Though major legislative and regulatory solutions have stalled in recent years, policymakers are once again turning their attention to the important issue of prescription drug affordability. One policy they are likely to debate is the scope of any potential limitations on drug prices.
Previous proposals have differed on this point. For example, some allowed Medicare to negotiate drug prices broadly, while others limited negotiation or reference pricing to certain high-cost prescriptions. While a narrow approach may be more feasible, politically and administratively, it may also leave savings on the table.
A timely new analysis from the Kaiser Family Foundation (KFF) examines this trade-off. The report finds that a small number of drugs are responsible for a disproportionate share of Medicare prescription drug spending. In 2019, the 10 top-selling Part D drugs with one manufacturer and no generic or biosimilar competition—less than 1% of all covered drugs—accounted for 16% of total Part D spending. Similarly, the 10 top-selling Part B drugs that year comprised 2% of all covered products but 43% of spending.
Given this concentration, KFF notes that tailoring drug pricing reforms to reduce spending on top-selling, high-cost drugs could be an efficient use of resources. But it would also be an incomplete solution, as it would not directly impact high-cost drugs that are less widely used. As policymakers consider next steps, KFF recommends they weigh whether focusing on all prescription drugs “would achieve sufficient savings to justify the added administrative burden and associated costs.”
Medicare Rights is encouraged by the renewed focus on high and rising drug prices. Earlier today, U.S. House Democrats reintroduced provisions of the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3), which we enthusiastically supported in the last Congress.
As these conversations continue, so will our pursuit of drug pricing improvements that strengthen Medicare as well as beneficiary health and financial well-being. Needed reforms include better protecting beneficiaries against burdensome costs, filling longstanding gaps in coverage, reducing programmatic barriers, and modernizing appeals processes.
Read the KFF analysis, “Relatively Few Drugs Account for a Large Share of Medicare Prescription Drug Spending.”