Virginia Chandler of Cary is one of over one million North Carolinians who depend on Medicare for prescription drug coverage. For many of them, a new proposal by pharmaceutical companies to reduce costs for brand-name medications is welcome news.

Chandler takes about 10 different medicines each day. While she's grateful to have the coverage, she is worried that she will be one of the 30 percent of North Carolinians who max out her Medicare drug benefit.

"One of the inhalers that I have, if I had to pay for it, would be $220," she said. "Which, when you live on a fixed income, takes a lot out of it."

Under a standard Medicare Part D plan, seniors pay a deductible toward their drug coverage, typically around $275. After that, they are responsible for a co-pay until the total cost of their medicines reaches $2,700.

The 30 percent of Medicare beneficiaries who exceed $2,700 get stuck in what is called the "doughnut hole." At that point, they have to pay 100 percent of the cost of their medicine until the total reaches $6,154.

"They have to make a decision , are they going to buy the medication or are they not going to buy it and just quit taking it," said Pharmacist Mike James, of Raleigh's Person Street Pharmacy. "And we see a lot of people that just stop."

Under the proposal, pharmaceutical companies are offering to cut brand-name drug costs by 50 percent for folks who reach the doughnut hole. But with the cost of prescription drugs outpacing inflation, James questions whether the deal will be good enough.

"Even at fifty percent of a $300 drug, that patient still has to pay $150," he said. "It might as well be $1,000 for some patients because they can't afford the $150 either."

But the AARP, which endorsed the proposal on Monday, maintains the plan is a step in the right direction.

"One of our main six priorities in all of our pushing for healthcare reform is to close the doughnut hole," said Bob Garner, communications director for AARP North Carolina.
"This proposal goes a long way to doing that."