Medicare predicts smaller increases in annual Part D drug spend

While the Medicare Board of Trustees reported that Part D drug spending in 2018 came in slightly higher than predicted, it lowered its projected growth rates for the next five years due to slower price growth and higher manufacturer rebates.

In its annual report published Monday, the board said 2018 Part D drug expenditures were $95.2 billion, higher than the $94.5 billion projection in its report last year. Part D spending was down from $100 billion in 2017 (see “Medicare Board Predicts a Slowdown in Part B Spending Increases”).

The board said rebates have come in higher than previously assumed, prompting it to lower its 2019-2027 annual Part D spending projections. It now expects Part D expenditures to increase 3.3% to $98.3 billion in 2019. In last year’s report, it estimated 2019 spending to be $103.7 billion. While it projects spending to increase 12.4% to $110.5 billion in 2020 and 9.2% to $120.7 billion in 2021, the figures are lower than the $113.7 billion and $123.2 billion predicted in last year’s report.

Due to slower dispensing of generics and increased use of high cost specialty drugs, the board expects Part D drug costs per beneficiary to increase at a higher rate than other Medicare benefits, such as hospitals and Part B drugs. It estimates per capita Part D spending to increase 4.9% per year on average, compared with a 3.9% average increase projected in last year’s report.

Actual 2018 spending on Part B, which reimburses for physician-administered drugs, came in at $337.2 billion, just under last year’s estimated $339.9 billion. The board slightly raised its predictions for Part B, and now expects 2019 spending to be $367.9 billion compared with $366.5 billion estimated last year.

The Trump administration’s proposed FY20 budget includes requests for changes to Medicare, Medicaid and FDA policies that the White House says would reduce government spending on drugs by $69 billion (see “Trump Wants to Use Budget to Complete Drug Pricing Blueprint”).

https://www.biocentury.com/bc-extra/politics-policy/2019-04-22/medicare-predicts-smaller-increases-annual-part-d-drug-spending