In 2006, when the government began offering prescription drug coverage for seniors through Medicare Part D, the goal was to increase utilization of prescription drugs by the elderly who may not have been able to afford them before, and also to lower the average price of these drugs. The idea was that insurers—representing all the new Medicare Part-D recipients—would be able to use the clout of having this huge market to negotiate price discounts with pharmaceutical companies.
Studies since then—like this one from The Annals of Internal Medicine—have found that Medicare Part D “appears to have led to modest savings and modest increases in drug use by older people.” With a new provision coming from the Affordable Care Act that aims to help “fill the donut hole” that seniors experience in coverage, these effects should be heightened.
But two new studies have revealed some unintended consequences of Medicare Part D. According to an AARP Rx Price Watch report released today, the retail prices for some of the most popular brand-name drugs sold to seniors increased 41.5% over the last five years, while the consumer price index rose only 13.3%. For example, the drug Flomax (which began facing generic competition this year and is usually prescribed for incontinence due to prostate problems), had the biggest price jump, climbing 24.8% in 2009. Over the past five years, Flomax increased in price by an alarming 92%. Other popular name brand drugs that experienced sharp price increases over that time span include the respiratory drug Advair (40%), the Alzheimer’s drug Aricept (40%), Nexium (28%) and Lipitor (24%)
Granted, some 75% of prescriptions are filled generically and some have actually decreased in price in the last few years. But the AARP report found; “For those taking drugs for a chronic condition, the average retail cost of brand-name medications in 2005—the year before Medicare Part D was implemented—was $1,049. By 2009, that had jumped about 32 percent to $1,382.”
Another unintended consequence of the Medicare Part D benefit is a rise in the overuse—or rather the inappropriate use—of antibiotics by seniors. In an article that appears in the Aug. 9 Archives of Internal Medicine, researchers looked at more than 35,000 Medicare beneficiaries and found that the drug benefit was having a beneficial effect on the treatment of pneumonia—a common illness that can be very serious in seniors. Those with Medicare Part D experienced triple the rate of antibiotic treatment when compared with those who previously lacked drug coverage. The authors conclude, “Given the high mortality associated with community-acquired pneumonia among the elderly, the finding that changes in drug coverage improve the likelihood of treatment is encouraging.”
But the study also unearthed a more troubling finding: “[W]e also found increases in antibiotic use for other acute respiratory tract infections (sinusitis, pharyngitis, bronchitis and non-specific upper respiratory tract infection) for which antibiotics are generally not indicated,” the authors conclude. “Our findings suggest that changes in drug coverage among the elderly may exacerbate problems with antibiotic overuse.”
Antibiotic use increased among older adults with Part D (as compared with before they had coverage), with the largest increases in prescriptions occurring for newer, broad spectrum drugs that can cost up to $30 per day, versus just $1 per day for basic penicillin. This is a problem for two reasons. First of all, inappropriate use of antibiotics is a major factor in the troubling emergence of antibiotic-resistant bacteria, especially the type that are spread throughout hospitals. Secondly, the tendency for doctors to prescribe newer, more expensive antibiotics—at times inappropriately—drives up Medicare costs at a time when austerity is the word of the day.
What are the lessons from these two new studies? Medicare Part D has been a godsend for many seniors—allowing them access to drugs that they otherwise might not be able to afford. But the benefit has also led to overuse of medications and unsupportable price increases in name-brand drugs. The AARP is calling “for action by Congress and the drug industry to bring more competition and transparency to the marketplace.” One place to start is to allow Medicare to more aggressively negotiate with drug companies on prices for name-brand drugs. In the case of the overuse of antibiotics—the authors of the Annals study suggest greater cost-sharing by Medicare recipients when their doctors write prescriptions for antibiotics to treat colds or other conditions when their use is unwarranted.
There is no practical way for Medicare to “negotiate” prices with drug companies that have patented drugs. I recently ran a test of 4 pretty expensive drugs using the CMS Plan Finder. The average consumer cost of this drug list was $4,600 with a low-to-high spread of $35. I was astounded to find that the consumer will pay very nearly the same price for a given set of drugs regardless of the Part D plan they choose. The premium makes a huge difference.
Mike
The comment by Mike, especially in his first sentence, is pretty startling. The VA negotiates prices for its beneficiaries and saves them (and taxpayers) a bundle. http://www.ncpssm.org/news/archive/vp_pricenegotiation/
Price Negotiation Would Dramatically Lower the Cost of Prescription Drugs for Medicare Beneficiaries
http://www.familiesusa.org/assets/pdfs/PDP-vs-VA-prices-special-report.pdf
Falling Short: Medicare Prescription Drug Plans
Offer Meager Savings
http://www.medpagetoday.com/PublicHealthPolicy/Medicare/12631
Democrats Introduce Bill to Let Medicare Negotiate Drug Prices
(of course, Obama squelched that in his behind-closed-doors-smoke-filled-room negotiations and cave-in to the pharma industry, using his best Dick Cheney imitation).
