Prescription drugs make up a rising share of Medicare spending – study
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A newly published study indicated that prescription drugs made up a growing proportion of annual Medicare expenditure from 2008 to 2019, a finding that researchers said could have implications for recently introduced drug pricing reforms.
Medicare is the federal health insurance program for those aged 65 years and above, patients with end-stage renal disease, and some young people with disabilities. Its Part B component covers the treatments administered in hospitals, and Part D covers the prescriptions filled in pharmacies.
According to researchers led by Stacie Dusetzina, an associate professor in the Department of Health Policy at Vanderbilt University School of Medicine, the study found that the total per-capita annual Medicare spending on prescription drugs rose to ~27% in 2019 from ~24% in 2008.
The researchers considered prescription drugs covered in Part D and Part B components adjusted for inflation and post-sale rebates and discounts. The study was published in the Journal of the American Medical Association on Tuesday.
The authors also referred to the recently passed Inflation Reduction Act, which aims to reduce prescription drug spending through measures that allow Medicare to negotiate prices for a group of older Part B and Part D drugs that lack competition.
The researchers noted that such legislative efforts would fail to bring savings to Medicare if there are no provisions to limit pricing on new drugs and if there is increased demand for drugs that were previously unaffordable for Medicare beneficiaries.
The study has several limitations, including the potential changes to the study population over the years with the rising demand for Medicare Advantage, the commercial alternative to Original Medicare offered by private insurers.
Major drug manufacturers: Pfizer (NYSE:PFE), Merck (MRK), Bristol-Myers Squibb (BMY), Johnson & Johnson (JNJ), Eli Lilly (LLY), Amgen (AMGN), Regeneron Pharmaceuticals (REGN).
Read: Bank of America highlighted a set of Medicare D drugs that could be subject to Medicare pricing negotiations due to the Inflation Reduction Act.