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Home Pharmaceutical

The glaring health equity gap in Democrats’ drug pricing plan

admin by admin
August 6, 2022
in Pharmaceutical



WASHINGTON — As Democrats close in on the biggest overhaul of the Medicare prescription drug benefit in 20 years, they’re ignoring a glaring health equity issue: unequal treatment for low-income adults 65 and older in Puerto Rico.

Residents of Puerto Rico pay the same Medicare taxes as other Americans, but they’re eligible for less help than other older adults when it comes to paying for their pharmacy drug premiums and their prescription drug costs. For all Democrats’ talk about health equity this Congress, they haven’t incorporated a bill that would level the playing field.

Right now, only adults 65 and older making below 85% of the federal poverty level, or $11,552 a year, are eligible for extra help in Puerto Rico. If the same patient lived in a state like Florida, they’d qualify even if they made up to 150% of the poverty level, or $20,385. One group representing insurers in the territory estimates that roughly between 120,000 and 150,000 people fall into that subsidy gap now.

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“There’s a human side of it. Is the health situation of a grandmother in Florida, Alaska, Texas, or Tennessee of more value than in Puerto Rico? Morally, the answer is no,” said George Laws García, executive director of the Puerto Rico Statehood Council.

Residents of Puerto Rico are American citizens, but they can be treated unequally under many federal programs because they live in a territory instead of a state. The legal authority for Congress to set up discriminatory policies for residents of territories comes from a set of Supreme Court decisions that are based on racist stereotypes, but persist as the law of the land today. The Insular Cases, as they’re known, set out a legal framework that say the Constitution doesn’t fully apply to residents of U.S. territories. The first cases were decided in 1901.

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One case held that residents of Puerto Rico were not entitled to full rights of U.S. citizens in part because citizens of territories are “alien races, differing from us in religion, customs, laws, methods of taxation and modes of thought.”

Residents in Puerto Rico continue to struggle to get equal federal benefits. In one case earlier this year, Jose Luis Vaello-Madero sued the government because his federal disability benefits were taken away when he moved from New York to Puerto Rico. The Supreme Court resoundingly ruled against him in an 8-1 decision, but conservative Justice Neil Gorsuch indicated there might be an opening to overrule the Insular Cases in the future.

“The Insular Cases have no foundation in the Constitution and rest instead on racial stereotypes. They deserve no place in our law,” he wrote in a concurring opinion.


Democratic lawmakers have introduced legislation again and again, beginning in 2014, to fix the prescription drug subsidy gap in Puerto Rico. The latest version is led by Sen. Bob Menendez (D-N.J.).

The extra benefits could make a big difference for the people who qualify. The subsidies help older adults pay monthly premiums, meet their annual deductibles, and pay their out-of-pocket costs when they pick up medicines at the pharmacy counter.

The Social Security Administration estimates that the extra benefits are worth about $5,100 per year. That isn’t a definitive number for every patient, as some people with higher income levels can receive partial help. This year, patients that got full subsidies paid no more than $3.95 for a generic drug, or $8.85 for any brand drug.

Right now, adults 65 or older in Puerto Rico who have an income below 85% of the federal poverty level get some subsidies to help with their prescription drug costs, but it’s not equal to the level residents of states receive, said Roberto Pando Cintron, president of the Medicaid and Medicare Advantage Products Association of Puerto Rico. Around 120,000 and 150,000 low-income beneficiaries in Puerto Rico who aren’t getting any help now could benefit if residents of the territory received equal subsidies, he said.

Despite advocates’ pleas, the policy is set to be ignored at the most critical juncture for the Medicare prescription drug benefit in two decades.

Menendez believes Democrats’ domestic spending package isn’t perfect, a spokesperson said, but he recognizes that it makes investments to lower drug prices, extend insurance subsidies, and tackle climate change.

“He will continue to be a champion for Americans in Puerto Rico whether it be in Medicare, Medicaid, or other areas,” the spokesperson said.

If Congress succeeds in completely redesigning the Medicare Part D program, which it appears likely to do soon, it’s possible that it won’t return to reforming the program for a long time.

The broader drug pricing reform does include elements that would undoubtedly benefit residents of the territories, too, such as a $2,000 annual cap on out-of-pocket costs, a negotiation mechanism that could lower costs for some expensive drugs, and penalties for drugmakers that raise prices quickly.

However, it doesn’t address the equity issue, and leaves the status quo in place for residents of territories working with limited resources and trying to afford their medications.

“Puerto Rico is a huge blind spot in these policy debates,” García said.

The Supreme Court’s permission to treat residents of Puerto Rico and other territories differently under federal programs has also fundamentally shaped what access territory residents have to health care.

Puerto Rico gets less Medicaid funding than it would if it were a state, due to Congress maintaining inequitable payment formulas. And unlike states, Puerto Rico’s Medicaid funding is also capped. Medicaid funding for the territory will plummet as of Dec. 13 unless Congress intervenes.

That means that it’s difficult for doctors and hospitals to plan ahead and invest in their facilities. Uncertainty about funding also makes it hard to recruit and retain doctors, and the government has less funding to improve patient benefits.

And it’s not just people who are born and raised in Puerto Rico who get fewer health care benefits. A U.S. citizen could live in, for example, New Jersey for most of their lives and pay taxes into Medicare, but that person’s federal benefits would be cut if they decided to retire to Puerto Rico.

“This different treatment leads to health disparities that are tangible. They have become permanent, discriminatory treatment,” said Jaime Torres, president of Latinos for Healthcare Equity.





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