At the same time, the transition of Medicare-eligible seniors from PAPs to Part D coverage will be far from seamless. The new drug benefit doesn't align perfectly with existing PAPs, so many seniors on PAPs who had benefited from free or sharply reduced prices for their medicines are worse off on Part D plans.
Pharmaceutical companies must carefully decide what support they will offer to PAP members. Those decisions include whether Medicare enrollees should continue to be eligible for company-sponsored PAPS, how best to encourage them to sign up for Medicare, and how to ensure that patients who do switch coverage continue to receive the medicines they require.
Nearly one-third (2.5 million) of the estimated eight million Americans currently enrolled in PAPs are over age 65 and are eligible to participate in the government's drug benefit program, available to all seniors and disabled individuals who qualify for Medicare, regardless of financial status. Historically, Medicare has covered hospital stays and in-patient medications; patients had to pay for medications out of pocket or enroll in a prescription drug plan to obtain their routine medications. To help those patients who could not afford their drugs, companies created PAPs, which offered free or reduced-priced therapies to qualified low-income patients, as determined by the manufacturer providing the program. The first PAPs were established more than 25 years ago, by such companies as Astra and Hoechst-Roussell. Today, PAPs are an industry standard, with companies' programs distributing $4 billion worth of drugs to needy patients in 2004, according to PhRMA.
The Medicare Part D program is truly beneficial for impoverished patients who live at the federal poverty level (FPL)—$9,570 for an individual, $12,830 for a two-member household—or up to 150 percent over the FPL, if they qualify for the low-income subsidy. Those patients will receive their medication with a very modest out-of-pocket cost, a nominal co-pay of $1 to $3, and pay no monthly premium.