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Executive Summary

CATASTROPHIC CARE DRUG BENEFIT: 14.8% OF ELDERLY PATIENTS reached the prescription drug spending threshold of $ 600 that would entitle patients to reimbursement for outpatient drugs in a recent Pharmaceutical Data Services (PDS) survey. Covering a sample of Medicare-eligible patients for the 12 months ended August 1988, PDS found that "more than one of seven of [Medicare eligible patients] have spent more than the required $ 600 deductible on prescription medication in a 12-month period." PDS reported that 14.8% of Medicare patients spent more than $ 600, compared with 4% of total patients receiving prescriptions. Medicare-eligible patients obtained an average of 14.8 prescriptions during the 12 months and spent an average of $ 288.40. The PDS data is based on a new service offered by the McKesson subsidiary called Senior Scripts, which charts prescribing trends among the elderly based on a national sample of more than 3,000 pharmacies. "Among all individuals who have had at least one prescription filed in a 12-month period, the average patient had 6.5 prescriptions filled at an annual cost to the patient of $ 115," PDS noted. "However, among patients with potential coverage under the Catastrophic Health Bill, these averages are more than twice as high." The PDS data indicate that outpatient drug reimbursements under the Catastrophic Care bill, which goes into effect in 1991, may be less than anticipated by Congress, the Health Care Financing Administration, and industry observers. Congress set the $ 600 deductible for 1991 and a $ 652 deductible for 1992, anticipating a level of outpatient drug reimbursements in the range of one in six Medicare patients. After 1992, the outpatient drug benefit deductible will be indexed to ensure that 16.8% of Medicare Part B enrollees during the preceeding year will meet the deductible. A Congressional Budget Office report predicted that the deductible will have to rise to $ 710 by 1993 in order to maintain the 16.8% level of beneficiary eligibility for the drug benefit. Purdue University Pharmacy Economics Professor Stephen Schondelmeyer, PhD, has predicted that the deductible level could rise to $ 1,000 in the early 1990s in order to maintain the 16.8% eligibility level. The American Association of Retired Persons is also predicting that the $ 600 deductible will be too low. The association found that in 1986 about 34% of the elderly population spend more than $ 500 a year on prescription medications.

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