Healthcare Business News

Report could boost effort targeting Part B drug costs

By Rich Daly
Posted: November 13, 2012 - 6:00 pm ET

More than half of the drugs Medicare beneficiaries receive in hospitals and physicians' offices would be subject to price negotiations under proposed legislation, according to a GAO report.

The Government Accountability Office reported (PDF) this week that in 2010 Medicare spent $19.5 billion on Part B drugs, which are generally pharmaceuticals administered by physicians in their offices or hospital outpatient departments. And Medicare beneficiaries were the primary users of at least $11 billion worth of those drugs in 2010, the latest year for which data is available.

The 35 drugs for which Medicare was majority purchaser were most commonly used to treat cancer and its side effects, autoimmune disorders and immunodeficiency, and chronic kidney disease.

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The findings could fuel a push by one of the senators who requested the report—Sen. Herb Kohl (D-Wis.)—to authorize the CMS to negotiate what Medicare pays when it is the majority purchaser.

“This report helps show how expensive these drugs are and the huge potential for savings that could be realized by allowing the government to negotiate the price of Part B drugs,” Kohl said in a written statement when contacted for comment.

Kohl, chairman of the Senate Special Committee on Aging, has held several hearings on the high cost of drugs during the current Congress. He requested the GAO report as part of the “effort to find ways to minimize drug costs without sacrificing the quality of care.”

Kohl introduced the Prescription Drug Cost Reduction Act in October 2011 to authorize price negotiations when Medicare was the majority purchaser of drugs but the measure failed to advance.

The bill also would require drugmakers to provide rebates, such as those provided to the Medicaid program. Democrats have repeatedly urged such drug savings as a primary way to reduce future Medicare cost growth.

The GAO report also found that most of the 55 costliest Part B drugs increased in expenditures, prices and the average annual cost-per-beneficiary from 2008 to 2010. Medicare spending increased for 42 of the 55 most expensive Part B drugs from 2008 to 2010, while it dropped for 12 of them.

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