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A Look at Medicare Drug Prices – What’s Happening Now

Posted by Mari Tautimes on 3/6/17 12:49 PM


The United States does not regulate drug prices, a policy that has resulted in a series of headlines in recent years as pharmaceutical companies have raised their prices.

In one example, the CEO of Turing Pharmaceuticals, Martin Shkreli, sparked a public outrage when he increased the price of Daraprim, a drug commonly used in the treatment of HIV, from $13.50 to $750. He agreed to lower the price to $375.

More recently, EpiPens caught the public’s attention when it was reported that the price had gone up from around $100 in 2009 to as much as $600 for a standard two-pack—even though the life-saving allergy drug used costs only a few dollars when purchased without the convenient delivery tool.

These are only two extreme examples of a common trend. According to Time, prescription drug prices in the United States increased by approximately 10 percent between June 2015 and May 2016. In comparison, the inflation rate for that period was only 1 percent.

Bloomberg analyzed drug prices in the United States and 14 other countries and found that the United States pays significantly more. This is true even after discounts given to insurers are taken into account. 

In an attempt to explain the soaring drug prices, many have pointed to the fact that the United States does not regulate prices. Many other countries do. In Canada, for example, the Patented Medicine Prices Review Board regulates drug prices to keep them from becoming excessive.

Some people in the United States think that the government should negotiate Medicare drug prices. The federal government is the largest payer of health care in the country. If the government began negotiating Medicare prices, this could have a significant effect on both drug costs and government spending.

Currently, Medicare is legally prohibited from negotiating prescription costs, but this could change. President Trump has expressed support for Medicare drug price negotiations. Bloomberg reports that Sean Spicer confirmed the president’s position on this issue at a press conference in early February.

Some Democrats have also been vocal about the need for Medicare negotiations. In January, nine U.S. senators, including eight Democrats and one Independent, introduced the Medicare Prescription Drug Price Negotiation Act.

Whether or not this act will become law remains to be seen. In the meantime, Medicare drug costs are expected to continue to rise, as are prescription costs not paid through Medicare.

Using data from CMS National Health Expenditure Data for Historical and Projected Retail Prescription Drug Expenditures, Kaiser Family Foundation reports prescription spending may reach $564 billion in 2024, with Medicare spending accounting for 34 percent of the total.

As always, WAP will keep you informed of all the breaking news impacting Medicare and your clients. If you haven’t already done so, subscribe for updates in the top right corner of this screen.

Topics: medicare benefits, medicare drug prices

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