Drug price increases that exceed inflation are costing Medicare Part D billions Spotlight (AARP Public Policy Institute) Purvis, Leigh, author. Drug Costs Inflation, Economic Medicare Part D -- economics Medicare Part D -- trends Prescription Drugs -- economics It has been 15 years since the creation of the Medicare Part D prescription drug benefit. Research indicates that the program has been largely successful: beneficiaries report improved access to prescription drugs and the vast majority are satisfied with their coverage. However, there is growing concern about trends in Medicare Part D spending, which has accelerated considerably over the past decade. One factor helping to drive these trends is brand-name drug price growth. Brand-name drug prices have been growing faster than general inflation for more than a decade, and drug companies are increasingly relying on such price increases for revenue growth. Meanwhile, Medicare Part D remains prohibited from negotiating with pharmaceutical companies, leaving it exposed to the possibility of paying ever-higher prices for the exact same drug products. In response to this challenge, Congress recently considered bipartisan legislation that would require drug manufacturers to pay a rebate to the federal government if their prices increased faster than the rate of general inflation. Notably, a similar inflationary rebate is already required under Medicaid and is responsible for roughly half of the rebates that state Medicaid programs receive from brand-name drug manufacturers. This Spotlight provides additional context for inflation-based rebates, by examining excess Medicare Part D spending due to annual drug price changes that exceeded the rate of general inflation between 2015 and 2019. Washington, DC : AARP Public Policy Institute, June 2021 AARP (Organization), issuing body. Public Policy Institute (AARP (Organization)), issuing body. Technical Report Text Illustrations 1 online resource (1 PDF file (5 pages)) nlm:nlmuid-9918317782206676-pdf 9918317782206676 http://resource.nlm.nih.gov/9918317782206676 English United States Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-ND license. https://creativecommons.org/licenses/by-nc-nd/3.0