|
|
Medicare 'Doughnut Hole' May Induce Illegal Foreign Drug Imports
By Charlie Mead, Medill
March 10, 2010
Charlie
Mead/ Source: Centers for Medicare & Medicaid Services
To view a larger version of this graph, please follow
this link
to the original version of this article.
Prescription drug spending, a main driver of domestic health care costs, are expected to rise over the next decade. Though Medicare Part D spending, which spiked upon the bill's enactment in 2006, may hold down out-of-pocket costs for seniors, it does little to address the unsustainable rise in drug expenditure.
Unless federal legislation closes the Medicare coverage gap colloquially known as the “doughnut hole,” seniors may opt for online drug imports to alleviate steep prescription costs.
But nearly all prescription drugs imported into the U.S. for personal use—which lack approval by the U.S. Food and Drug Administration—are illegal.
The Medicare Modernization Act—passed in 2003 and enacted in 2006—certainly reduced demand for cheaper foreign alternatives among consumers by shifting high drug costs to the government. However, the coverage gap is a lingering reminder of price incentives that push seniors’ prescription orders beyond the domestic border.
President Obama has called for the passage of a health care reform bill by the end of March, but the details of how final legislation will fill in the gap or address the precipitous cost increases among prescription drugs have yet to be settled.
But drug importation worked for Sandra Pesmen.
“It was wonderful,” said the 78-year-old Northbrook resident, who ordered prescription drugs online from a Canadian pharmacy after falling into the Part D coverage gap in 2006. “Wonderful. It was less than half,” Pesmen said of the prices.
Pesmen regularly used an online pharmacy to import her medicines before the federal legislation, but switched to domestic sources after Part D kicked in to cover a substantial portion of initial drug costs.
But Pesmen also suffered from ulcerative colitis, a chronic type of inflammatory bowel disease that pushed her into the doughnut hole in 2006, the first year the new coverage was enacted. “I got there in six months,” she said, and so returned to British Columbia-based Canada Pharmacy’s Web site.
“I used them with great success,” she said.
Medicare Part D extends prescription drug coverage to seniors by paying 75 percent of costs in an initial coverage phase after a deductible. But in 2010, once expenditures exceed $2,380, seniors must cover all of their drug costs until out-of-pocket expenses top $4,550—when Medicare’s “catastrophic coverage” kicks in to cover 95 percent of the remaining burden.
“It’s just a bad design,” said Ken Schafermeyer, professor of pharmacy administration at St. Louis College of Pharmacy. “People don’t seem to understand it; they seem to be surprised when it hits; it seems to affect their utilization.”
Once she reached the doughnut hole in June 2006, Pesmen said, she returned to foreign imports, purchasing 500 tablets of Asacol, an ulcerative colitis treatment, for about $265. “It was twice that at the local pharmacies,” she said in an email.
Mandeep Khara, the managing marketing director of British Columbia-based Orbital Marketing Inc.—the advertising firm representing Canada Pharmacy—confirmed a spike in U.S. business during the fall. “From our overall customers, we do see a slight increase,” he said. Asked if the increase was attributable to the Medicare doughnut hole, Khara responded: “Completely.”
Pesmen eclipsed the out-of-pocket limit in December 2006, she said, making her eligible for catastrophic coverage at the very point her Medicare plan reset for the next year. “I never got catastrophic because that’s when the year was over,” she said.
Pesmen underwent a successful surgery at the University of Chicago Medical Center in 2007. “Now I’m like everybody else,” she said. “I pay my $38 a month for the Plan D, and I pay $4 for blood pressure medicine, and $4 for a little cholesterol pill, and I’m on my way.”
But if she ever fell into the doughnut hole again, Pesmen said, she would certainly return to foreign imports.
Pesmen’s experience highlights the continuous difficulties among seniors to afford prescription drugs once in the doughnut hole.
In Illinois alone, according to a 2009 report by the AARP Public Policy Institute, more than 600,000 Medicare Part D enrollees face the full cost of the doughnut hole—nearly 65 percent of the state’s Part D pool—though the Department of Health and Human Services estimates 37 percent of Illinoisans with Part D coverage receive a low-income subsidy.
