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HHS OIG Report Shows Increase in Medicare Part D Brand Name Drug Reimbursements

June 8, 2018

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PRESS CONTACTS
Mary Mullaney, Director, Hospital Payment Policies

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) June 4 released a report that found total reimbursement for all brand name drugs in Medicare Part D increased from 2011 to 2015 despite a decrease in utilization of brand name drugs.  Analysis of Medicare prescription drug event data revealed a 77% increase in total reimbursement for all brand name drugs.  After accounting for manufacturer rebates, reimbursement for brand name drugs in Part D showed a 62% increase. 

The OIG found that for almost half of the brand name drugs reviewed, Part D costs increased at least 50%.  In some cases, drugs with higher unit costs had increases that were smaller in terms of percentages but significant in terms of dollar amounts.  Finally, brand name drugs with utilization decreases had greater increases in average unit costs.

During this timeframe, beneficiaries’ average out-of-pocket costs for the brand name drugs reviewed rose by 40%.  Part D beneficiaries who did not receive third-party assistance had $29 billion in out-of-pocket costs – including copayments and coinsurance amounts – for all brand name drugs in Part D.  Total out-of-pocket costs were highest for brand name insulins, cholesterol reducers, and respiratory tract corticosteroids (e.g., inhalers). 

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