Filling Medicare doughnut hole could cost Pharma $32B

The Wall Street Journal has found another potential bonus for pharma in healthcare reform: The closing of the doughnut hole. Yes, we know, that closure relies in part on a hefty discount drugmakers agreed to provide as part of that $80 billion cost-cutting deal it negotiated with the Senate and White House. But experts say that those discounts could be offset by more filled prescriptions.

Here's the cost side of the ledger: Pharma is bearing a large part of the burden of closing the coverage gap in Medicare Part D. Starting next year, drugmakers have to give a 50 percent discount on branded drugs for people who fall into the gap, which is between $2,830 and $6,440. Over 10 years, the cost of closing the hole could cost pharma $32 billion, the Journal reports.

When seniors fall into that doughnut hole, some postpone refills or drop their prescriptions altogether. In fact, about 15 percent of the 4 million seniors who end up in that coverage gap stop taking their medicine. So, the discounts may keep people on their drugs--helping them through the gap and back to full coverage.

"Anything that gets people through the doughnut hole faster can certainly generate more revenues," says Jack Calfee, a former Federal Trade Commission economist (as quoted by the WSJ). Drugmakers certainly hope he's right.

- see WSJ's coverage