Drug makers have tripled the prices of top Medicare drugs

In 2021, Medicare spent nearly $81 billion on these 25 drugs.

Beth Mole – Aug 15, 2023 9:49 am | 257

The top 25 costliest drugs for Medicare Part D plans earned their lofty rankings largely through exorbitant price hikes—increases that, on average, more than tripled their list prices since they entered the market, according to a new analysis by AARP.

For nearly all the drugs, the price hikes far outstripped the rate of inflation, with increases ranging from 20 percent to 739 percent during the drugs’ lifetimes on the market. Only one of the top 25 drugs—Trelegy Ellipta, an inhaler for asthma and chronic lung conditions—had price increases that were below the rate of inflation during its time on the market. Since its initial release in 2017, Trelegy Ellipta’s price increased only 20 percent, compared with a general inflation rate of 23 percent.

Overall, the average lifetime price increase for the top 25 drugs was 226 percent. The highest increases were seen in drugs that have been on the market the longest. For example, drugs that were on the market for under 12 years had an average lifetime price increase of 58 percent, while those on the market for 20 or more years had an average lifetime increase of 592 percent.

The drug in the analysis with the largest lifetime price increase was Lantus, a Sanofi-made, long-acting insulin for diabetes. Since its introduction in 2000, Sanofi has hiked the list price 739 percent, the analysis found. The general inflation rate during that period was 71 percent.

In 2021, Medicare Part D prescription drug plans spent $80.9 billion on these top 25 drugs, which were used by more than 10 million enrollees. AARP noted in its report that Medicare Part D enrollees take an average of four to five medicines each month, and 20 percent of older adults report using cost-coping strategies like skipping doses or not filling prescriptions to save money.

The report lands amid drug cost-cutting measures in the Inflation Reduction Act (IRA). The act requires drug companies to pay rebates to Medicare when they increase the price of drugs faster than the rate of inflation. And, under IRA provisions, Medicare will soon begin negotiating prices of drugs directly with manufacturers. On September 1, the Centers for Medicare & Medicaid Services will announce the first 10 drugs selected for price negotiations. Some of the drugs expected to be announced are among the top 25 costliest drugs analyzed in the AARP report.

Multiple pharmaceutical companies and the trade group PhRMA have sued the federal government over the IRA’s price negotiation provision. The suits, filed in four different federal courts, claim the negotiation program is unconstitutional. Drug makers also claim negotiating prices will cut into profits, preventing them from funding research and development into new drugs. The Biden administration has said it will defend the IRA’s price negotiation program vigorously.

In a blog post on Friday, PhRMA called the AARP’s analysis on drug price increases a “flawed report to spin a misleading narrative.” The group pointed to insurers and pharmacy benefit managers for their role in increasing costs for seniors.