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2014 Straddle Claim example for $9,000 medication purchase

Category: Straddle Claims and high costs
Published: Oct, 23 2014 03:10:40
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Question: I was diagnosed with CML and now using Tasigna (r), a drug with a retail cost of more than $9,000 per month.  My Medicare Part D plan said that the cost of this medication could be as high as $2,700.  Is that possible?

Yes, the cost of this medication could be this high depending on your 2014 Medicare Part D plan.
 
To begin, we looked up the price of this medication using our Drug Finder (Q1Rx.com) and as an example used the 2014 Florida Medicare Part D plans that cover Tasigna 150mg:
https://q1medicare.com/PartD-2014-SearchPDPMedicareDrugFinder.php?stateReg=11FL&form=adv&drug=Tasigna%20150mg/1%204%20BLISTER%20PACK%20per%20CARTON%20/%2028%20CAPSULE%20per%20BLISTER%20PACK%20(4%20BLISTER%20PACK%20in%201%20CARTO%20)&plans=&plans2=&ndc=00078059287

You will notice that the retail prices (shown in the right column) vary slightly, but are all over $9,000.

As an example, your Medicare Part D prescription drug plan may have a cost-sharing structure of 25%, meaning that you would be "theoretically" responsible for $9,433.51 * 25% = $2,358.38.

However, since the retail cost of this medication is so high, you will actually go through all phases of your Medicare Part D plan with a single purchase, thus making the cost slightly higher.

You can use our 2014 Donut Hole Calculator to get an idea of how the cost of this medication is actually split over: the Initial Deductible, the Initial Coverage phase, the Coverage Gap, and the Catastrophic Coverage phase:  https://q1medicare.com/PartD-PartDCoverageGapCalculator14Xphp.php

(1) Initial Deductible:  Assume that your Medicare Part D plan has a $0 Initial Deductible, so you begin in the Initial Coverage Phase of your plan.

(2) Initial Coverage phase: You pay $712.50 of the first $2,850 portion of the retail price, the remainder of the retail goes into the 2014 Coverage Gap
 
(3) Coverage Gap (the 2014 Donut Hole discount for brand-name drugs means you pay a 47.5% discount): You spend $3,837.50 *47.5% = $1823 (actually slightly more) with the remainder of the retail value rolling into the Catastrophic Coverage phase.  Please note that you receive a 52.5% discount on your purchase (you pay 47.5% of retail), but you actually get 97.5% of the total cost (your 47.5% + 50% Pharma discount) toward meeting  your 2014 TrOOP limit of $4,550).  You can see how the annual plan parameters change here: https://q1medicare.com/PartD-The-2014-Medicare-Part-D-Outlook.php.  The remainder of the first purchase price falls into the last phase of your Medicare Part D plan: the Catastrophic Coverage phase.
 
(4) The Catastrophic Coverage phase (you pay a maximum of 5% of the remaining balance): $2,746 * 5% = $137.30.
 
The total cost of the first month's purchase of this medication is then around $2,673.

After the first purchase, you will remain in the Catastrophic Coverage phase and pay a maximum of 5% for the medication or, as in our example, $9,433.51 * 0.05 = $471.68 per month.

You will notice from our example list of Florida stand-alone Medicare Part D prescription drug plans that the 25% co-insurance is the lowest cost-sharing in the state, although you may find lower cost-sharing in a local Medicare Advantage plan.


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