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Medicare and Prescription Drug Costs-Part VII of a VII Part Article

(3/3/17)- The median drug-price increase from January 2016 to January 2017 was 8.5%, according to a recent report from Raymond James & Co., an investment firm. Please keep in mind that Janet Yellen, who heads the U.S. Federal Reserve, and her fellow members of the board of the Federal Open Market Committee (FOMC) are hoping to see the rate of inflation this year rise to 2%.

The pharmaceutical industry raised the U.S. list prices of 2,353 prescription drugs in that time frame, which was about 25% fewer than did it the prior year, according to that Raymond James report.

Johnson& Johnson announced that it had raised the list price of its medications by an average of 8.5% last year, and by 3.5%, after discounts in its health products..

These numbers are part of what J&J calls its U.S. Transparency Report for the company’s Jansen prescription drug subsidiary. The company did not give an individual product breakdown in the report.

(1/29/17)- Merck & Co. released figures on its website showing the average list price increase of its drugs and vaccines varied from 7.4% in 2010 to 9.6% last year. The average price increase was in its net price, which reflected the discounts the company gives its insurers.

The company did not give pricing for its individual drugs for its 72 products.

Merck said that it intends to update this data every January. The company stated that the average discount for its products rose to 40.9% in 2016 from 27.3% in 2010.

(1/11/17)- Johnson & Johnson said it would release a report in February showing how much it has raised the U.S. price of its prescription drugs because of the loud outcry from consumers and their advocates about the excessive increase in drug prices.

The report will give the average increase in the list prices for all the company’s drugs in the U.S., as well as their average price after the company gives its discounts from the listed price

Officials of the company stated that the report will show that J&J spends more on research than marketing, and about two-thirds of its sales growth comes from selling more medications, rather than from raising prices. 

(7/16/16)- The politicians talk about reducing the costs of pharmaceuticals, but the reality of the situation shows that the exact opposite is happening.

Drug prices rose 9.8% from May 2015 through May 2016, according to statistics from the Bureau of Labor Statistics Producer Price Index This was the second highest increase among the 20 largest products and services tracked in the survey. The highest increase was in the investment service industry.

(4/18/16)- Total spending on prescription drug in the U.S. rose 12.2% to $425 billion, according to a report from IMS Health Inc . That represents a decline from the 14.2% rise the year before, and is based on pharmaceutical retail prices.

IMS estimated that after rebates and other price breaks, pharmaceutical companies received $309 billion for their drugs last year, up 8.5% from 2014

The average patient share of the cost for a brand-name drug filled through a commercial health-insurance plan was $44 per prescription in 2015.

Harvoni, the hepatitis C drug from Gilead Sciences was the top selling drug in the U.S., with $14.3 billion in sales before discounts. AbbVie’s Humira and Amgen’s Enbrel, which treat arthritis were the second-and third-highest selling drugs, respectively.

(3/10/16)- A new report from the Department of Health and Human Services (HHS) estimated that prescription drug spending in the U.S. totaled $457 billion in 2015,or 16.7% of spending on personal health care services. Previous estimates were lower because they did not include spending for drugs administered in hospitals or in doctors’ offices.

About $328 billion (72%0 was for retail drugs, and about $128 billion (28%) was for drugs provided in hospitals and doctors’ offices.

(1/13/16)- Total prescription-drug spending rose 12.2% in 2014, up from the 2.4% growth in 2013, according to figures from the Centers for Medicare and Medicaid Services. The high cost of new drugs coming into the marketplace was one of the leading reasons for this large percentage increase. Drugs that are effective in fighting a diseases such as hepatitis C is an example of a drug that is effective, yet costly.

New drugs that utilize the body’s own auto-immunological system are an example for this increase.

Pfizer Inc. raised list prices an average of 10.6% for more than 60 branded drugs with annual U.S. sales of at least $10 million, according to an analyst at Deutsche Bank. Taken together with the increase in premiums and deductibles under prescription drug plans, this does not bode well for the U.S. consumer.

(3/15/13)- Spending for prescription drugs continues to slow down, according to the latest figures from Express Scripts Holding Co. To see how sharp the slowdown is compared to previous years, please see our item dated 4/28/10 below.

The numbers in the report reflect the spending for drugs by its members, but since Express Script is the largest pharmacy benefits manager in the country, it does cover the spending habits of its substantial membership numbers.

Spending on traditional drugs slipped 1.5% last year-the first ever decline in two decades of tracking the data.

