Drug companies getting paid billions at expense of taxpayers

Associated Press

WASHINGTON

A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show.

The cost of Medicare’s “catastrophic” prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program’s number-crunching Office of the Actuary.

Out of some 2,750 drugs covered by Medicare’s Part D benefit, two pills for hepatitis C infection – Harvoni and Sovaldi – accounted for nearly $7.5 billion in catastrophic drug costs in 2015.

The pharmaceutical industry questions the numbers, saying they overstate costs because they don’t factor in manufacturer rebates. However, rebates are not publicly disclosed. Sen. Charles Grassley, R-Iowa, is calling the rise in spending “alarming.”

Medicare’s catastrophic coverage originally was designed to protect seniors with multiple chronic conditions from the cumulatively high costs of taking many different pills. Beneficiaries pay 5 percent after they have spent $4,850 of their own money. With some drugs now costing more than $1,000 per pill, that threshold can be crossed quickly.

Medicare pays 80 percent of the cost of drugs above a catastrophic threshold that combines spending by the beneficiary and the insurer. That means taxpayers, not insurers, bear the exposure for the most-expensive patients.