Compounded drugs, opioids trigger unprecedented Part D spending

An open pill bottle and a dollar bill

Medicare Part D prescription drug spending has increased 167 percent over the past decade, fueled by concerning trends tied to opioids and compounded medications, according to a report released by the Office of Inspector General (OIG).

The new report offers additional context to comments made by U.S. Attorney General Loretta Lynch Wednesday when her office announced a historic national fraud bust involving 300 people and $900 million in fraudulent billing, in which more than 60 of the individuals were linked to schemes targeting Part D.

The report indicates Part D prescription drug spending has increased at least $14 billion during each of the past three years, reaching $137 billion in 2015. Spending on commonly abused opioids reached $4.1 billion, a 165 percent increase since 2006 despite the fact that the number of beneficiaries receiving Part D drugs grew just 75 percent. All told, nearly one-third of Medicare beneficiaries received a prescription for commonly abused opioids last year.

Perhaps even more concerning, the OIG found that spending on compounded drugs increased 625 percent from 2006 through 2015, including a 3,466 percent spike in topical creams and ointments typically used for pain relief. From 2013 through 2015, overall spending on compounded drugs more than doubled to $509 million thanks to a $182 million spike last year. Certain areas of Texas, Florida and New York demonstrated unusually high rates of spending.

Last year, the OIG released two reports highlighting similar spending patterns on opioids within Part D, prompting senators to grill federal authorities on ways to detect and prevent fraud within the program—including requiring plan sponsors to report fraud activity. Last year, Tricare saw a $1.75 billion increase in spending on compounded medication, which prompted the health plan to implement new payment screening procedures.

To learn more:
- read the OIG’s report