Spending on specialty drugs, which treat specific illness, such as cancer, grew 18.4% last year.

Total drug spending grew 2.7% last year, since more money is spent on traditional drugs than on specialty drugs. Drugs for inflammatory conditions such as rheumatoid arthritis made up the costliest specialty category last year, with spending up 23%. Abbott Laboratories spin-off company AbbVie's arthritis drug Humira saw an increase of 17% to $9.27 billion in sales last year.

(8/24/11)- When prescription drug coverage was created for Medicare eligible beneficiaries, Congress determined that the individual insurers could bargain for lower prices for drugs than could the federal government. The data from a recent study that was required under the new health care law passed in 2010 showed that this was not true.

The data from the report, from the inspector general of the Department of Health and Human Services found that when rebates are included, spending on 100 widely used brand name drugs resulted in reduced costs of 19% in Medicare, while it was reduced by 45% in Medicaid.

Federal law specifies how the rebate is calculated under Medicaid. Under the law drug companies must pay additional rebates to Medicaid if a drug's price rises faster than general inflation. The inspector general, Daniel R. Levinson, found that the added rebates accounted for slightly more than half of all rebates paid to Medicaid on the top 100 drugs

"The inflation-based additional rebate is the primary reason Medicaid rebates are substantially higher" than Medicare rebates said Mr. Levinson.

About 50 million beneficiaries receive their drug coverage through Medicaid while about 30 million beneficiaries receive drug coverage through Part D of Medicare.

(12/16/10)- One of the reasons why the drug companies draw the public's animosity is because of their abuse of their pricing structure in connection with the "Average Wholesale Price" (AWP) used to determine the cost of various drugs for Medicare and Medicaid patients.

Time and time again, an inflated price is used in setting the AWP reimbursement price for the government. Once confronted by a governmental investigation, the companies settle the case and walk away without being criminally prosecuted.

In the latest example of this abuse, 3 drug companies agreed to pay a total of $421 million to settle claims that they overcharged the government for their drugs.

A Florida home-infusion company, Ven-a-Care of the Florida Keys, originally brought the cases as whistleblower suits. The government then joined the suits under the qui tam provisions of the False Claims Act, which allows whistleblowers to share in any proceeds that the government may recover as a result of their information.

As part of these settlements, Ven-a-Care will receive $88.4 million. The company's principals have already received several millions of dollars as a result of some of their prior whistleblower suits.

Abbott Laboratories Inc. will pay $126.5 million as its part of the settlement, Roxanne Laboratories Inc., will pay $280 million, and B. Braun Medical Inc., will pay $14.7 million.

The new health care law passed in 2010 provides for extra incentives for whistleblowers to report fraud and misdeeds by the pharmaceutical industry, and the law also provides for criminal penalties against the offenders. The big question will be if the criminal penalty clause will actually be utilized.

(4/28/10)- Prices for brand-name drugs rose 9.1% last year, the biggest increase in at least a decade, according to Express Script data. Express Script is one of the largest prescription benefits managers, and releases an annual-drug trend report.

The increase for specialty drugs, which includes biotech products, was 11.5% in 2009. The price increase had been 7.4% for traditional drugs in 2008, and 9.4% for specialty drugs.

According to figures from the investment banking firm Credit Suisse, which tracks the pricing of brand-name drugs made by the largest U.S. manufacturers, wholesale prices went up 7.8% in the first quarter of this year, compared to last year.

Under the terms of the new health-care legislation passed this year, drug companies, starting in 2011, will reduce by 50% the price paid by Part D card holders for drugs that fall into the "doughnut hole" category.

For our other articles in this series please see:
Medicare and the Cost of Prescription Drugs-Part I
Medicare and the Cost of Prescription Drugs-Part II
Medicare and the Cost of Prescription Drugs-Part IIa- Medicare and Medicaid Drug Spending
Medicare and the Cost of Prescription Drugs- Part III- HMOs and PBMs
Crossing the Border to Obtain Cheaper Prescription Drugs-Part IV-Importing drugs from outside the U.S.
Prescription and Generic Drug Costs- Part V
Medicare and the Cost of Prescription Drugs- Part VII

For a related article on the new prescription drug discount cards:
The New Medicare Prescription Drug Discount Cards

FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing Home

By Allan Rubin and Harold Rubin, MS, ABD, CRC, Guest Lecturer
updated March3, 2017

To e-mail: hrubin12@nyc.rr.com or allanrubin4@gmail.com

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