Study Examines How Medicare Prescription Drug ‘Doughnut Hole’ Affected Beneficiaries in 2007

In 2007, about 3.4 million Medicare beneficiaries reached the so-called "doughnut hole," or gap in Medicare prescription drug coverage, during which time they were responsible for their medication costs, according to a Kaiser Family Foundation study released on Thursday, the AP/San Francisco Chronicle reports. In 2007, the coverage gap occurred when total drug spending for an individual reaches $2,400 for a single year and continues until total out-of-pocket spending reaches $3,850 in that year (Freking, AP/San Francisco Chronicle, 8/22).

Researchers from the Kaiser Family Foundation, Georgetown University and NORC at the University of Chicago analyzed pharmacy claims data provided by IMS Health. The analysis excludes beneficiaries who receive low-income subsidies because they do not face a gap in coverage under their Medicare drug plan.

According to the study, one out of four Medicare beneficiaries enrolled in the Part D drug benefit, or 26%, who filled any prescriptions in 2007 reached the coverage gap. This includes 22% who stayed in the gap for the remainder of the year and the 4% who ultimately received catastrophic coverage. Applying this estimate to the entire population of beneficiaries enrolled in the drug benefit, the analysis suggests that about 3.4 million beneficiaries (14% of all drug benefit enrollees) reached the coverage gap and faced the full cost of their prescriptions in 2007.

Beneficiaries who take medications for serious chronic conditions were much more likely to reach the coverage gap. For example, 64% of beneficiaries taking medications for Alzheimer's disease, 51% of those taking oral anti-diabetic medications and 45% of patients on antidepressants reached the coverage gap in 2007.

Across eight classes of drugs examined -- used to treat a variety of relatively common chronic conditions -- about 15% of the beneficiaries who reached the coverage gap in 2007 stopped taking their medications, according to the study. The report also found that 5% of those reaching the gap switched to a different drug, most often a generic, while 1% reduced the number of medications of a certain class they were taking. The study found that 10% of drug benefit enrollees taking oral anti-diabetic drugs who reached the coverage gap stopped taking their medications. Among drug benefit enrollees taking a drug for osteoporosis who reached the gap, 18% stopped taking medications. And, 20% of those taking Proton Pump Inhibitors (for ulcers and acid reflux) who ended up in the gap discontinued their medications.

According to the study, beneficiaries who reached the coverage gap but did not receive catastrophic coverage on average spent $196 monthly while in the doughnut hole, compared with $104 monthly prior to reaching the coverage gap. In addition, beneficiaries who reached the coverage gap paid the full cost of their medications for just over four months on average and received catastrophic coverage for less than one month on average.

Kaiser Family Foundation President and CEO Drew Altman said, "The Medicare drug benefit has produced tangible relief for millions of people, despite the unusual coverage gap that was created to make the benefit fit within budget constraints. But if a new president and Congress consider changes to the drug benefit, it will be important to keep in mind that the coverage gap has consequences for some patients with serious health conditions" (Kaiser Family Foundation release, 8/22).

CMS Spokesperson Jeff Nelligan said the coverage gap sets in after beneficiaries have saved about $1,600 on drug costs, on average. He also said many plans offer some coverage during the gap and can cost as little as $28.70 per month and are available in every state for less than $50 (AP/San Francisco Chronicle, 8/22).

The study is available online.