Universal digital health records will, I hope, begin to attack the problem of inappropriate medication. If the docs know that their prescriptions will be compared to their diagnoses they may be more careful.
Naomi wrote:
Medicare Part D has been a godsend for many seniors – allowing them access to drugs that they otherwise might not be able to afford. But the benefit has also led to overuse of medications and unsupportable price increases in name-brand drugs.
Part D is also a very expensive benefit, in itself.
Part D Is similar to Part B in their funding.
Neither part is prefunded like Part A, and premiums for the coverage are paid 25% by the participants and 75% by general revenues.
There are basically 2 perspectives when it comes to accounting for Social Security and Medicare: the Trust Fund Perspective and the Budget Perspective. From a paper entitled “Social Security and Medicare Trust Funds and the Federal Budget,” it states, “It is important to recognize that the signals of financial stress from the trust fund analysis are much milder than those faced by the federal budget as a whole.
The difference between the two perspectives is most dramatic in the case of the SMI program (Parts B and D).”
http://www.treas.gov/offices/economic-policy/reports/budget_trust_fund_perspectives2008.pdf.
In a paper with the same title , published by the Treasury Department one year later, in 2009, it states: Page 13 – “From the Trust Fund Perspective, SMI is always ‘fully funded.’ From the Budget Perspective, SMI draws huge transfers (because 75% of the expenses are paid from general revenues, which is a current budget expense, my words).
http://www.treas.gov/offices/economic-policy/reports/budget_trust_fund_perspectives_2009.pdf.
Don Levit
A number of cancer patients die of heart failure, brought on by the intense (over-aggressive cocktail) regimes of chemotherapy. Medicare Part D may be helping more older Americans with heart failure get medication used to control the disease. A new study of nearly 7,000 older heart failure patients in a big insurance plan found the number of filled prescriptions for standard heart failure medication increased after Part D began in 2006, and the biggest increase was among seniors who previously lacked drug coverage.
The results, which were reported in the American Heart Journal, are the first to show Part D may help more people with heart failure get meds that are recommended to lower the risk of hospitalization and extend lives.
The study examined records for 6,950 people age 65 and older who were enrolled in a Pennsylvania Medicare managed care plan between 2003 and 2007. In the year before Part D began, 534 plan members had no coverage, and 4,600 had coverage with quarterly caps of $150 or $350. The remaining 1,800 had coverage through an employer or union, with no cap.
Among those who had lacked coverage, the average number of scrips filled each year rose from 13 to 19, and the percentage who filled at least one scrip for a beta-blocker increased from 45% in the two years prior to Part D, to 59% in 2006 and 2007. For a beta-blocker plus an ACE inhibitor or ARB, the percentage rose from 21% to 32%. Plan members who previously had drug coverage with quarterly caps showed smaller increases. The percentage filling a scrip a beta-blocker rose from between 55 and 58% to about 63%.
Julie Donohue of the University of Pittsburgh Donohue said that these findings are consistent with a major goal of the (Medicare Part D) policy, which was to reduce financial barriers to medication access among the elderly.
However, the Medicare Prescription Drug, Improvement, and Modernization Act substantially reduced payment rates for chemotherapy drugs administered on an outpatient basis. Assessement was made how these reductions affected the likelihood and setting of chemotherapy treatment for Medicare beneficiaries with newly diagnosed lung cancer, as well as the types of agents they received.
Contrary to concerns about access, they found that the changes actually increased the likelihood that lung cancer patients received chemotherapy. The type of chemotherapy agents administered also changed. Physicians switched from dispensing the drugs that experienced the largest cuts in profitability, carboplatin and paclitaxel, to other high-margin drugs, like docetaxel.
They do not know what the effect was on cancer patients, but these changes may have offset some of the savings projected from passage of the legislation. The ultimate message is that payment reforms have real consequences and should be undertaken with caution.
The paper was published recently on the online Journal Health Affairs. “How Medicare Payment Cuts For Cancer Chemotherapy Drugs Changed Patterns Of Treatment.” In other words, physicians switched from dispensing the drugs that experienced the largest cuts in profitability to other high-margin drugs.
In regards to cancer medicine (at least) I believe that all these studies showed results that the Medicare reforms are still not working. It is still an impossible conflict of interest. And the existence of this profit motive in drug selection has been one of the major factors working against the individualization of cancer chemotherapy based pre-testing the cancer biology. It is way over time to take medical oncologists out of the retail pharmacy business and force them be doctors again.
I remember once they said that crocodile serum was able to fight cancer or HIV virus(don’t remember exactly) but then I never heard any update in this, has anyone of you heard anything on this?
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Medicare drug coverage has contributed to access many vital drugs, it made things very difficult for people with severe mental illnesses and their treatment providers. Employees were spending their time on more paperwork, the repeated calls to CMS, prescription plans and local pharmacies and find money for co-pays.
Sadly the NHS in the UK doesn’t fund the array of drugs Medicare provides. Healthcare in the US is far more advanced and organised compared to ours