Critical Alert: Navigating Formulary Shake-Ups Under the $2,000 Drug Cap

Recent changes in U.S. healthcare policy capped out-of-pocket prescription drug costs for Medicare beneficiaries at $2,000 per year starting in 2025. While this policy aims to make life-saving medications more affordable, it has unintended consequences. Some pharmaceutical companies are responding by taking certain medications off insurance formularies, limiting access to these drugs through standard Medicare plans. This leaves patients scrambling to find affordable alternatives and raises important questions about how to navigate healthcare costs effectively.

What’s Happening with Formulary Changes?

Insurance formularies are lists of medications covered under a prescription drug plan. Drug companies and insurance providers negotiate which medications are included and at what cost. To mitigate the impact of the $2,000 cap on their profits, pharmaceutical companies are removing medications from their formularies or shifting certain medications to higher-cost formulary tiers.

This tactic forces patients to pay for their medications fully out of pocket or switch to alternatives that might not work as well for their condition. For Medicare beneficiaries, it creates a troubling scenario: While their total costs may be capped, they could still face disruptions in care or limited access to the drugs they depend on. So, what to do during this open enrollment period?

Focus on Overall Costs, Not Just Premiums

Many Medicare beneficiaries focus on plans with the lowest premiums, assuming that will save them the most money. However, this strategy backfires when formulary exclusions, higher deductibles, or higher co-pays for non-preferred medications come into play. To truly minimize healthcare expenses, it's essential to evaluate total potential costs, including premiums, deductibles, and out-of-pocket maximums. Here's how:

1. Compare Drug Coverage Across Plans. Use Medicare’s Plan Finder tool, or a trusted guide (SHIP counselor). to compare how specific medications are covered across different plans. Focus on whether medications are included in the formulary and which specific tier they are placed; the higher the tier, the higher the costs.
2. Calculate Your Annual Out-of-Pocket Costs. Factor in premiums, co-pays, and co-insurance for the medications you regularly take. This gives you a clearer picture of your overall financial commitment. Your annual out-of-pocket costs could be upwards of $10,000 if your medication(s) is not on formulary. Why? Because you will pay the full price!! ?I cannot stress the importance of looking at your total costs not just premium!!!!
3. Review the Pharmacy Network. Some plans have preferred pharmacies that offer lower costs for certain medications. Verify if your usual pharmacy is included or if you’d need to switch.
4. Consider Generic or Therapeutic Alternatives. If a medication you rely on has been removed from the formulary, consult your doctor about generic or alternative treatments that are covered.
5. Use Manufacturer Discounts and Assistance Programs. Some drug companies offer coupons or assistance programs to offset the cost of medications not covered by insurance. These can bridge the gap for drugs excluded from formularies. Check out other discount companies such as Good Rx. Just because you have this insurance does not mean you need to use it if you can get the medication at a cheaper price!
6. Reassess Annually During Open Enrollment Formulary changes occur from year to year and this coming year (2025) has been the most consequential since I’ve been advising about the Medicare program. ?Take the time to review your plan options every open enrollment period to ensure your current needs are met.

The Bigger Picture: Advocacy for Systemic Change

This Wack-a-Mole approach of drug pricing, capping pricing is a losing game. Do not expect any realistic or meaningful change this year. It will be complete chaos so stay tuned for the chaos but make changes now before open enrollment for 2025 closes December 7!!!!!!!!!!!