Skyrocketing Drug Costs Hit Medicare

drug costs

drug costsSome drug price increases have gotten a lot of attention (such as Daraprim’s 5,000 percent jump). But the combined effect of price hikes on numerous prescription drug costs is apparent in new data released by the U.S. Centers for Medicare and Medicaid Services (CMS). Hefty price jumps on generic and brand name drugs contributed to higher spending on Medicare. The dashboard the CMS released shows 80 drugs covered by Medicare Parts B or D, with skyrocketing costs that represent $55 billion out of $143 billion total in drug spending that hit Medicare plans that year.

The Medicare Drug Spending Dashboard includes information on 80 drugs (40 each from Medicare Part B and Part D formulary lists) based on 2014 claims. The lists of 40 to focus on were based on 15 with the highest total spending, 15 that cost users the most annually, and 10 that had significant price hikes over the prior year. The drugs selected account for 71 percent of prescription spending in Medicare Part B and 33 percent in Medicare Part D. (Part B covers prescriptions administered on an outpatient basis or in physicians’ offices. Part D covers routine prescriptions filled at a pharmacy.)

Captopril, which is prescribed to deal with high blood pressure, and Digoxin, which is used to treat heart failure, both had increases in drug costs of approximately 300 percent. Two other drugs more than doubled in price that year. According to the CMS, more than 500 drugs in the Part D formulary had increases of at least 25 percent, but not as high as the ones with skyrocketing hikes. On the Part B side, 96 drugs had increases over 10 percent.

It should be noted that some drug costs did see a decrease. The multiple sclerosis drug Copaxone, which is among the top in Part D spending, had a price decrease of 88 percent. Others had smaller increases.

Many of the medications on the dashboard rack up more than $2 billion in total spending annually. (Total spending combines what the plan pays and what the patient pays.) At the top of the spending list is Sovaldi, a hepatitis C medication, with $3.1 billion in spending on the drug in 2014. Three highly advertised medications are next in total spending. The acid reflux and ulcer treatment, Nexium, had $2.7 billion in spending and Crestor, a cholesterol fighting statin, and Abilify. an antipsychotic, both had $2.5 billion in total spending.

There are several drugs on the list that are widely available in generic form and relatively low in cost. The one most prescribed was Prednisolone Acetate, which is a corticosteroid used for eye problems. About 1.5 million Medicare recipients were prescribed the medication, which was one that increased in cost over 100 percent, during 2014.

Drug costs is a hot issue with politicians (particularly those running in 2016) criticizing the recent hikes in several drugs, particularly older ones like Daraprim. The CMS report does not include much rhetoric; it merely highlights the medications that are most used, highest in spending, price changes, etc. for people to draw their own conclusions. While merely representative of the whole Medicare prescription drug picture, the dashboard shows the effect skyrocketing drug costs are having on those 65 and older who are being hit with higher drug costs in both their copayments and premium increases.

Written and edited by Dyanne Weiss

Center for Medicare & Medicaid Services: Medicare Drug Spending Dashboard 2014
Wall Street Journal: Surge in Prescription Costs Hit Medicare in 2014
Medscape: CMS ‘Dashboard’ Reveals Costliest Drugs for Medicare
Washington Post: Why drug spending is so high, in three charts

Photo courtesy of trOtt3r’s Flickr Page – Creative Commons license