Keeping you updated on the latest Medicare and Part D news

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Medicare Part D spending on the EpiPen has increased by 1151% since 2007

A recent report by Kaiser Family Foundation (KFF) examined trends in Medicare spending on EpiPens from 2007 to 2014. KFF found that since Mylan acquired EpiPen from Merck in 2007, prices for a two-pack of EpiPens have increased by almost 550%, from $94 in January 2007 to $609 in May 2016.

The KFF analysis demonstrated that the EpiPen price increases have translated into higher spending fro Medicare Part D plans, enrollees, and program overall, leading to higher cost sharing and higher premiums for consumers. The average out-of-pocket spending by enrollees for each prescription doubled among non-LIS enrollees, from $30 to $56.

The analysis found that Part D spending increased from $7 million in 2007 to $87.9 million in 2014, an 1151% increase. At the same time, the number of enrollees using EpiPens also increased, but at a much, much slower rate, only increasing by 164%, from 80,000 to 211,000 enrollees. KFF 1.PNGOn a per prescription basis, the average total spending increased by 383%, rising from an average of $71 in 2007 to $344 in 2014, a nearly five-fold increase. Compared to the annual growth rate of Medicare overall (per capita), the annual growth rate for total Part D EpiPen spending (per prescription) was significantly higher. For example, in 2014, the annual growth rates were 34% and 8.6% for EpiPen spending and overall Medicare spending, respectively. KFF 3.PNG




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2016 Medicare Part D Benefit Design and Cost Sharing

Last week’s Medicare Part D in 2016 and Trends over Time report from the Health Policy Institute at Georgetown University and the Kaiser Family Foundation found that most PDP and MA-PD enrollees in 2016 were in plans with tiered pharmacy networks, no additional gap coverage, enhanced benefits, 5 tier formularies, and low deductibles.  PDPs and MA-PDs differ in some significant categories though – a much larger percentage of MA-PD enrollees are in enhanced plans and more PDP enrollees are in plans with tiered pharmacy networks.


The report also found that close to 60% of beneficiaries enrolled in PDP plans have plans that offer only the basic benefit. This is down from 83% a decade earlier.  Additionally, about half of all enrollees in 2016, in PDPs and MA-PDs, are in plans that do not charge the Part D deductible.  Tiered pharmacy networks have grown in recent years and are now the new norm in PDP plans.


8915-exhibit-3-13.pngNext week we will conclude this exploration of the Medicare Part D in 2016 and Trends over Time report by digging deeper into the Low Income Subsidy and Plan Performance Ratings.

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2016 Medicare Part D Premiums

Last week’s Medicare Part D in 2016 and Trends over Time report from the Health Policy Institute at Georgetown University and the Kaiser Family Foundation provides a snapshot of Part D in 2016 and trends over the past decade.  A previous post covered Part D enrollment trends from over the past decade.  Part D premiums for most beneficiaries enrolled in PDP plans increased in 2016.  This increase marked the end of 6 years of little change.  As the chart below indicates, MA-PD plans in 2016 continued the recent trend of modest growth.  Close to 50% of beneficiaries in 2016 enrolled in MA-PD plans paid no monthly premium for Part D coverage.8915-exhibit-2-1.png

As might be expected, geography plays a considerable role in Part D premiums.  PDPs offering comparable benefits can vary by as much 6 times the cost, depending on the region.  Even within the same geographic area, there can be large differences in stand-alone PDP premiums.


In the coming days, we will take a closer look at 2016 Medicare Part D benefits, the LIS program, and plan performance ratings.

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Senators want to force drug makers to justify big price hikes

In the first federal legislative response to the Mylan price increase uproar, a bipartisan group of Congress-members introduced a bill aimed at increasing transparency between the public and pharmacy companies.

Senators Tammy Baldwin (D-Wisc.) and John McCain (R-Ariz.) and Representative Jan Schakowsky (D-Ill.) are co-sponsoring the Fair Accountability and Innovative Research (FAIR) Drug Pricing Act in the Senate and House of Representatives, respectively.

