Medicare Part D drug prices up nearly 100%
Overall, these top 25 drugs were responsible for nearly $50 billion in total Medicare Part D spending in 2022, AARP finds.
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The brand-name drugs covered under Medicare Part D have nearly doubled in price, and 25 of them are now up 98% since they debuted in the market, a new AARP Public Policy Institute analysis has found.
These lifetime price increases often greatly exceeded the corresponding rate of general inflation, AARP found.
The analysis also found that, on average, more than 40% of the current list prices for the top 25 drugs is due to price increases that have occurred since the products first entered the market.
All of the data was based on the 25 brand-name drugs with the highest total Medicare Part D spending in 2022 that have not yet been selected for Medicare drug price negotiation, as reported in the Medicare Part D Spending by Drug Dashboard.
Overall, these top 25 drugs were responsible for nearly $50 billion in total Medicare Part D spending in 2022 and were used by a total of more than 7 million Part D enrollees, according to AARP.
The 25 drugs include Trulicity, Ozempic, Trelegy Ellipta, Biktarvy, Xtandi, Humalog, Ibrance, Jakafi, Ofev, Pomalyst, Levemir, Tresiba, Linzess, Victoza, Breo Ellipta, Tradjenta, Creon, Ingrezza, Janumet, Calquence, Tagrisso, Epclusa, Xifaxan, Vyndamax and Cabometyx.
WHAT'S THE IMPACT
Five of the top 25 drugs' lifetime list price increases did not exceed the corresponding rate of general inflation, including one hepatitis C drug, Epclusa, that has not had a list price increase since it entered the market in 2016.
The top 25 products have been on the market for an average of 11 years (ranging from five to 28 years). Lifetime list price changes increase dramatically the longer a product has been on the market. For example, the average lifetime price increase for the six products on the market for less than 12 years was 47%, whereas the average lifetime price increase for the four products on the market for 16 years or longer was 207%.
According to AARP, the findings highlight the importance of Inflation Reduction Act provisions that allow the Medicare program to negotiate prescription drug prices, and require drug companies to pay penalties when they increase their prices faster than the rate of inflation.
The IRA includes two major provisions designed to address high prescription drug prices and drug price increases. The first allows the Medicare program to negotiate the prices of certain high-cost prescription drugs; 10 drug prices have already been negotiated, and additional drugs will be selected and negotiated every year. The second provision requires drug companies to pay a rebate to Medicare if the prices of their products increase faster than the rate of general inflation.
The Congressional Budget Office has estimated that these changes will reduce Medicare Part D enrollee and program spending by billions of dollars.
These mechanisms, said AARP, will help moderate prescription drug pricing practices that have caused millions of older adults to engage in cost-coping strategies, such as not filling a prescription or skipping doses to save money.
They will also become increasingly important as more expensive prescription drugs enter the market. The median price of a new brand-name prescription drug is now approximately $300,000 per year, the analysis said.
However, according to Forbes, President-elect Trump has said that he will repeal portions of the IRA, although he has stopped short of saying that he would remove prescription drug pricing provisions from Medicare. The report posited that, due to these provisions' popularity with consumers, the new administration may go so far as to pursue additional price cuts.
THE LARGER TREND
An October survey from the National Community Pharmacists Association showed that more than 90% of independent pharmacists may not sell drugs for which the Medicare Part D program is trying to negotiate lower prices.
The administration announced in August a list of 10 drugs for which the Medicare Part D program will seek to negotiate lower prices. They include drugs for diabetes, blood clots, heart disease and other conditions.
The drugs subject to the new pricing include Januvia, Farxiga, Enbrel, Jardiance, Setalara, Xarelto, Eliquis, Entresto, Imbruvica, and the Fiasp, or NovoLog FlexPen. The new prices are set to go into effect for people with Medicare Part D prescription drug coverage beginning January 1, 2026.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
