How Much Are Medicare Drugs Really Costing Us?


August 18, 2015

In 2013, Medicare accounted for about 14 percent of the total federal budget in the United States. Dollar-wise, this means that a program designed to help seniors afford health care spent approximately $583 billion on benefit payments. It’s no wonder that the government has been working hard on ways to mitigate costs while ensuring that recipients still benefit from the program. One of the goals of the Affordable Care Act was to make Medicare more efficient by cutting unnecessary costs. A report released by the Centers for Medicare and Medicaid Services, the organization responsible for overseeing both programs, shed new light on how Medicare spends its money. Drug costs alone account for about 11 percent of the program’s total spending.

Crunching the Numbers

According to the data, Medicare spent approximately $103 billion on prescription drugs in 2013 as part of its Part D program. Of these prescriptions, most were brand name drugs used to treat common conditions like heartburn, asthma and high cholesterol. Nexium topped the list. The popular heartburn drug cost more than $2.5 billion and was prescribed to nearly 1.5 million beneficiaries by about 294,000 prescribers nationwide.

Other top drugs include Advair Diskus, which treats asthma; Cymbalta, used most often for depression; and Revlimid, a treatment used in blood disorders. More expensive drugs included those used in rare medical conditions. For example, Carbaglu, which is used to treat high ammonia levels, cost the government $60,000 per prescription and accounted for about $1.4 million in total claims.

Brand names may have cost the most, but generic drugs dominated the market in terms of frequency. According to NPR, the generic blood pressure drug lisinopril “was prescribed or refilled nearly 37 million times by more than 7 million Medicare beneficiaries.” Hydrocodone acetaminophen, the generic version of Vicodin, was prescribed most often among generic drugs. Typically used as a painkiller for rehabilitation purposes, hydrocodone acetaminophen has dominated the prescription landscape for the last few years. The frequency with which doctors prescribe this powerful painkiller raises questions about healthcare in general.

Caveats about the Data

Experts and officials with the American Medical Association warn consumers to interpret the CMS’s data with a grain of salt. The report doesn’t indicate important factors that might affect the frequency of a prescription or a person’s individual health condition. The data reveal which doctors prescribed the most drugs as part of the Part D program, but the numbers only offer a general picture on cost. Some patients, for example, need continuous dosages of Vicodin or its generic form in order to get through medical rehabilitation. Dosages may vary over time for the same patient, which could skew the numbers. Still, the CMS report on spending offers an opportunity to re-examine how Medicare allots its Part D costs.

The Real Cost of Medication

Excessive spending on Medicare Part D may indicate a deeper underlying problem in the way that doctors approach medical care. Several organizations and the government itself have been monitoring Medicare spending since the program first began. The Part D program in particular requires attention due to its relatively high cost especially for seniors who are within the coverage gap, or donut hole, period when they have to carry most of the costs. This recent report by the CMS takes a more detailed look at specific numbers in an effort to encourage feedback from consumers and outside analysts. By publishing the report, the organization hopes to gain better insight from different sources on how to streamline Part D spending.