AcuPartD

Keeping you updated on the latest Medicare and Part D news


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Medicare may be permitted to negotiate prescription drug prices under Trump administration

There has been much confusion about the Trump administration’s vision for heath care in America.  Repeated calls to replace the Affordable Care Act and promises to not dismantle Medicare on the campaign trail are still fresh in American’s minds though Trump has provided few details or proposals. President Trump proposed often that Medicare should be able to leverage its buying power to negotiate better drug prices.  Trump presented this idea often on the campaign trail and recently said the following during a January 11 news conference:

I think a lot of industries are going to be coming back. We have to get our drug industry coming back. Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don’t make them here. To a large extent. And the other thing we have to do is create new bidding procedures for the drug industry because they’re getting away with murder.
Pharma, pharma has a lot of lobbies, a lot of lobbyists and a lot of power. And there’s very little bidding on drugs. We’re the largest buyer of drugs in the world, and yet we don’t bid properly. And were going to start bidding and were going to save billions of dollars over a period of time.

Medicare is currently not permitted to participate in the negotiation of drug prices between pharmaceutical companies and insurance companies that provide Part D prescription drug plans.  Many experts believe negotiating the prices of prescription drugs could save Medicare billions though the only government report on the subject, completed in 2007 by the Congressional Budget Office, found the effects would be insignificant.

Trump has seemed to walk back some of his previous campaign rhetoric on this subject and recently told a group of pharmaceutical executives that he would “…oppose anything that makes it harder for smaller, younger companies to take the risk of bringing a product to a vibrantly competitive market.  That includes price fixing by the biggest dog in the market – Medicare – which is what’s happening.”  White House spokesman Sean Spicer has since clarified that Trump does support Medicare negotiating prescription drug prices.

NPR story by Allison Kodjak


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CMS reports that Medicare Part D rebates to insurers not passed onto government, beneficiaries

CMS reported this week that despite pharmacies and drug companies paying higher rebates to insurers over time, the savings are infrequently passed on to government health programs and beneficiaries.  The growth in rebates from drug makers to insurers has far outpaced the growth in Medicare Part D drug costs since 2010, the CMS report shows. This has helped private insurers in Part D keep costs down, but it is not translating to lower costs for consumers. In some cases, it has resulted in more drug costs being shifted to the government.

The full report can be found here.


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CMS Medicare Drug Spending Dashboard Updated with CY2015 Data

This week, CMS updated their interactive Medicare Drug Spending Dashboard with data from 2015.  The online tool provides users with Part B and Part D spending information for drugs with high spending on a per user basis, drugs with high overall spending, and drugs with large per unit cost increases.  The tool returns relevant spending, utilization, and trend data as well as drug information, manufacturer, and uses in a user-friendly format.

Detailed methodology and the underlying data set are also available for download.

Part D Total Spending, Top 5 Drugs CY2015

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Part D Dashboard Summary for CY2014 and CY2015

# of Drug Products* Total Program Spending Percent of Program Spending
2014 2015 2014 2015 2014 2015
All Drugs 3,761 3,812 $121.5B $137.4B 100% 100%
All Drugs with Total Program Spending >$250M 115 119 $76.7B $88.0B 63% 64%
Top 15 Total Program 15 15 $29.1B $35.6B 24% 26%
Spending Drugs
All Drugs with Annual Per-User Spending >$10K 267 335 $26.2B $37.9B 22% 28%
Top 15 Drugs with Annual Per-User Spending >$10K 15 15 $9.3B $9.2B 8% 7%
All Drugs with Unit Cost Increases >25% 540 538 $13.7B $8.7B 11% 6%
Top 10 Drugs with Unit Cost Increases >25% 10 10 $1.3B $1.4B 1% 1%
All Drugs Included in Dashboard 40 40 $39.7B $46.2B 33% 34%
* Drug Products defined by distinct Brand Name and Generic Name (First Databank), excluding over the counter drugs.


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Many Questions About Trump’s Health Care Policy Remain

For seniors in the midst of Medicare open enrollment, which lasts this year from October 15 to December 7, questions remain about how a Trump presidency will affect Medicare.  The president-elect made clear his intention to repeal the Affordable Care Act throughout his campaign and has since established a page on his website dedicated to his plans to reshape the nation’s healthcare system.  He includes steps to “modernize Medicare” and increase state flexibility with regard to Medicaid.  Trump promised throughout his campaign to leave Medicare untouched, though his campaign seems to be leaving the door open to some reforms.

Pharmaceutical stocks have gained in the days since Trump’s surprise victory over Hillary Clinton last Tuesday.  President-elect Trump continues to call for a replacement to the Affordable Care Act though he has yet to offer a specific plan nor clarified how he plans to combat the rising medication and health care costs for most Americans.  Regardless, any changes have the potential to greatly impact the drug marketplace and the drug price issue is unlikely to go away in the coming years.  During the Republican primary presidential campaign, Trump indicated that he was open to having the federal government negotiate directly with pharmaceutical companies to secure lower prices, as other nations such as Canada do.  It is unclear if this remains part of Trump’s plan or was merely an idea proposed on the campaign trail.


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2016 Medicare Part D Low-Income Subsidy and Plan Performance

Wrapping up our coverage of the recently released Medicare Part D in 2016 and Trends over Time report from the Health Policy Institute at Georgetown University and the Kaiser Family Foundation are findings related to the Low-Income Subsidy (LIS) program and plan performance ratings.

The report found that nearly 3 in 10 Part D beneficiaries receive financial subsidies through the Low-Income Subsidy program.  This number has grown steadily over the past decade, reaching 12 million in 2016.  About two thirds of LIS enrollees  (roughly 8 million) are enrolled in stand-alone PDPs; others are in standard MA-PD plans, Special Needs Plans (SNPs), Medicare-Medicaid plans participating in financial alignment demonstrations, cost plans, or PACE plans.  PDP LIS enrollment has been relatively constant since the program began, but MA-PD plan enrollment has expanded greatly since 2006.

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In 2016, MA-PD plans are far more likely than PDP plans to have 4 or more stars out of a possible 5 stars for the rating factors based on their Part D performance.  The average PDP plan star rating average has fluctuated in recent years while the MA-PD plan average has been increasing steadily.  Both plan types are rated on the same Part D performance factors.

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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 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.

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