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%)