“As seniors start falling into the doughnut hole, they are going online to find deals on prescription drugs, whether they’re based in the U.S. or in other countries,” said Gabriel Levitt, vice president of PharmacyChecker.com LLC, a leader in the evaluation of online and mail-order pharmacies in both the U.S. and abroad. “And they should be wary of doing so because there are many rogue pharmacies out there.”
“We’re not opposed to it,” said Gerardo Cardenas, spokesman for AARP Illinois, of purchasing prescription drugs from abroad. “But we’ve always said that there should be legislation in Congress that legalizes and insures the safety of the importation of prescription drugs.”
Legislation of that sort has been roundly opposed by the pharmaceutical industry. In a July 2009 news release, PhRMA, the lobbying group representing top branded drug makers in the U.S., warned of deteriorating consumer safety and product integrity as the main reasons for hostility to legalization. “The worldwide counterfeit threat is knocking at America’s door,” stated Vice President Ken Johnson. “The Congress should not pursue policies that could expose Americans to counterfeit and substandard drug products.”
Orbital Marketing’s Khara dismissed the charges from Big Pharma. He said top U.S. pharmaceutical companies make Canada Pharmacy’s top selling products, such as Lipitor. “I just don’t know what the difference is between drugs in Canada made by Pfizer, and drugs in the U.S. made by Pfizer,” he said.
“Yes we do have different laws in Canada then they do in the U.S.,” he added.
“That doesn’t necessarily mean that drugs here in Canada aren’t safe.”
Canada Pharmacy is also a member of the Canadian International Pharmacy Association. According to CIPA’s Web site, each member pharmacy is subject to stringent inspection by the Canadian government.
But the FDA is quick to point to the potential risks of incorrect ingredients and toxic substances stemming from foreign outlets. “It’s a very wild environment out there on the Internet when it comes to sites selling drugs,” said Thomas Gasparoli, spokesman for the FDA. “You often don’t have any idea what you’re getting.”
For example, the FDA issued a consumer warning Jan. 18 for counterfeit versions of Alli capsules, an over-the-counter weight-loss product made by GlaxoSmithKline PLC, the United Kingdom’s largest drug maker. Fake Alli capsules were reported to contain sibutramine, a controlled substance used to treat obesity, which may pose a danger to certain patient groups.
“[GlaxoSmithKline] has determined that the counterfeit product has been sold over the internet,” the FDA release stated.
The FDA allows exceptions to the blanket ban of unapproved drugs, but individuals must meet four criteria to qualify, such as proof that an effective treatment for a serious condition is not available in the U.S.
Imports, in general, cannot exceed a three-month supply.
While illegal, domestic enforcement appears constrained to detaining a shipment, or pursuing the vendor. The FDA says it is not aware of any actions taken against an individual resulting from the purchase of small quantities of unapproved drugs on the Internet.
Pesmen once received a letter from the FDA, she said, notifying her of a refused shipment.
She contacted Canada Pharmacy, which reshipped the medicine free of charge.
Ultimately, says Schafermeyer, the issue of the doughnut hole inducing foreign purchases will be superfluous if the coverage gap is closed.
The Senate bill, passed on Christmas Eve, would reduce the coverage gap by offering up to 50 percent discounts on certain classes of drugs for those in the doughnut hole; the House version would phase out the gap completely over 10 years. The president’s proposal combines the House phase-out with a $250 stipend in 2010.
“The main way to lower prescription drug costs is by closing the so-called doughnut hole,” AARP’s Cardenas said.
Out-of-pocket health care spending among Medicare beneficiaries, as a percentage of income, increased by nearly five points from 1997, to 16.5 percent in 2006, according to the Kaiser Family Foundation. And prescription drug costs, which generally outpaced increases in both hospital care and physician services between 1996 and 2006, are a prime accelerant of rising U.S. health expenses.
But ironically, closing the gap might neglect the root problem of inflated prices.
The U.S. Department of Health and Human Services estimates domestic prescription drug spending will increase to $457.8 billion by 2019, a nearly 86 percent jump compared with the 2009 figure. Out-of-pocket payments are expected to approach $80 billion over the same period, an almost 60 percent spike.
“The real issue that’s being disguised here is that the United States has the highest drug costs of any country in the world,” Schafermeyer said. “We have to ask ourselves ‘Why is that?’”
More Information on US Health Issues
|
|
