Public Payers News

Rising Specialty Drug Prices Plague CMS, Medicare Beneficiaries

Researchers from the University of Southern California discovered that rising specialty drug prices have limited the benefits of the Affordable Care Act for Medicare beneficiaries.

By Vera Gruessner

Even though the Obama administration’s Patient Protection and Affordable Care Act assisted Medicare beneficiaries by attempting to end a drug coverage gap called the “doughnut hole” through plan payments and drug manufacturer discounts, new research from the University of Southern California outlines that rising specialty drug prices are causing more strain on the wallets of senior citizens once again.

Medicare Beneficiaries

The “doughnut hole” is known as the amount a Medicare beneficiary is left to owe out-of-pocket once Medicare Part D’s prescription drug coverage limit is met and the patient hasn’t reached the “catastrophic coverage” threshold, according to a news release from the University of Southern California.

Only when a Medicare beneficiary reaches $4,850 in a year on out-of-pocket prescription drug costs does that patient have the opportunity to pay only 5 percent of prescription drug prices for the rest of the year. The rest of those costs would be covered by the Medicare program or federal government and their health insurance plan.

However, elevated specialty drug prices are once again causing a problem despite the efforts of the Affordable Care Act and the discounts available. The lack of a complete limit on out-of-pocket spending for prescription drugs among Medicare beneficiaries is leading some patients to pay exorbitant prices especially when it comes to specialty drug prices, said Erin Trish, lead author and Assistant Research Professor at the USC Schaeffer Center for Health Policy and Economics.

“Five percent may not sound like a lot, but if the price is very high and the patient takes these drugs month after month to treat a chronic condition, those dollars can really add up,” Trish added. “Currently, there is no limit on out-of-pocket spending for prescription drugs for Medicare beneficiaries, and these patients often face very high spending year after year.”

“Medicare beneficiaries who take specialty drugs typically incur very high out-of-pocket spending. This raises concerns about affordability and health because patients who struggle to pay for their drugs may not take their medicine as prescribed,” Trish explained.

Researchers from the University of Southern California found that specialty drug prices were leading to higher costs in Medicare coverage and particularly for catastrophic prescription drug coverage. The researchers looked at data from 2008 through 2012 and discovered that the total average of annual drug spending for the Medicare program including out-of-pocket costs rose from $18,335 to $33,301 per patient across five years.

The research was published in the journal Health Affairs and looked at a random 20 percent sample of Medicare beneficiaries each year of the study. In 2012, the sample held a total of 6.7 million patients who had prescription drug coverage through the Medicare program.

The Centers for Medicare & Medicaid Services (CMS) defines the concept of specialty drug as those that cost more than $600 per month. About 1.4 million beneficiaries of the Medicare program are prescribed these specialty drugs and approximately one-third of these patients are in need of medication hitting the ceiling on the costliest specialty drug prices.

From 2008 to 2012, the average costs of specialty drugs rose tremendously, the researchers found. For instance, when it comes to treating multiple sclerosis, the specialty drug prices grew 97 percent to $37,952.

In addition to the rising costs of multiple sclerosis medication, antiretroviral medicine meant for treating HIV increased 38 percent to $18,668. Patients in need of rheumatoid arthritis medication or drugs for treating multiple sclerosis hit their catastrophic coverage threshold very quickly due to these rising costs.

“Any gains made in helping patients caught in the doughnut hole to pay for their medications were nearly entirely offset by the increases in out-of-pocket spending that patients incurred once they reached the catastrophic coverage phase,” Trish commented.

When it comes to out-of-pocket spending for patients on some of the most expensive specialty drugs, the costs decreased by 26 percent from $4,482 to $3,314 due to the Affordable Care Act, according to the study.

While the federal government has made changes to decrease costs for the everyday consumer such as through Medicaid expansion and tax subsidies on the health insurance exchanges, rising healthcare costs are still being covered by taxpayers and more consistent efforts to reduce prescription drug costs haven’t been achieved. The Guardian outlined how the Affordable Care Act hasn’t helped cover the elevated costs of prescription medication.

“The co-payment for the inhaler he needs for his maintenance – to prevent a severe attack – used to cost me $7,” Rita Cheng, a Financial Advisor at Blue Ocean Global Wealth, told the news source about the costs of her son’s asthma inhaler after the Affordable Care Act was passed. “Then it went to $30. Then $60. Now it’s $100, every month.”

While the federal government continues to look at whether there are additional steps to cap out-of-pocket spending for prescription drugs among Medicare beneficiaries, the pharmaceutical industry continues to have free reign to set their own prices for life-saving medication. More steps may need to be taken to keep taxpayers from covering the costs set up by pharmaceuticals.

Image Credits: University of Southern California

 

Dig Deeper:

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