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Drug prices soar in Medicare despite fewer prescriptions

Cuprimine drug capsules sit on a table.
The unit cost of Cuprimine (above) increased 2,143% from 2011-2015. Photo: Roberto Machado Noa/LightRocket via Getty Images

The federal government paid more money to fill fewer prescriptions in Medicare Part D between 2011 and 2015, according to a new federal report.

The bottom line: "Increasing prices for these drugs will affect beneficiaries and the government for years to come," Ed Burley, a deputy regional inspector general involved with the report, said on a podcast.

The big picture: Federal payments for brand-name drugs in Part D increased 62% between 2011 and 2015 — and that's after accounting for rebates that offer discounts on drugs' sticker prices. The number of actual prescriptions fell 17% over the same period.

The Office of Inspector General's study included some other noteworthy findings:

  • The unit cost for Medicare drugs rose six times faster than the general rate of inflation.
  • One of the most significant unit cost increases came from Cuprimine, a rheumatoid arthritis drug made by Valeant that soared by 2,143%, from $6 in 2011 to $135 in 2015. Medicare paid Valeant $48 million for Cuprimine over that time span.

Real-world impact: The percentage of seniors and disabled people who have Medicare Part D coverage and "who had at least $2,000 per year in out-of-pocket costs for brand-name drugs nearly doubled" from 2011-2015, per the report.

  • Most of these people are taking "maintenance" medications that treat chronic conditions, so these costs aren't going away and aren't attributed to new, expensive drugs.
  • The Trump administration also wants to move drugs from Medicare Part B to Part D.

Be smart: Pharmacy benefit managers and other middlemen in the supply chain have been getting their fill, but pharmaceutical firms are still some of the most profitable companies on the planet.

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