The Journey
Newsletter
Week of January 26, 2025
Volume 2, No. 3
Part D Rip-off -- AGAIN
Dear Friends:
We are quite optimistic that sometime in the very near future, our Team will draft a newsletter of a more positive nature. Unfortunately, now is not the time.
The impetus for this newslatter's discussion came from a visit that the team member and his wife went to their usual pharmacy, located in and operated by a major supermarket company. The result of the visit was a great deal of shock. On several of the life maintaing pharmaceutical they are prescribed, the prices had increased several times their pre-2025 value.
After a 'discussion' with the pharmacy's staff, no clear reason for the price-hikes became evident. In fact, it is well-believed and documentated that the staff is trained and prohibeted from responding to such questions by the insurers and/or Pharmaceutical Benefit
Managers (PBM).
Note, overall that while there isn't conclusive evidence that pharmaceutical manufacturers and PBMs are specifically manipulating prices or formulary tiers to circumvent the closure of the Medicare Part D donut hole, existing industry practices related to drug pricing and formulary management have contributed to increased costs for patients. Ongoing regulatory scrutiny and legal actions aim to address these issues and promote more transparent and fair pricing mechanisms within the pharmaceutical industry. THIS IS A BAD AND INEXECUSIBLE SITUATION -- one that intimately affects a very large segmrnt of our Community, namely, the middle income members.
Several Reports, Investigations and Legal Actions Provide Insights and Evidence
With the closure of the Medicare Part D "donut hole," some experts argue that manufacturers and PBMs have compensated for lost revenues by:
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Increasing the base prices of drugs before reaching the catastrophic coverage phase and shifting drugs to higher tiers, making patients pay more before catastrophic coverage kicks in
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Using formulary exclusions, forcing patients onto more expensive alternatives.
According to an analysis by the Medicare Rights Center, many beneficiaries have reported higher out-of-pocket costs despite policy changes aimed at lowering expenses -- we can peronally attest to yhat being the absolute truth.
Impact of Inflation Reduction Act
The Inflation Reduction Act (IRA) of 2022 introduced several significant changes to Medicare Part D, aiming to reduce prescription drug costs for seniors, including addressing the financial burden of the "donut hole." However, whether the IRA is genuinely effective in eliminating the financial challenges of the donut hole or merely a "mirage" is up to debate
While the IRA brings meaningful reforms to Medicare Part D, it is not a cure-all for high drug costs, and some aspects might feel like a "mirage" in the following ways:
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True Savings Depend on Individual Drug Use: If you take high-cost medications not included in negotiated pricing, the IRA may offer limited relief
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Systemic Issues Persist: The complex interactions between drug manufacturers, PBMs, and insurers can still create loopholes that diminish the law’s effectiveness.
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Long-Term Effects Yet to Be Seen: Many cost-saving measures depend on future enforcement, negotiation outcomes, and legislative changes that could evolve over time.
"Front-loading" of Medcare Part D Costs
Yes, believe it or not, under the 2025 Medicare Part D changes, costs are effectively front-loaded, meaning beneficiaries will face higher out-of-pocket expenses earlier in the year until they reach the new $2,000 out-of-pocket cap. Although, once this threshold is met, they will no longer pay for covered medications for the rest of the year -- trick is to afford to get there and being able to survive.
The upfront financial burden could place significant strain on middle-income seniors who do not qualify for low-income subsidies but still struggle with healthcare expenses. This “middle class gap” in healthcare affordability is a major concern, and many seniors may find themselves facing financial hardship due to these front-loaded costs.