Report: Medicare Part D spending will soar from hep C drugs

As the health insurance and pharma industries clash over the cost of hepatitis C drugs, a new report finds the high-priced meds will drive up Medicare Part D spending by about $2.9 billion to $5.8 billion next year.

Federal spending on Medicare Part D will increase $100 to $200 per beneficiary per year, while average monthly premiums would jump $17 to $33 per beneficiary per year, according to the report from Milliman and the Pharmaceutical Care Management Association.

The report notes that a 20 percent increase in federal reinsurance subsidies will account for much of the spending boost and that taxpayers will "bear the lion's share" of  costs resulting from pricey hep C drugs like Sovaldi and Olysio.

"While most payers cover about 75 percent of an enrollee's prescription drug costs, Medicare Part D covers 95 percent at high spending levels," PCMA President and CEO Mark Merritt said yesterday in a statement.

To measure the impact of Medicare Part D spending, Milliman estimated that between 15 percent and 30 percent of the roughly 270,000 Medicare Part D beneficiaries infected with hepatitis C will take an $84,000 12-week course of treatment in 2015.

High-priced hep C medications have prompted lawmakers to call for Medicare to offer rebates and negotiate prices to keep spending in check, FierceHealthPayer previously reported. Slashing the costs of certain drugs, such as the $1,000-per-pill Sovaldi, would allow the federal government to secure Medicare savings for the program and its beneficiaries, concluded a report released last week by advocacy groups the Medicare Rights Center and Social Security Works.

Meanwhile, America's Health Insurance Plans has been calling out the drug industry for the soaring costs of new hep C medications, saying such expensive pricing is unsustainable and takes unfair advantage of health insurers. AHIP has directed its scorn at Sovaldi, recognizing its effectiveness but warning that the hefty price tag prevents access for many patients and forces taxpayers and state Medicaid budgets to foot the bill, according to an AHIPCoverage blog post.

For more:
- here's the Milliman announcement and report (.pdf)
- check out the AHIPCoverage blog post