CMS: Medicare Rx savings nearly $6 billion

The Centers for Medicare & Medicaid Services (CMS) reported on Feb. 7 that the Affordable Care Act (ACA), since its enactment in 2010, has saved 6.1 million seniors and people with disabilities more than $5.7 billion on brand-name prescription drugs.

CMS based its claim on provisions of ACA that gradually close the gap in prescription drug coverage known as the "donut hole." For many people enrolled in Medicare Part D, the donut hole occurs after they and their plan spend a certain amount of money for covered drugs, but before they hit catastrophic coverage in which they are only responsible for a small percent of their drug costs, CMS explained. Prior to the ACA, an individual in the donut hole had to pay the full costs of prescription drugs.

CMS issued a one-time $250 payment to those who reached the donut hole in 2010. The next year, CMS began providing discounts on brand-name drugs for those in the donut hole. Additional discounts will be offered to qualified recipients until the coverage gap is closed in 2020, CMS said. Medicare beneficiaries receive the discounts when they purchase prescription drugs at a pharmacy or order them through the mail, until they reach the catastrophic coverage phase.

The Department of Health & Human Services projected average savings per Medicare beneficiary to be approximately $5,000 from enactment through 2022, while those with high prescription drug spending are projected to save much more -- over $18,000.

In 2012, more than 3.5 million seniors and people with disabilities who reached the Medicare Part D coverage gap received discounts on brand-name prescription drugs. These individuals with Medicare received more than $2.5 billion in discounts, or an average of $706 per beneficiary, according to CMS. Savings for covered generic drugs while in the “donut hole” in 2012 totaled $105 million for 2.8 million beneficiaries. 

Here's a breakdown by drug type showing coverage gap discounts allowed in 2012 to seniors and people with disabilities:

  • Blood sugar lowering drugs --  $435,794,413
  • Asthma and other lung-related (non-cancer) disease drugs -- $297,234,514
  • Triglyceride and cholesterol lowering drugs -- $240,495,663 
  • Drugs used to lower blood pressure -- $138,497,053
  • Anti-dementia drugs --  $120,878,582
  • Drugs used to treat ulcers --  $101,888,578
  • Cancer drugs --  $97,263,505
  • Anti-depression drugs --  $85,047,907
  • Autoimmune disease anti-inflammatory drugs -- $56,715,485
  • Psychiatric drugs -- $56,295,844
  • All other drug therapeutic uses -- $872,688,178

CMS noted that most of the savings are on drugs for chronic conditions, suggesting that people with Medicare who must continuously take medications are benefitting most from the help provided by the ACA. Drugs managing chronic conditions such as high blood sugar, high blood pressure and high cholesterol accounted for almost 33 percent of savings and may have helped patients avoid hospitalization, the agency said.

In 2013, people with Medicare in the coverage gap are saving 52.5 percent on brand‐names drugs and 21 percent on generics, CMS reported. Those savings will increase each year until the coverage gap is closed in 2020.