New Drug Plan Has Winners and Losers

Prescription drug companies, pharmacy benefit managers, and lower-income people not currently enrolled in Medicaid will be the biggest winners under the new Medicare prescription drug benefit that will roll out in 2006, according to Robert Atlas, ’77, an independent health care consultant and former president of The Lewin Group.

Atlas, the luncheon keynote speaker at the Chicago GSB Health Care Conference November 19 in Chicago, also pointed out that the biggest losers will be retail pharmacies, most middle- and upper-income beneficiaries, and federal taxpayers. Taxpayers will get screwed. The costs will go out of proportion, and there will need to be a way to fund it somehow, he said.

On the beneficiaries side, prescription drug companies will gain new customers and pharmacy benefit managers will see additional profit opportunities through their mail services. Other beneficiaries will be those whose income is below the federal poverty level; they will pay only a $1 or $3 co-pay depending on whether a drug is generic or brand name, respectively, Atlas said. These are the actual winners. These people will get a substantial benefit without hefty cost-sharing.

However, Atlas cautioned, the costs escalate higher up the income scale. For people in the middle and upperincome bracket, the government will pay 75 percent of costs between $250 and $2,250, and 95 percent of costs above $5,100 per yearbut nothing between $2,250 and $5,100. It’s the famous doughnut hole, Atlas said.

I challenge you to explain this to your parents and grandparents, whether they should enroll, he said. Confusion will reign.

 

Ed Finkel