The EpiPen, the latest example in extreme drug price hikes, has not only led to Congressional hearings and outrage over price gouging, but is raising new questions as to why so many older adults are getting prescriptions for the drug in the first place. At the same time the cost of the EpiPen dramatically increased from $94 in January 2007 to $609 in May of 2016, the total number of Medicare beneficiaries to whom the pens were prescribed ballooned by 164%. As a result, Medicare spending on EpiPens rose by 1,151% through 2014, according to an analysis by the Kaiser Family Foundation.
The increase in the number of people getting the drug is unusual because the active ingredient in EpiPens, epinephrine, poses greater risks in older adults. The side effects include chest pain, sudden increase in blood pressure, and irregular heart rhythms that could be fatal in people with certain medical conditions.
Under current law, extreme price hikes, like that for EpiPens, remain perfectly legal because Medicare is prevented from negotiating prices. Spiking drug prices are having a growing impact on Medicare spending as well as retiree household budgets. The Government Accountability Office (GAO) reported that while generic drug prices declined overall under Medicare Part D from 2010 through the second quarter of 2015, more than 300 established generic drugs had similar “extraordinary” price increases of 100% or more. While most of the extraordinary increases were 100% to 200%, 48 were 500% and 15 were 1,000% or higher.
Although most Medicare beneficiaries have prescription drug coverage, the only way insurers can continue to provide coverage when prices spike is by increasing deductibles, raising premiums, shifting drugs to higher formulary tiers that cost more, or making people pay co-insurance, a percentage of the costs, instead of a fixed co-pay.
TSCL supports legislation that would:
- Allow Medicare to negotiate drug prices.
- Cap annual out-of-pocket drug costs, once the Part D catastrophic level of coverage is reached. This would allow consumers better protection from very high costs or sudden price spikes
- Allow importation of drugs from approved Canadian pharmacies.
- Allow generics to come to market more quickly by prohibiting “pay for delay” deals.
What do you think? Next month, TSCL will be surveying the public about proposed measures to reduce prescription drug costs. Watch for the January issue of this newsletter.
Sources: “With An Increase In EpiPen Use Among Seniors, Medicare Spending up 1,100 Percent,” Kaiser Health News, September 23, 2016. “Senators Ask Justice Department To Investigate EpiPen Maker,” The Associated Press, September 28, 2016.