Medicare 'doughnut hole' relief could be offset by higher prescription drug prices
By David S. Hilzenrath
September 20, 2010
Beginning next year, at the expense of pharmaceutical companies, millions of senior citizens in the Medicare coverage gap known as the "doughnut hole" will receive 50 percent discounts off the price of brand-name prescription drugs.
The government does not control the underlying prices; the law leaves that to the market.
"There is legitimate concern that some manufacturers will steeply increase the price of drugs in order to offset the cost of the discount to the manufacturers at the expense of both consumers and the Medicare program itself," the Center for Medicare Advocacy and the Medicare Rights Center said in a letter to the agency that oversees the federal health insurance program.
UnitedHealth Group, which sells prescription drug insurance, has expressed concern "that Manufacturers have not agreed . . . to protect the underlying pricing of the drugs."
"I don't think all savings will be lost. But they can certainly recoup some of those savings by increasing prices," said John M. Coster, senior vice president for government affairs at the National Community Pharmacists Association.
For the industry, the outcome could have been worse. The legislation did not include proposals that posed a potentially greater threat to drugmakers - for example, empowering the federal government to negotiate prices.
And, by shrinking the number of uninsured, the legislation will expand the market for prescription drugs.
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