Part D sour spot

A law that comes into effect next year will squeeze profits from moderately priced drugs that treat common, chronic conditions afflicting older Americans, and increase economic incentives to develop high-priced medicines for rare or acute, life-threatening diseases.

The law increases the discounts branded drug manufacturers provide to people in the Medicare Part D donut hole. Manufacturers of drugs to treat common, chronic conditions will be especially hard hit, as these drugs occupy the “sour spot,” a zone in which drug prices are high enough to get beneficiaries into the donut hole, but not so high that they quickly become eligible for Part D’s catastrophic coverage. Drug companies are not required to discount drugs for patients who reach catastrophic coverage. ...