Congress Should Say No to Cutting Drug Subsidies for Low-Income Seniors

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President Barack Obama and congressional appropriators are looking for savings to offset new federal spending programs.  One proposal on the table – drawn from the president's budget plan – would disproportionately impact low-income seniors who rely on prescription medications for serious medical conditions.

The measure, estimated to save $8.9 billion over ten years, would increase copayments for brand name drugs for Medicare Part D beneficiaries who receive extra financial assistance under the Low Income Subsidy (LIS) program.

Forcing low-income seniors to pay more for brand-name medications could impact the quality of health care for one of the most vulnerable populations in Medicare by limiting their access to needed medicines, and it could result in higher costs for taxpayers.

The policy being contemplated targets individuals with incomes up to 150 percent of the federal poverty level (about $17,700 a year for individuals) who also have limited assets. The LIS program reduces their out-of-pocket spending by paying some or all of their Part D monthly premiums and annual deductibles -- and also limiting their co-insurance or copayments.

Under the proposal, filling a prescription with a generic drug may cost a beneficiary only $0.90, but filling a brand name drug prescription could cost as much as $12 in copayments.  For beneficiaries on multiple prescriptions, this cost differential could be significant.

Increasing cost-sharing for these vulnerable, generally-sicker patients will distort treatment decisions, result in lower medication compliance, which would likely mean higher costs for other taxpayer-funded medical care. 

The change is a solution in search of a problem.  In 2012, LIS beneficiaries filled 78 percent of their prescriptions with generics, versus 83 percent for the rest of the Part D population, according to MedPAC. That is true despite LIS beneficiaries often having multiple chronic conditions, higher rates of diabetes and more impairments than other beneficiaries.

When there is little difference between generics and brand-name drugs, there is little difference between prescribing trends for these populations.  For hypertension, depression and other illnesses, both LIS and non-LIS patients fill their prescriptions at least 96 percent of the time with generic products when a direct substitute is available.  Those receiving prescriptions to treat high cholesterol receive a generic almost 100 percent of the time, whether they are LIS or non-LIS beneficiaries.

But there are times when only brand name drugs may work for an individual patient, particularly for LIS patients who are likely to have a higher incidence of disease or adverse drug interactions.

Research has shown that small increases in copayments for low-income Medicaid patients who have cancer reduced their use of necessary medicines and significantly increased the probability of higher health care costs and emergency room visits. The Congressional Budget Office says policies that decrease the use of prescription medicines would cause Medicare spending to increase for other types of medical care.

The administration’s assumption is that the newer brand-name drugs are unnecessary and that seniors can be diverted to generics without consequence.  But it is more likely that LIS recipients are prescribed the newer branded drugs because their physicians decide that is what patients need. 

Making it more expensive for patients to fill prescriptions for the newer drug may mean that doctors would be pressured to compromise and prescribe less expensive generics that may have different active or inactive ingredients and would therefore be less effective.  The CBO has said that even among drugs approved to treat the same condition, some medicines in a class may be more effective than others for individual patients.

Drug plans already have checks and balances in place to push seniors toward using more generic drugs. Most employ step therapy that requires patients to use generic drugs first, then if they don’t work, their physician must apply for prior authorization so they can receive branded medicines. 

Consequently, by the time the branded drug is approved for a patient, it is generally clear that is the drug the patient needs.  The proposed copayment change for LIS patients interferes with medical decisions by increasing the costs of the drugs that may be the only ones that work for particular patients, possibly putting the recommended medicine out of financial reach for these low-income seniors. 

Significantly, half of LIS recipients qualified for Medicare before age 65 because of a disability, compared to only 15 percent of non-LIS beneficiaries.  The LIS population has a higher prevalence of diabetes, chronic heart failure, chronic kidney disease and chronic obstructive pulmonary disease.  Not surprisingly, the LIS population also experienced more mental illness and more hospital and skilled nursing stays than non-LIS patients.

A Health Affairs study found, “In treating mental illnesses, patients and physicians typically work through a trial-and-error process to identify the best medication or medication combination. … This complicates formulary-driven medication switches. Unlike other chronic conditions such as hyperlipidemia, hypertension, and osteoporosis, disrupting psychiatric medications can have immediate health consequences resulting in symptoms, functional impairment and accelerated use of health services.”

Nearly 60 patient groups have written to Congress to oppose the co-payment change.  This short-sighted solution would likely would result in adverse health outcomes for seniors and higher costs for Medicare.  The proposed LIS policy change should be scrapped. 

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