Published August 10, 2023
List prices of the 25 brand-name prescription drugs that Medicare Part D spends the most on have, on average, more than tripled since these medications came on the market, a new AARP Public Policy Institute report has found.
In 2021, Medicare spent nearly $81 billion on these 25 brand-name medications that were taken by more than 10 million Americans enrolled in a Part D prescription drug plan, including those who had drug coverage through a Medicare Advantage plan. In all, Medicare covered 3,500 prescription drugs in 2021 for a total cost of $216 billion, according to data from KFF, formerly the Kaiser Family Foundation. That means these 25 medications alone accounted for over 37 percent of Medicare's prescription drug spending that year.
The AARP report also found that the lifetime price increases for all but one of the top 25 drugs greatly exceeded the annual rate of inflation.
“This report really solidifies the impact of drug companies’ relentless price increases year after year,” says Leigh Purvis, author of the report and AARP’s prescription drug policy principal.
How rising drug prices hurt Medicare beneficiariesPurvis said these price increases have a direct impact on many Medicare beneficiaries whose out-of-pocket prescription drug costs are often calculated as a percentage of the price. “Every time you see a percentage price increase, that increase will affect the coinsurance that they pay,” Purvis says.
These price hikes, Purvis added, can be particularly challenging for Medicare beneficiaries who typically take four or five prescription drugs every month. A recent study in the Journal of the American Medical Association found that 1 in 5 older adults have tried to mitigate the high cost of prescription drugs, often by skipping doses prescribed by their health care providers.
“It’s a shame anyone today must face the decision of whether to fill their prescription or put food on the table,” says Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer. “Rest assured that AARP will keep fighting for additional measures to lower prescription drug prices so Americans are no longer charged the highest prices in the world for the medications they need.”
AARP conducted this study just as the Centers for Medicare & Medicaid Services is preparing to release the names of the first 10 prescription medications whose prices will be subject to negotiation as part of the Inflation Reduction Act of 2022. CMS will choose the top 10 drugs based on total Medicare spending and other factors, such as whether these drugs have a generic alternative and how long they’ve been on the market.
The new law also now requires drugmakers to pay a rebate to Medicare if their prices increase faster than the rate of general inflation, a provision that is designed to discourage manufacturers from continuing the outsize price increases highlighted in the AARP report.
AARP’s analysis found that over the course of the lifetime of these drugs, their price increases ranged from 20 percent to 739 percent. Not surprisingly, the longer a brand-name drug has been on the market the larger its lifetime price increase, the AARP report found.
The largest lifetime percentage increase among these drugs was for Lantus, an insulin product used to treat diabetes that was introduced in 2000. Its price has increased by 739 percent since then. The second highest increase was for Enbrel, which was introduced in 1998. The list price for this rheumatoid arthritis drug increased by 701 percent. Of the 25 drugs listed, eight are used to treat diabetes and five are cancer medications.
Top 25 Medicare DrugsHere are the prescription medications that Medicare spends the most on, the year each drug came to market, and how much the list prices have increased over their lifetimes.
Price hike over lifetime
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Dena Bunis covers Medicare, health care, health policy and Congress. She also writes the Medicare Made Easy column for the AARP Bulletin. An award-winning journalist, Bunis spent decades working for metropolitan daily newspapers, including as Washington bureau chief for The Orange County Register and as a health policy and workplace writer for Newsday.