Watchdog report finds surge in Medicare drug spending

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Medicare spending on prescription drugs has surged in recent years, despite a drop in the number of prescriptions, according to a new report.

The report from the Department of Health and Human Services (HHS) inspector general finds that Medicare Part D spending for brand-name drugs rose by 62 percent from 2011 to 2015, from $49 billion to $80 billion.

That is after accounting for discounts that drug companies provide and that they often cite as crucial to deflecting the rising costs of drugs. The number of prescriptions, though, fell 17 percent in the same time period, indicating price increases, not an increase in usage of drugs, is the issue.

Advocates seized on the report to argue that rising drug prices are doing real damage.


“Today’s report from the HHS Inspector General makes it clear that list price increases on brand drugs are hurting patients,” said David Mitchell, founder of the advocacy group Patients for Affordable Drugs. “I heard this weekend from a California woman who reports she pays $500  — nearly half of her $1,200 per month income — to cover two maintenance drugs. We need action to lower pharma list prices now.”

The report also found that unit costs for drugs rose 29 percent from 2011 to 2015, six times faster than inflation.

Medicare enrollees’ average out of pocket costs per brand name drug rose from $161 to $225 in that time period, an increase of 40 percent.

The report comes as the Trump administration is ramping up efforts to fight high drug prices. Democrats, though, have criticized the administration’s proposals for being too soft on drug companies and leaving out more sweeping ideas like allowing Medicare to negotiate drug prices.

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