New Medicare report provides another reason to rein in drug prices

January 23, 2017


Federal payments for Medicare Part D catastrophic coverage have tripled since 2010, according to a new government report.

An analysis by the Office of Inspector General within the Department of Health and Human Services finds federal spending for Medicare catastrophic coverage climbed from $10.8 billion in 2010 to $33.2 billion in 2015.

Medicare beneficiaries qualify for catastrophic coverage when they reach a certain threshold of their out-of-pocket costs. Once they qualify for catastrophic coverage, most patients pay a 5 percent co-insurance for their drugs; the federal government covers the rest of the bill.

The Inspector General’s analysis found prescription drugs were a significant reason catastrophic coverage costs tripled in just five years. And 10 high-priced drugs accounted for nearly a third of all drug spending in 2015. These drugs cost thousands of dollars per month to treat cancer, hepatitis C and other conditions.

The report concludes: “The issue of high-price drugs is not exclusive to catastrophic coverage; it affects the entire Part D benefit and can lead to higher costs for all beneficiaries.”

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