Medicare's Costly Misunderstanding

New Drug Plan Is Costing Some Users More By Ending Free Drugs

From Suddenly Senior

July 7, 2006

(CBS) When the new Medicare drug plan rolled out in January, the intent was to subsidize medicine costs for tens of millions of older Americans and the disabled afford the prescription drugs they need. But as CBS News correspondent Wyatt Andrews reports, prescriptions that once cost nothing are now becoming a big financial burden for many.

That's not how it was supposed to work.

But when Kenneth and Barbara Cook signed up for the new Medicare drug benefit, they were cut off from some of the drugs they used to get for free -- drugs that used to be donated by the pharmaceutical companies.

One free medicine that quit coming was Paxil, the anti-depressant made by GlaxoSmithKline. The Cooks are both diabetic and live on low fixed incomes. Going off Paxil, Barbara says, deepened her depression -- to the point that she has considered suicide.

This cutoff of free drugs happened because of monumental misunderstanding. When Medicare Part D began, the government sent out notices to the drug companies warning that drug giveaways could be prosecuted -- for fraud and abuse -- if the drug companies counted the value of the donated drugs to file for reimbursement.

The result was chaos, as dozens of companies wrote letter after letter telling patients like the Cooks that the days of free drugs were over -- thanks to Medicare.

"These folks have been forgotten in the process," says Marge Rowe, the director of St. Luke's free clinic in Front Royal, Va., where the Cooks and 400 other seniors were getting their free drugs. The real problem, she adds, is that the Medicare benefit itself is expensive for low-income seniors. In addition to their monthly premium, they also pay up to $3,600 in co-payments every year -- so losing the free drugs is a big deal.

None of the 400 people served by the clinic can afford the $3,600 out-of-pocket expense, says Rowe. "It is the difference between eating and not eating for many of them."

Medicare tells CBS News that despite the fraud and abuse memo, the giveaways have always been legal. The department's Inspector General, Daniel Levinson, says the drug companies overreacted by canceling.

"That's a stretch by any definition," Levinson says of the drug companies' interpretation of the memo. "I just can't imagine why there would be a feeling of threat."

What exists not for patients is a hodgepodge of different rules for different drug companies As for the Cooks and Paxil, GlaxoSmithKline first told CBS News that it was waiting for government approval to re-start the donations. The week after we called, the Cooks were told that the free Paxil would resume.