- Price growth for top drugs covered by Medicare Part D has outpaced inflation, according to a new AARP report.
- The 25 drugs studied have increased by an average of 98%, or nearly doubled, since entering the market.
- The findings highlight the importance of letting Medicare negotiate drug prices, according to AARP.
List prices for the top 25 prescription drugs covered by Medicare Part D have nearly doubled on average since they first came on the market, according to a new AARP report.
Moreover, that price growth has often exceeded the rate of inflationaccording to the interest group, which represents Americans age 50 and over.
The analysis comes as Medicare now has the ability to negotiate prescription drug costs after the Inflation Reduction Act was signed into law by President Joe Biden in 2022.
Notably, only certain medicines are eligible for these price negotiations.
In August, the Biden administration released a list of first 10 drugs to be included, which could provide an estimated $6 billion in net savings to Medicare by 2026.
The Centers for Medicare & Medicaid Services is scheduled to announce on February 1 list of 15 Part D drugs selected for negotiation for 2027.
AARP studied the top 25 Part D drugs as of 2022 that are not currently subject to Medicare price negotiation. However, there is a “fairly strong likelihood” that at least some of the drugs on that list could be selected in the second line of negotiations, according to Leigh Purvis, director of prescription drugs at AARP.
These 25 drugs have increased by an average of 98%, or nearly doubled, since entering the market, the research found, with lifetime price increases ranging from 0% to 293%.
Price increases that took place after the drugs went on the market were responsible for a “substantial portion” of the current list prices, AARP found.
The top 25 treatments have been on the market an average of 11 years, with timelines ranging from five to 28 years.
The results highlight the importance of letting Medicare negotiate drug prices, as well as having a mechanism to counter annual price increases, Purvis said. According to the Inflation Reduction Act, pharmaceutical companies must also be punished for price increases that exceed inflation.
Notably, a new $2,000 annual cap on Part D prescription drug costs goes into effect this year. Beneficiaries will also have the option of spreading these costs over the year, rather than paying all at once. Insulin has also been capped at $35 per month for Medicare beneficiaries.
More from Private Economics:
Maximize your 401(k) plan in 2025 with higher limits and catch-up contributions
Here are changes retirees will see from Social Security and Medicare in 2025
Biden withdrew plans for student loan forgiveness. There is still debt consolidation
Those caps help people who previously spent upwards of $10,000 a year on cost-sharing for Part D prescription drugs, according to Purvis.
“The fact that there’s now a limit is incredibly important to them, but then also really important to everybody,” Purvis said. “Because everyone is just one very expensive prescription away from needing that cap.”
The new law also expands one extra helper program for low-income Part D beneficiaries.
“We hear about people having to choose between splitting their pills to make them last longer, or between groceries and filling a prescription,” said Natalie Kean, director of federal health policy at Justice in Aging.
“The cost and prescription pressures are real, and especially for people on low incomes, trying to just make ends meet,” Kean said.
When the new changes take effect, retirees should notice noticeable differences when they fill their prescriptions, she said.
