The Cost of Brand Name Medicine Is Rising Sharply: Medicare Part D Plans Are Failing to Keep the Costs Down

The price of brand name drugs rose by 3.9 percent in the first three months of 2006. According to a report from AARP, this is the largest quarterly increase since 2ooo. This jump in price was four times the rate of general inflation over the same period (New York Times, 6/21). This increase in wholesale drug prices has already resulted in higher insurance premiums and will almost certainly mean higher retail costs for consumers.

Families USA, a patient advocacy group, analyzed the cost of 20 of the drugs most frequently prescribed to seniors. The study found that for 19 of these drugs Part D plan prices were virtually identical to the Average Wholesale Price. This places a burden not only the seniors who are enrolled in Part D plans but also on taxpayers who pay approximately three-fourths of the costs of the program.

The legislation which created Medicare Part D prohibits Medicare from negotiating with the pharmaceutical companies for lower drug costs. The presumption was that competition among the private Part D plans, which can negotiate with the drug companies, would keep drug costs down. This is a tactic appears to be a costly failure.

The Veteran's Administration which does negotiate with the drug manufacturers paid much lower prices the Part D plans. The lowest VA price for a year's supply of the cholesterol drug Zocor was $127 compared with $1,275 for the lowest Medicare drug plan price.

To lean more about Families USA go their website www.familiesusa.org. AARP can be found at www.aarp.org.

Created 6/28/06