In 2015, the Centers for Medicare and Medicaid Services released an online tool to check the prices of prescription drugs used by Medicare patients, and that tool has now been updated with the latest figures on spending. The drug tracking tool was necessary because of the rise in prices over the last few years, something that shows no signs of stopping and that can hit patients when they least expect it. Prescription drugs keep people healthier, and in many cases, keep people alive. Tracking spending is just one way to make sure that life-saving medication remains affordable. As research continues, more drugs and additional treatments will likely become indispensable. But that also raises the possibility of higher costs.
New Version Released
The CMS has released an updated version of the tool with 2015 spending, noting that drug companies have begun raising prices on critical medications like the Epi-Pen, insulin-based medications and expensive drug combinations that combine two drugs originally sold separately for less. By tracking the costs of medication, you and your doctor can be on the lookout for price increases, which could help you find cheaper substitutes that work the same without the higher price tag.
What the Tool is Tracking
The CMS drug price tool allows you to see drugs included in Medicare Parts B and D that are considered higher priced or that have had substantial price increases. You can also look up five-year trends for individual drugs. With the update, Medicaid drugs are included in the database as well, and you can look up rebates that have been available in the past. These rebates have helped alleviate some financial burden, though their effects are often limited by additional price increases or by specific restrictions on who can take advantage of them.
Between 2012 and 2015, personal spending on prescription drugs increased 1.3 percent, with an actual dollar increase of $90 billion. The CMS estimates that price increases will continue at a rate of about 6.7 percent through 2025, which means that tracking drug prices and being able to head them off through a combination of rebates, coupons and substitutions will become only more essential.
The effect of drug price increases on Medicare and Medicaid beneficiaries is immediate and often harsh, but what you might not realize is that these price increases also affect the national budget and taxes paid by non-beneficiaries. Much of the help given to Medicare and Medicaid beneficiaries outside of manufacturer rebates comes from taxes and government spending. If drug prices go up, spending and taxes will increase to compensate.
As an example, the Medicare program covers most of the cost – 80 percent – above what is known as the catastrophic limit. Catastrophic coverage starts once you’ve reached a certain out-of-pocket limit on spending; in 2017, the limit is $4,950. With the cost of prescriptions on the rise, you’ll reach that limit more quickly, and taxpayers will have to pick up the slack. What’s more, the need for medication doesn’t lessen once a certain monetary amount has been reached, which means taxpayers will continue picking up the tab as costs increase.
CMS says that Medicare Part D catastrophic coverage payments increased 85 percent between 2013 and 2015. Even after adding in rebates, that’s a stunning increase. Some of the increase in costs is due to more prescriptions being used, but the majority of the costs are due to those price increases.
Rebates help, but only so much. Estimates from the CMS for rebate spending in 2014 topped $16 billion. However, the rebates covered only certain drugs, and the average rebate covered less than 20 percent of the cost of the drugs. Another issue is that rebates offered for drugs paid through Medicare are not as substantial as those paid through other programs.
Spending on the Rise
Certain drugs cost substantially more than others, not only in manufacturing cost but in personal use as well. In 2015, the top five drugs in terms of spending for Part D were Spiriva and Advair Diskus (both used to treat obstructive pulmonary disease), Crestor (for cholesterol), Lantus/Lantus Solostar (for diabetes), and Harvoni (for chronic hepatitis C).
Between 2014 and 2015, spending on Harvoni alone jumped from not even a billion dollars to over $7 billion. The drug was introduced in October 2014. Brand-name prescriptions aren’t the only drugs that have seen increases in spending. Some generic drugs also jumped substantially, by as much as 500 percent in some cases.
If you’re a Medicare beneficiary, it’s essential that you talk to your doctor so that you can get information about price increases and usage statistics. This will facilitate advanced planning and help you avoid surprise cost increases. Taking a proactive approach to your medication will also help administrators and government officials keep track of dangerously high-cost increases that could make life-saving medications unaffordable.