturer discount. For generic drugs, the plan will reduce seniors’ out-of-pocket costs by 7 percent each year and inversely increase the amount paid by Medicare Part D by 7 percent each year.Over the next 8 years, the out-of-pocket cost for prescriptions will slowly reduce until finally, in 2020,seniors enrolled in Medicare Part D will have 75 percent of their prescription costs covered.
Source: Barclays Capital 
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