Part D Spending on Branded Drugs Soars as Prescriptions Fall

Kerry Dooley Young

June 07, 2018

Spending for branded medicines through Medicare Part D drug plans soared in recent years, even with a decline in prescriptions for these treatments, according to a report from a federal watchdog agency.

Total reimbursement for brand-name drugs in Medicare Part D increased 77% from 2011 to 2015, while prescriptions for these medicines dropped 17%, the Office of the Inspector General (OIG) of the Department of Health and Human Services said in a report posted June 4.

Part D costs for brand-name drugs rose from $58 billion in 2011 to $102 billion in 2015, while the number of prescriptions for these drugs dropped from 229 million in 2011 to 191 million in 2015.

The mismatch stems from sharp increases in the per-unit costs of many drugs, according to the report.

Of the 3578 brand-name drugs that were covered by Part D plans in every year studied for the report, there were unit cost increases for 89% during the 5-year span, the OIG said.

The average per-unit increase was 29%, from $115 in 2011 to $148 in 2015. That's almost six times greater than the 5% increase in the consumer price index measure of inflation, the OIG said.

For almost half of the brand-name drugs covered by Part D from 2011 to 2015, the increase was at least 50%, the OIG said. The report highlighted as an example the unit cost of the rheumatoid arthritis drug Cuprimine (penicillamine, Valeant Pharmaceuticals), which increased 2143%, from $6 in 2011 to $135 in 2015, the OIG said.

The OIG also reported on the average out-of-pocket costs for brand-name drugs during the 5 years that were reviewed. The inspector general's office said the average out-of-pocket costs for branded drugs rose by 40%, from $161 in 2011 to $225 in 2015.

Many of the branded drugs studied treat chronic conditions, such as diabetes and heart disease, the OIG said.

"Therefore, increasing costs for these drugs may have a long-term financial impact on Part D and its beneficiaries," the OIG said in the report.

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