An annual report published Tuesday by the Medicare Board of Trustees showed that spending on Part D drugs for 2017 came in slightly above projections, but predicted a marginally lower annual percent increase than previously predicted in spending over five years for Part D.
Actual Part D drug expenditures in 2017 were $100 billion; last year the board predicted that number would be $99.2 billion. The report says the underestimation was partly because actual 2016 drug manufacturer rebates were slightly lower than plans had estimated in their bid submissions.
The board now projects that spending on Part D drugs will increase by an average of 6% annually over the next five years, compared with 6.4% as estimated in last year's report. It attributes the slowdown to an assumed increase in drug manufacturer rebates plus a decline in spending for both HCV and diabetes drugs. Actual manufacturer rebates were 19.9% of total drug costs in 2016; the assumed rates for 2017 and 2018 are 22.8% and 25.5%, respectively.
HHS Secretary Alex Azar has vowed to change the PBM business model, at least with regard to Medicare Part D and is considering scaling back or eliminating payments of rebates to drug plans and PBMs in Part D (see BioCentury Extra, May 14).
Actual spending on Part B, which reimburses for drugs administered under a physician’s supervision, also slightly outpaced the board's projection, coming in at $313.7 billion in 2017 compared with an estimated $312.8 billion. The board now expects Part B drugs to increase 8.2% annually over the next five years, up from its 7.8% estimate last year.
A report this month from the HHS Office of Inspector General on Medicare Part D found a 62% increase from 2011 to 2015 in Part D reimbursement for brand name drugs, after accounting for manufacturer rebates. Over the same period, the number of prescriptions for brand-name drugs decreased by 17%, which means that the increased reimbursement was fueled by price increases (see BioCentury Extra, June 5).