Medicare Drug Plans Raise Prices on Five Medications

A new analysis of Medicare Part D drug plans by Consumers Union, the publisher of Consumers Report, indicates that many of the plans in five populous states increased the combined prices for five commonly used prescription drugs by as much as $500 for a one-month supply between December 2007 and January 2008.

Seventy-five percent of Part D drug plans in California, New York, Illinois, Florida and Texas raised prices on ramipril, which is marketed as Altace; atorvastatin calcium, which is marketed as Lipitor; Zoloft (i.e., sertraline hydrochloride); nifedipine extended-release 30-mg tabs; and celecoxib, which is marketed as Celebrex, between December and January. Combined prices for these medications increased by an average of $369, according to the analysis. One in six plans increased prices on the five drugs by $500. Twenty-five percent of the plans, meanwhile, decreased their prices for these drugs during the same one-month period.

Consumers Union has been monitoring the prices of the five drugs in particular zip codes for each of the five states since the inception of the Medicare Part D drug plan in 2005. In most instances, the analysis shows that the majority of Medicare Part D plans in these areas have increased the costs of the drugs two to three times more than the rate of inflation.

Medicare Part D beneficiaries can switch plans during the open enrollment period from mid-November to Dec. 31, and most of the price increases seem to occur during that period, making it important that beneficiaries check the prices offered by their plans during open enrollment, said William Vaughan, senior policy analyst for Consumers Union.

"Every trip to the drug store can be a surprise," warned Vaughan in an interview with AAFP News Now.

"We continue to see rates of inflation (for Medicare drugs) that far exceed rates of general inflation and even exceed medical inflation. We question whether the taxpayers are getting a good deal," he added.

The Bush administration has repeatedly touted the benefits of the Medicare drug benefit, saying it gives beneficiaries access to life-saving and life-enhancing medications. Vaughan agrees with the administration's assessment -- to a point.

"Before this benefit, Medicare beneficiaries needed drug coverage," Vaughan said. Lower-income beneficiaries, in particular, were not filling prescriptions before the advent of the Medicare drug benefit.

But the Medicare drug program costs about $60 billion a year, and, for that price, "it should be better," said Vaughn. "For $60 billion, we ought to be getting a Cadillac and not a Yugo."

Beneficiaries can shop for a plan every fall during the six-week open enrollment period, but after they choose a plan, they are locked into it for the year. However, plans can randomly change their prices during the year, engaging in "bait and switch" tactics, Vaughan said.

"Sometimes, it is a buck here, a buck there, not a big deal," he said. "But sometimes, it is $600 or $700. We don't think it is right, and we think the law needs to be changed."

According to Vaughan, Consumers Union supports a "stable Medicare-run plan where people would not have to shop every year, and they know the formulary is stable."

CMS, meanwhile, has proposed a regulation (30-page PDF; About PDFs) to allow more Medicare beneficiaries with limited income and resources to remain in their current Medicare prescription drug plan without having to pay a premium. Under the proposed regulation, prescription drug plans would be allowed to offer a reduced premium for beneficiaries eligible for Medicare's low-income subsidy in certain situations. The proposal would apply to regions where there are fewer than five drug plans that offer zero-premium plan options for beneficiaries with limited incomes.

CMS randomly reassigns certain low-income beneficiaries to another Part D plan if they have to start paying a premium because their plan's premium is higher than the amount subsidized by the federal government. The intent of the proposal is to ensure that there are a sufficient number of organizations offering zero-premium plans, while increasing the number of low-income subsidy beneficiaries who are able to remain with their current plans without paying a premium.

"Through this proposed rule, we are seeking comment on a means of reducing the number of beneficiaries subject to random reassignment while maintaining the integrity of the annual bid process," said CMS Acting Administrator Kerry Weems in a statement. "We expect changes adopted in the final rule to be effective in the 2009 benefit year."