Drug spending for some Medicare beneficiaries has increased at an alarming rate, a new federal report finds.
Federal payments for Medicare Part D catastrophic coverage exceeded $33 billion in 2015, which is more than triple the amount paid in 2010, according to an HHS Office of Inspector General report released Thursday.
The catastrophic drug benefit under Medicare Part D is meant to cover costs for beneficiaries with chronic conditions who quickly rack up high drug expenses. The coverage kicks in after beneficiaries spend $4,850 out of pocket.
After that, taxpayers pay for 80% of the cost of medications. The beneficiary pays 5%, and insurers pay the remaining 15%.
About 8.7% of Medicare beneficiaries trigger the catastrophic drug coverage clause. Of the 41 million enrollees in Part D in 2015, only 3.6 million needed it. However, that figure is a 53% jump from the enrollees with catastrophic coverage in 2010.
By 2015, high-price drugs were responsible for almost two-thirds of the total drug spending in catastrophic coverage. That's a huge increase from 2010, when high-price drugs were responsible for one-third of the spending, the OIG report found.
The two most expensive drugs were Harvoni, which treats hepatitis C and costs catastrophic enrollees an average of $33,000 a month, and Revlimid, a blood cancer medication which costs more than $11,000 a month.
The federal watchdog suggested that the CMS needs to more closely regulate Part D. One idea is restructuring the program so that Part D plans have more incentives and opportunities to lower costs. Another is revising the law to allow HHS to negotiate prices for certain drugs.
It's unclear how Capitol Hill will respond to the report. A GOP Hill staffer said some legislative action on drug pricing could take place when Congress reauthorizes the Prescription Drug User Fee Act, or PDUFA, which allows the Food and Drug Administration to collect fees from drug companies to give them the resources, such as staffing to expedite approval of new therapies. Fees can range from $500,000 to $1 million.
The PDUFA must be reauthorized every five years, and is set to end in September 2017. Since it's a must-pass bill, some see it as a possible vehicle for legislation to curb rising prescription drug prices, he said.
However, the struggle lawmakers face is how to ensure access to drugs and solvency of the Medicare trust fund, while at the same time not discouraging the creation of innovative products.
President-elect Donald Trump's HHS secretary pick, Rep. Tom Price (R-Ga.), has sent out mixed signals on his interest in reining in drug spending for the Medicare program.
He led opposition to a recently canceled payment model that aimed to cut drug spending under Medicare Part B. He said the CMS didn't receive enough stakeholder feedback, and that the agency focused too much on lowering spending without ensuring access to drugs when developing the initiative. On the other hand, he has also said he'll prioritize ways to reduce spending in the Medicare program.