- The AARP Public Policy Institute Spotlight report found that list prices for 25 top Medicare Part D drugs have increased by an average of 226 percent.
- Medicare beneficiaries often have a fixed income and can’t afford to pay high medication prices.
- This can lead to people skipping doses, taking less than the prescribed amount, or even going without their medications. This can have serious health consequences, and it can even be fatal.
The AARP Public Policy Institute Spotlight report finds that list prices for 25 top Medicare Part D drugs have increased by an average of 226 percent—or more than tripled—since they first entered the market, significantly exceeding the corresponding rate of general inflation.
Further, the analysis of these 25 individual products finds that lifetime list price changes increase dramatically the longer a product has been on the market and that, on average, nearly 60 percent of the current list price is due to price increases after the product entered the market.
Those 25 drugs were responsible for $80.9 billion in total Medicare Part D spending in 2021, about 37% of the total, and were used by more than 10 million Part D enrollees. It noted that, on average, nearly 60% of their current list price was due to price increases after the product entered the market.
The price of Enbrel used to treat rheumatoid arthritis and psoriatic arthritis, has increased by 701% since coming to market in 1998, and the cost of Januvia, used to treat diabetes, has increased by 275% since entering the market in 2006.
Overall, the lifetime price increases ranged from 20% to 739%, and all but one of the drugs’ lifetime price increases greatly exceeded the annual inflation rate over the same time.
There are a number of reasons why drug companies raise prices on Medicare drugs. One reason is that they have a monopoly on their drugs. This means that they are the only company that makes the drug, so they can charge whatever they want. Another reason is that they can afford to raise prices because Medicare and Medicaid will pay for them. Medicare and Medicaid are the largest purchasers of prescription drugs in the United States, so they have a lot of bargaining power. However, they have been reluctant to use this power to negotiate lower drug prices.
The high cost of prescription drugs is a severe problem for Medicare beneficiaries and the American people. It is essential to hold drug companies accountable for their actions and to find ways to lower drug prices. The Inflation Reduction Act is a step in the right direction, but it is insufficient. We need to do more to make prescription drugs more affordable for everyone.
Here are some things that we can do to address the high cost of prescription drugs:
- Allow Medicare to negotiate prices for all prescription drugs. This would give Medicare the power to bargain with drug companies and get lower prices for prescription drugs.
- Pass legislation that would cap out-of-pocket drug costs for Medicare beneficiaries. This would protect Medicare beneficiaries from paying high prices for their medications.
- Increase transparency in drug pricing. Medicare beneficiaries should be able to see how much their drugs cost. This would help them to comparison shop and find the best deals.
- Reform the patent system. The patent system gives drug companies a monopoly on their drugs for some time. This allows drug companies to charge high prices for their drugs. We need to reform the patent system so that it doesn’t give drug companies so much power.
To make matters worse, the drug industry is suing the government because it chose to negotiate drug prices for Medicare. That’s a giant case of arrogance.