As retirees deal with rising healthcare costs and high inflation, many are seeing the costs of Medicare Part D drugs skyrocket, according to a report from the AARP.
In fact, the list prices for the 25 brand-name drugs with the highest total Medicare Part D spending in 2021 have increased by 226% on average since these medications entered the market, the AARP reported. And the prices of some medications used by more than 10 million Medicare Part D enrollees more than tripled, according to the report.
Overall, these price hikes ranged from 20% to 739%, according to the report. Taken together, these 25 drugs accounted for $80.9 billion in total Medicare Part D spending in 2021 or about 37% of total spending, the AARP said. In addition, the price of all these drugs — except for one — has exceeded the annual rate of inflation since entering the market.
The price of Enbrel, a medication used to treat rheumatoid arthritis and psoriatic arthritis, has increased by 701% since being released in 1998. The lifetime general inflation rate since Enbrel was released was 85%. And the price of Eliquis, a drug used to prevent or treat certain types of blood clots, has risen124%. The lifetime general inflation rate since Eliquis was introduced was only 31%, the AARP said.
“Brand-name drug prices have increased dramatically faster than inflation for decades,” Leigh Purvis, the prescription drug policy principal at the AARP Public Policy Institute, said in a statement. “The median price of a new brand-name prescription drug is now approximately $200,000 per year, so even relatively small percentage price increases can translate into thousands of dollars and put life-saving medications out of reach of the patients who need them.”
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Inflation Reduction Act brings changes to Medicare
The Inflation Reduction Act of 2022 contains provisions aimed at making Medicare coverage more affordable. It would allow Medicare to negotiate lower prescription drug costs with the private health insurance companies that participate in the Medicare program. In addition, the act lays out caps on out-of-pocket spending and limits on increases in Medicare Part D premiums.
Here are some of the Medicare highlights found in the Inflation Reduction Act.
- Out-of-pocket spending for Medicare Part D prescription drugs will be capped at $2,000 beginning in 2025. This cap would increase in subsequent years based on Medicare’s annual covered drug spending.
- The price of most covered prescription drugs won’t be allowed to increase faster than the rate of inflation, without the manufacturers paying rebates to Medicare.
- The base beneficiary premium for Medicare Part D plans can’t increase by more than 6% per year from 2024 through 2029.
Some Medicare-related provisions in the Inflation Reduction Act go into effect in 2023, while others kick off as late as 2026.
“This historic law cracks down on the big drug companies and brings real relief to millions of seniors who have been struggling with out-of-control prescription drug prices,” Nancy LeaMond, AARP‘s executive vice president and chief advocacy and engagement officer, said in a statement. “American families simply can’t afford to keep paying the highest prices in the world for the medications they need.”
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Many Americans can’t rely on Social Security
As retirees face the high costs of healthcare and prescription drugs, many are also doubting the effectiveness of Social Security benefits, according to a survey.
More than half (74%) of Americans said they can’t rely on Social Security benefits when planning retirement income, according to a survey by the Allianz Life Insurance Company of North America. And 88% said it’s critical to have another source of guaranteed income in order to comfortably retire.
“Social Security benefits are often the backbone of a retirement strategy but it cannot be your entire strategy,” Kelly LaVigne, the vice president of consumer insights at Allianz Life said in a statement. “A strong retirement strategy will ensure you have enough guaranteed income to cover your essential expenses. That guaranteed income can come from Social Security benefits along with other investments and protection products such as annuities.”
The survey results come amid projections that Social Security funds could be depleted faster than expected.
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