Medicare 2011 Part D Coverage Gap

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When I started writing this blog it was to remind you about some of the new things that were happening in 2011 for Medicare Part D, like the 50% co-payment by the pharmaceutical manufacturers for brand name drugs when you hit the coverage gap.

But as I started writing, I stumbled upon something interesting that could ultimately cost you more while in the coverage gap if you use generic drugs.

We know Part D providers encourage you to use a generic drug whenever possible.  And, where I live in the State of Florida, a pharmacy dispenses a generic drug unless it is written on your prescription that the “brand” is medically necessary.

Until you hit the coverage gap and you are using the generic drug, your monthly co-payment is generally less expensive than it would be if you were receiving a brand name drug.

What’s New

In 2011 when you hit the coverage gap (donut hole) you will receive a 50% discount on the total cost of your “brand” name drug(s) as long as the pharmaceutical manufacturer has an agreement with Medicare.

You will have a 93% cost share on your generic drugs during the coverage gap in 2011. This is the beginning of reducing the beneficiary co-insurance rate in the gap from 100% to 25% by 2020 for generic drugs.

Generics Could be More Expensive – A Catch 22

But, in some instances your costs for generics during the coverage gap in 2011 could be more expensive than a “brand” name drug.  This is somewhat of a “Catch 22.” You are sort of “damned if you do, and damned if you don’t.”

The Example:

You are prescribed “Brand X” which is a brand name drug and has a retail price of $170 and there is “Generic D” available.  Your Part D provider offers you a co-payment of $10 per month for using the generic versus $50 per month for using “Brand X.”  The generic has a retail price of $130 for a 30 day supply.  Along with your other drugs you hit the coverage gap. (As a note, these costs are based on an actual brand versus generic.)

The Catch

During the coverage gap, “Brand X” will cost you $85 per month, but “Generic D” will cost you $120 per month.  In this instance you are actually paying more for the generic than the brand during the coverage gap.

The Solution

There is no correct solution to this dilemma. You can ask your physician to write a prescription that is “medically necessary” for the brand name drug. What happens here is that you reach the coverage gap quicker because of the higher retail price.

But on the other hand, if you reach the coverage gap and use the generic drug, your out-of-pocket costs are much higher.

Let us know if you have a solution for this situation as I’m sure there will be many beneficiaries who will fall victim to this issue.

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