Kaiser Family Foundation Report Finds Drug Prices Increased Faster than Inflation
A recent report from the Kaiser Family Foundation found that drug prices increased faster than inflation for half of all drugs covered by Medicare in 2020. The analysis is based on changes in unit prices reported in the drug spending data released by the Centers for Medicare and Medicaid Services (CMS) through 2020.
For Part D, prices are based on total gross spending, including Medicare, plan, and beneficiary spending, but not reflecting manufacturer rebates and discounts to plans because they are considered proprietary and therefore not publicly available. For Part B, prices are based on total spending, including beneficiary liability and Medicare’s payment, which is based on the average sales price; this measure takes rebates and discounts into account.
According to the analysis, 50% of 3,343 drugs under Part D and 48% of 568 drugs covered under Part B had price increases greater than the 1% inflation rate from July 2019 to July 2020. Of the Part D drugs, 17% increased more than 7.5% in that time frame while 18% of Part B drugs increased more than 7.5%. Of the 568 Part B drugs, 46% experienced a price reduction while 41% of the 3,343 Part D drugs experienced a reduction in price.
Across all Part D drugs with price increases greater than the rate of inflation, the median price increase was 5.6%; for Part B, the median price increase was 5.4%.
When it comes to drugs with the highest total spending, 23 of the top 25 Part D drugs and 16 of the top 25 Part B drugs had price increases above the rate of inflation between 2019 and 2020.
Among the 25 drugs covered by Medicare Part D with the highest total gross spending (excluding any rebates), 23 had price increases greater than inflation in 2020. The top 3 drugs by total gross spending in 2020 were: Eliquis, a blood thinner used by 2.6 million beneficiaries in 2020, with a 5.9% price increase; Revlimid, a treatment for multiple myeloma used by nearly 44,000 beneficiaries in 2020, with a 6.5% price increase; and Xarelto, a blood thinner used by 1.2 million beneficiaries in 2020, with a 4.1% price increase.
Among the 25 drugs covered by Medicare Part B with the highest total spending, 16 had price increases greater than inflation in 2020. This includes 2 of the top 3 drugs by total spending in 2020: Keytruda, a cancer treatment used by nearly 59,000 beneficiaries in 2020, with a 3.3% price increase in 2020; and Prolia, a treatment for osteoporosis used by nearly 600,000 beneficiaries in 2020, with a 4.7% price increase in 2020.
In concluding its report, the Kaiser Family Foundation notes that barring any Congressional action on prescription drug proposals, rising drug prices are likely to continue to pose affordability challenges for many people, especially in the current high inflation period.