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1. The total cost of medications covered by Medicare Part B increased 42% from 2012-2016.
2. The total cost of medications covered by Medicare Part D increased 71% from 2012-2016.
3. Medicare’s total cost for everything they covered those years increased by far less; only 18% from 2012-2016, meaning that medication costs alone have accounted for a substantial portion of the rising cost of Medicare.
4. Only 20 of the more than 400 medications covered by Part B and 100 of the more than 2,000 medications covered by Part D were responsible for nearly 60% of the total medication costs for both programs.
5. A major reason so few medications are costing Medicare so much is that the providers and pharmacy benefit managers who select these medications are paid more to select more expensive medications.
Two separate divisions of Medicare cover medications. Part D covers prescription drugs (which people usually buy at retail pharmacies and take at home) and Part B (which covers most other outpatient costs) covers the majority of the medications administered at a doctor’s office, infusion clinic or a nursing home. Typically, vaccines administered at a doctor’s office would be covered by Part B benefits whereas those received in a pharmacy would be covered by Part D.
Other examples of medications covered by Medicare Part B include infusions of cancer chemotherapy, infusions that treat rheumatological conditions like Rheumatoid Arthritis or Lupus (SLE) and eye injections given by an ophthalmologist to treat certain retinal problems. Medication costs for each division are handled somewhat differently so I’ll begin by addressing Part B medication costs.
Medicare Part B Medication Costs
The total spent for all medications covered under Medicare Part B was $109.8 billion from 2012-2016. Although an average of about 450 separate medications were covered by Part B benefits each of those years, $64.5 billion, or about 59% of that total spending went toward the administration of just 20 different medications.
The following graph shows these expenditures for each of those years:
Figure 1: Totals spent on all medications covered by Medicare Part B increased 42%, from about $18 billion in 2012 to nearly $26 billion in 2016. The green part of the bar indicates the amounts spent each year on the 20 most expensive medications covered.
Even though the 20 most expensive drugs covered by Medicare Part B accounted for nearly 60% of Part B medication costs, these medications went to only about 5% of the beneficiaries who were administered medications covered by Part B benefits each year. They also accounted for less than 11% of the total medication claims covered by Part B benefits during those years. The following figure shows this:
Figure 2: The annual proportion of Medicare Part B medication cost vs. the proportion of medication claims for these drugs and total beneficiaries who received medications covered by Part B.
The Part B Seven
Going further, the seven most expensive medications covered by Medicare Part B from 2013-2016 are summarized in the following table:
|Total Spent From
|Neulasta||Low White Blood
|Total for all Seven
|Total Part B Spent
on All Medications