High Drug Prices Said Pressuring US Medicare

26.07.2016 -

Drugmakers who supply Medicare, the US health insurance for the elderly, are raking in billions of dollars for “pricey medications” at taxpayer expense, a report by the news agency Associated Press said provocatively, citing “government numbers”

A report by the US government’s accounting bureau, Office of the Actuary, said the cost of Medicare's catastrophic illness prescription coverage leapt forward 85% in three years from 2013 to 2015 from $27.7 billion to $51.3 billion  Two hepatitis C treatments, Harvoni and Solvadi – both manufactured by biopharmaceuticals producer Gilead – ran up costs of nearly $7.5 billion in 2015, double the 2013 figure.

The pharmaceutical industry has questioned the government’s numbers, saying they overstate costs because they don't factor in manufacturers’ rebates; however, drugmakers have come in for heavy criticism recently, in particular during the presidential campaign. Rebates for individual drugs, which are not disclosed, reportedly averaged nearly 13% across the entire program in 2013 and were estimated at about 17 percent for 2015.

Most of those who benefit from Medicare's catastrophic illness coverage, originally designed to protect retirees with multiple chronic conditions from the cumulatively high costs of taking many different pills, pay 5% of the drugs’ costs after spending $4,850 of their own money. With some drugs now costing more than $1,000 per pill, that threshold can be crossed quickly, AP noted.

Medicare spending for Harvoni and Sovaldi more than doubled from 2014 to 2015, rising nearly $7.5 billion in 2015, the US figures show. Harvoni topped the list of Medicare's high-cost drugs in 2015, Sovaldi in 2014. Revlimid, a cancer drug made by biotech company Celgene surpassed $1.7 billion in catastrophic costs in 2015 and was second most expensive in that year behind Harvoni.

Fifth most expensive prescription drug was Novartis’ Gleevec, a breakthrough treatment for leukemia launched in 2001. It cost Medicaid more than $1 billion in 2015, up 54% against 2013.

According to AP, catastrophic illness spending accounted for 37% of Medicare's total drug cost of nearly $137 billion in 2015. But as only about 9% percent of beneficiaries reached the reimbursement threshold, their drug costs jumped by 46 % between 2013 and 2015.

The US Congress has threatened to clamp down on drugmakers seen as overpricing their products, as this is seen as burdening the largely taxation-financed benefits program. Presidential candidates as well as the Obama administration have proposed giving Medicare legal authority to negotiate prices.