The Affordable Care Act (ACA), as a whole, did not have a significant impact on pharmacy services per se. However, a complete repeal would likely impact certain areas of pharmacy services including the drug benefit for the exchange plans, the donut hole for Medicare Part D, states’ necessary Medicaid rebates, and certain recipients of 340B drugs.
The ACA included a number of required “Essential Health Benefits” for health plans listed on the exchanges. One of the benefits is prescription drug coverage. A repeal of the ACA would remove this requirement and possibly make it harder for persons currently covered to obtain prescription drug coverage without paying significantly more for it.
Medicare Part D, which went into effect January 1, 2006, provides prescription drug coverage for seniors. One of the program’s elements is a gap in coverage known as the “donut hole.” The donut hole occurs when a person’s expenses reach a specified level, then they are responsible for the entire cost of their medicines until such time as these expenses reach a certain level. For 2017, the donut hole begins when a beneficiary has paid $3,700 in drug costs and continues until their true out-of-pocket costs reach $4,950. The ACA has been slowly shrinking the donut hole each year the statute has been in effect, and has also been reducing the amounts that beneficiaries pay for medications while in the donut hole. This year beneficiaries only pay 40 percent of the cost of brand name drugs and 51 percent of the cost of generic drugs while in the donut hole. Currently under the ACA, by 2020, while in the donut hole, the amount seniors pay would be only 25 percent of the cost of both brand name and generic prescriptions. Repeal of the ACA would reopen the donut hole and eliminate the subsidies, thus increasing the amount that seniors pay for prescription drugs.
Generally, the state Medicaid programs receive quarterly rebates from pharmaceutical manufacturers for drugs dispensed to Medicaid recipients. The ACA made a number of changes to Medicaid, increased the rebate amount, and included drugs dispensed through Medicaid managed care organizations. However, the states have to pay for these increases to the federal government, which results in a reduction of the amount paid by the federal government to the states. A repeal would do away with the increased rebates, decrease the amount paid to the federal government, and allow more funding at the state level. It remains to be seen if this shift ultimately is beneficial to Medicaid recipients and to state healthcare programs, generally.
The 340B Drug Pricing Program is a drug discount program for certain non-profit “safety net” healthcare entities, including federally qualified health centers, disproportionate share hospitals, children’s hospitals, and certain federal grantees. It allows these designated “covered entities” to purchase prescription drugs at a significant discount roughly equal to the amount paid by Medicaid programs after the application of the drug manufacturer rebate program (approximately a 20 to 50 percent discount). These covered entities can prescribe and dispense the drugs for outpatient use by their own patients. The ACA expanded the list of covered entities to include critical access hospitals, rural referral centers, sole community centers, and freestanding cancer hospitals. This added over 1,000 new covered entities, and significantly increased access to medication in certain areas. A repeal of the ACA would bar these providers from receiving the discounted drugs, potentially causing patients nationwide to no longer have access to critical medications.
Again, it is not yet known what impact, if any, a repeal and replacement may have, as there are no details as of now regarding any replacement program. Akerman will continue to monitor this matter as it evolves and report on any developments as they occur.
