Medicare Drug Benefit Boosts Pharmaceutical Use - Pharmaceutical Technology

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Medicare Drug Benefit Boosts Pharmaceutical Use
Expanded access to drugs for seniors has increased demand and focused attention on costs.


Pharmaceutical Technology


These stable premiums reflect lower-than-expected plan expenditures, which also have altered 10-year cost estimates for the program. Earlier this year, CBO predicted that outlays for the Medicare drug benefit would be $675 billion from 2007 to 2016, which is $265 billion less than earlier estimates because of plans' lower costs and enrollment.

Still, some seniors in Part D plans do incur high out-of-pocket costs compared with other retiree benefits. More than one-fourth of all seniors report spending at least $100 a month on medications, and 8% dole out $300 or more, according to the Kaiser survey. Individuals facing such costs are more likely to ignore or drop a prescription, especially for chronic conditions.

As Part D participation rises, program spending is sure to accelerate. Greater spending will inspire more aggressive utilization management and cost sharing by Part D plans and increased demand for cost-effectiveness information from manufacturers. The coming years promise rising premiums and cost sharing for beneficiaries, increased Congressional scrutiny of plan benefits and costs, sharper focus on drug prices in shaping formulary listings, and more competition from generics in important therapeutic categories. Even without federal price controls or a national formulary, Medicare Part D will set the tone for coverage and payment decisions throughout the US market, which in turn will shape pharmaceutical research and development and manufacturing strategies.

Jill Wechsler is Pharmaceutical Technology's Washington editor, 7715 Rocton Ave., Chevy Chase, MD 20815, tel. 301.656.4634,


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