David Belk, M.D.
Hello again everyone, I hope you all had a great 4th of July!
I’m writing you all today to give you two updates about prescription medication costs. The first update has to do with the cost of generic prescription drugs: Their prices went down last year! That’s right, down, by an average of about 12%!!
As those of you who have been following me for a few years might remember, I track the prices pharmacies in the U.S. pay for more than 1,000 generic listings. A few years ago, the prices of many of the medications I was tracking were skyrocketing rather abruptly. Last year the average price of all of the listings I track went down by about 12%.
The reason? Several generic pharmaceutical companies have been accused of collusion and price fixing by 45 states and the DOJ. Most are still awaiting trial but, apparently after being caught red handed, they’ve decided to back down a bit on those price hikes we suffered a few years back.
The second link I’m sending today has to do with how much Medicare has been spending on medications.
Medicare has two separate divisions that cover medications:
Part B covers the medications patients receive in a doctor’s office or other outpatient setting. That might include anything from a flu shot to cancer chemotherapy.
Part D covers prescription medications bought at a pharmacy.
Recently, Medicare released a slew of data on how much both Parts B & D spent on all the medications they covered from 2012-2106. It’s a lot of data, but here’s the gist:
From 2012-2016 the cost of all the medications Part B covered rose by 42% while the cost of the medications Part D covered rose by 71%.
That’s a pretty steep rate of inflation, especially when you consider that the total cost of everything Medicare covered those years rose by only 18%. In other words, rising medication costs were responsible for much of the increase in all of Medicare’s costs during those years.
What’s more, only a very few medications were responsible for most of the cost of either program each year. Nearly 60% of the medication costs for Part B went to cover only 20 of the more than 400 medications that program covered and about 60% of Part D spending went to cover only 100 of the more than 2,000 medications that program covered.
Why do so few medications cost Medicare so much? The providers and pharmacy benefit managers who select medications for patients are paid more to select more expensive medications.
I’ve explained how all of that works in my webpage so, without further ado, here’s the page on generic medication prices:
And here’s the page on Medicare drug costs:
I tried to keep them both short and to the point (as best I could).
David Belk MD