With the medicare part d prescription drug benefit program in effect, pharmaceutical companies have to decide how to handle
the estimated 2.5 million low-income seniors who have been part of their patient assistance programs (PAPs). In many cases,
it no longer makes sense for drug companies to continue to allow Medicare-eligible patients into their PAPs when more comprehensive
assistance through Part D is available and the government is absorbing the cost.
Make the Switch
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.
However, the industry will take its next steps toward redefining PAPs in the Part D environment under strict government guidance
and scrutiny. Already, the Office of Inspector General (OIG) has placed severe limitations on companies willing to offer Part
D-enrolled patients additional assistance in affording their prescription drugs.
Toolbox: Institutional Assistance Programs
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 new Medicare Part D program, implemented through private health insurance companies, adds outpatient medications to the
list of services for which Medicare pays. Although it's up to the insurance companies exactly what premiums are required and
which drugs their programs will cover, the government has set guidelines for the plans relative to the categories and number
of drugs that must be available in each category. Just like payers outside the Medicare realm, it is clear that many plans
favor lower-priced generics over more expensive brand-name drugs.
Part D Poverty Split
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.