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Drug Prices Already Rising Under New Medicare Plan

by Jessica Azulay

June 22, 2006 – Now that millions of seniors are locked into Medicare’s new private prescription drug plans, an analysis released this week found that prices for medication sold through the plans rose in just the first five months.

Families USA, a liberal healthcare-reform group critical of the Medicare Part D program, evaluated prices charged by the private companies administering the program for the 20 drugs most-often prescribed to seniors. Comparing prices reported by the companies in November, when seniors began enrolling in the program, to prices the next April, researchers found that nearly all companies raised rates for the majority of the medications studied.

"At the same time that the Bush administration and congressional leaders are touting the effectiveness of the Medicare drug plans, those plans are quietly raising the prices that they charge," said Ron Pollack, executive director of Families USA, in a press statement announcing the study. "As a result, seniors will pay more and more – as will America’s taxpayers."

Peter Ashkenaz, a spokesperson for Medicare, told reporters that many seniors were insulated from the cost increases because they enrolled in plans with flat co-pays.

Among the key findings: all of the plans raised prices for the cholesterol-lowering drug Zocor, nearly 99 percent upped costs for the osteoporosis medication Fosamax, and more than 97 percent increased charges for Lipitor, another cholesterol-lowering drug.

At least half the drugs studied went up in price by 3.7% or more

More than nine out of ten companies raised prices on Actonel for osteoporosis, Toprol XL for high blood pressure, Xalatan for glaucoma, Clebrex for pain, Nexium for gastrointestinal problems, Norvasc for heart problems, and Aricept for Alzheimer’s symptoms.

At least half the drugs studied went up in price by 3.7 percent or more, and of the 2,202 Medicare-plan prices analyzed, more than 88 percent rose, while only 7.6 percent fell.

While the companies involved in the Medicare program are free to change their prices at any time, seniors and people with disabilities enrolled in the plan are not able to switch between companies to get better rates.

Since Congress explicitly forbade Medicare from negotiating with pharmaceutical companies for lower prices, Families USA also compared drug prices under Medicare to those under the Department of Veterans Affairs (VA) health plan, which is allowed to bargain with drugmakers for lower prices.

Zocor cost over $1,200 per year under the Medicare plan with the best rates for that drug, while the VA paid just over $127 for the same amount. Fosamax, under the cheapest Medicare price, went for nearly $730, while the VA got the medication for just under $463.

The study found that all of the 20 most frequently prescribed drugs for seniors cost more under the lowest Medicare price than the VA’s price.

Of the 2,202 Medicare-plan prices analyzed, more than 88% rose; only 7.6% fell

A separate report put out by the senior advocate AARP this week found that prices for the most widely used 193 brand-name medications by seniors rose about 6.2 percent over the last year, almost twice the rate of general inflation.

The Families USA study also compared the Medicare Part D price increases to wholesale price changes by pharmaceutical companies and found that in almost all cases, they were parallel.

"This means," said Pollack, "that Part D plans are doing essentially nothing to contain the fast-rising prices by the drug industry."

The group did not report whether the prices paid by the VA went up during the same period.

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The NewStandard ceased publishing on April 27, 2007.

This News Report originally appeared in the June 22, 2006 edition of The NewStandard.
Jessica Azulay is a staff journalist.

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