The FAIR Drug Pricing Act focuses on creating greater transparency, rather than directly addressing drug prices. The bill would require pharmacy companies to justify any planned price increase greater than 10% to the Department of Health and Human Services at least one month before the intended increase. Companies would have to disclose all non-confidential and non-proprietary information pertaining to the drug of interest, including spending on R&D, manufacturing, marketing and advertising, and profit information.

This bill does not set drug prices, but is intended to increase transparency over why large and unprecedented price hikes will occur. By requiring companies to disclose potential price increases at least one month before they will go into effect, tax payers are given notice of these price hikes and can adjust accordingly.

Due to the bill’s introduction late in the Congressional session, its passage is nearly impossible. However, the point of introducing the bill is to create momentum for future legislation.

As John McCain said, “transparency leads to accountability, and it is past time that mantra applied to the skyrocketing cost of prescription drugs”.

The bill has received support from many organizations, including: American Association of Retired Persons (AARP); the Campaign for Sustainable Rx Pricing (CSRxP); the Medicare Rights Center; Consumer Union; Doctors for America: Drug Price, Value, and Affordability Campaign; Families USA; Center for Medicare Advocacy, Inc.; and Public Citizen.

Bill Overview

USA Today Article


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2016 Medicare Part D Enrollment Trends

A report published today by the Health Policy Institute at Georgetown University and the Kaiser Family Foundation exploring the current state of Medicare Part D and trends over the last decade presents a number of interesting findings.  The percent of beneficiaries enrolled in a Part D plan has increased from 52% in 2006 to 71% in 2016.  The chart below presents a high level view of current Part D  enrollment.8915-exhibit-s-1.png

A closer examination of 2016 Part D enrollment data reveals that the three largest Part D sponsors, UnitedHealth, Humana, and CVS Health, account for 52% of enrollees.  The ten largest sponsors have enrolled 80% of Part D beneficiaries.  The average Medicare beneficiary ha 26 PDP plans available in 2016, the lowest amount in the past ten years.  On average, there were 16 MA-PD plans available to beneficiaries, a number that has remained relatively stable since 2011.


A closer look at 2016 Part D premiums, benefits, the LIS program, and plan performance ratings will be covered in the coming days.


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Avoidable Hospital Readmissions Down Nationwide, According to CMS Data

The Hospital Readmissions Reduction Program, implemented as part of the Affordable Care Act, was implemented to reduce preventable hospital  readmissions for targeted conditions by adjusting payments for hospitals with higher than expected rates. CMS has additional quality improvement initiatives in place, including Partnership for Patients which seeks to improve care for beneficiaries as they change health care settings.  Hospital readmissions are expensive and can be an indicator of poor quality care.  Discharging patients with the proper medication, instructions for follow-up care, and clear instructions are simple steps that can reduce preventable hospital readmissions.

Newly released data from CMS indicates that these and other measures are proving effective, evidenced by a significant reduction in the number of Medicare beneficiaries readmitted to hospitals in the 30 days after being discharged. In fact, the readmission rate fell between 2010 and 2015 in every state and the District of Columbia except for Vermont. The readmission rate declined by 8 percent nationally in the same time period.


CMS Announcement

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Orphan Drugs Used to Treat Common Conditions May Lead to Higher Prices

Though some research indicates that concerns over rising orphan drug costs may be unwarranted, a study conducted by America’s Health Insurance Plans (AHIP) found that orphan drug prices were more likely to rise when the drug was primarily used to treat common conditions – in contradiction to the Orphan Drug Act of 1983 which grants drug manufacturers a period of exclusivity and financial incentives to produce drugs to treat diseases that affect fewer than 200,000 people. The study found that drugs with mostly non-orphan uses had greater price increases than drugs prescribed almost always for their rare disease indications.

Orphan drugs are vital for patients suffering from rare conditions and the Orphan Drug Act has greatly incentivized the development of new drugs. The AHIP study ultimately finds that “A proper balance has to be struck between ensuring that the incentives remain for those firms focused on developing these very important, and much needed orphan disease therapies; while not allowing the Act to be exploited purely for financial gain.” The FDA recently noted that they are continuing to receive increased numbers of applications for orphan drug designations from drug makers. As prescription drug costs, and health care costs across the board, continue to rise sharply, more scrutiny of the orphan drug program may be inevitable.