When looking at Medicare, it is important to remember that there are various deductibles for each Part of the program:
However, there are various phases in the deductable for Part D, and as a Medicare recipient spends money on prescriptions, their deductible changes.
Once the $445 deductible has been reached (remember that it could be lower in some cases), the Medicare recipient enters the "initial phase." During this phase, the cost of prices usually decreases, and for many Tier 1 and Tier 2 drugs, they may not pay anything.
But about ten percent of Medicare beneficiaries reach a coverage gap. In 2020, many found themselves in the gap after spending more than $4,020 dollars on prescriptions; but the cut-off changes year to year.
When this happens, a new deductible kicks in. In 2021, it was $6,550, and next year experts are warning that it could increase to $7,050.
This means that someone would have to have a combined out-of-pocket expense total of $6,550 before further prescription drug benefits kick in. If the deductible is met, the recipient enters the "catastrophic coverage" phase.
Details on catastrophic coverage
Once a patient has made it into the catastrophic coverage phase, they should see decreases in their prescription drug costs. This year, someone in this phase would pay five percent of the drug's cost OR $3.60 (generic)/$8.95 (name-brand), whichever is more expensive.
Who does this benefit help?
While the benefit was designed to help those with chronic conditions, a new study found that the majority of the people who end up entering catastrophic coverage are those who take specialty medications.
According to the Commonwealth Fund, Specialty medications are drugs that “typically treat complex or chronic diseases and are identified by the Centers for Medicare and Medicaid Services (CMS) based on cost.” These include Harvoni®, which is used to treat Hepatitis C, and in 2015 cost $31,050 per prescription. Other examples include Revlimid®, “used to treat anemia, multiple myeloma, and lymphoma” which in the same year cost $10,130.8 per prescription.
The researchers found that twenty-five percent of those “without multiple chronic conditions taking a specialty drug entered catastrophic coverage, compared to only 4.8 percent of those with multiple chronic conditions who were not taking a specialty drug.”
This raises many questions about the prices pharmaceutical companies are able to pay. While Medicare and catastrophic coverage put a limit on the amount of money that is spent on prescription drugs, one perspective for one drug could be greater than their deductible, which means they will be required to pay it.