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Medicare Premiums/ HCV - New Millman Report
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Milliman states that it estimates these HCV therapies will increase "total annual individual Medicare Part D beneficiary premiums by $481 million to $965 million in 2015."
Medicare drug premiums to rise for 2nd year
July 31, 2014 20:46 GMT
WASHINGTON (AP) -- Medicare says premiums for prescription drug plans will rise in 2015 for the second year in a row.
Officials said Thursday that Medicare's average monthly drug premium will rise next year to $32.
The modest increase of $1 a month comes amid worries over the future impact of costly new medications. Sovaldi, for example, cures hepatitis C but costs $1,000 a pill.
Most Medicare beneficiaries have prescription drug coverage.
But consumers should pay attention because the average premium says little about what any one person pays.
Premiums change every year, so consumer advocates say beneficiaries should check their plan during open enrollment, from Oct. 15 to Dec. 7, and seek better deals if they're not satisfied.
This year, the average premium also went up by $1, after three stable years.
"Based on Milliman's December 2013 HCV study, HCV is more prevalent among low income individuals than it is for non-low income individuals (2.91% of the Dual Medicare and Medicaid population and 0.31% of the Non-Dual Medicare population)6. Therefore, the federal government will pay more in low income cost sharing and premium subsidies, and will collect less member cost sharing to offset government spending associated with HCV drug therapy."
"We estimate that the cost of HCV drug therapies will increase 2015 federal spending on the individual Medicare Part D program by approximately $2.9 billion to $5.8 billion. This range was developed around our point estimate of $4.2 billion and corresponds to a 2015 new HCV drug use rate of 15% to 30% by the infected Medicare Part D population7. Table 1 presents the components of our point estimate for the estimated 2015 individual Medicare Part D HCV cost to the federal government.......
.......The primary driver of cost to the federal government is a 20% increase8 in federal reinsurance subsidies (which are significant for all covered high cost drugs). Low income cost sharing subsidies (LICS) and low income premium subsidies (LIPS) are also funded by the federal government and are therefore included in the federal government costs in our findings.
......It is uncertain whether or not PDP sponsors will successfully negotiate manufacturer rebates on the new HCV drug therapies. The HCV cost estimate included in this report assumes that no rebates are paid on Sovaldi. To illustrate the impact of pharmacy manufacturer rebates, we estimate that the federal government would save approximately $215 million per year if the average rebate is 5% of allowed claims.
.....As more treatment options become available and competition increases we would expect rebates to increase. We are seeing more aggressive attempts at rebating in some state Medicaid programs such as Oregon9, and expect that PDP sponsors could leverage the rebate contracting progress."
New Milliman Study: Hepatitis C Drugs Could Increase Medicare Part D Spending by $2.9 to $5.8 Billion in 2015
WASHINGTON, July 29, 2014 /PRNewswire-USNewswire/ -- New high priced hepatitis C drugs will increase federal spending in Medicare Part D by a projected $2.9 to $5.8 billion next year, according to a new report by the actuarial firm Milliman released today by the Pharmaceutical Care Management Association (PCMA). Milliman projects that average Part D premiums could increase by as much as 8.6 percent in 2015 as a result of high-priced hepatitis C drugs, including Sovaldi and Olysio.
The study finds that the majority of new Federal spending will come from increased federal reinsurance subsidies. Medicare payments for Part D catastrophic coverage have grown considerably faster than other components of Part D spending. According to the Medicare Payment Advisory Commission, between 2007 and 2012, payments have increased at an average annual rate of 14 percent while nearly doubling from $8 billion to $15.6 billion.
Milliman bases its cost projections on the assumption that 15 percent to 30 percent of the Medicare Part D population estimated to be infected with hepatitis C will receive an $84,000 course of treatment in 2015.
"While most payers cover about 75 percent of an enrollee's prescription drug costs, Medicare Part D covers 95 percent at high spending levels," said PCMA President and CEO Mark Merritt. "The study shows taxpayers will bear the lion's share of the increased drug costs for Medicare Part D beneficiaries taking hepatitis C drugs."
Click here to read the new report.
attached report pdf above
Major findings from the report include:
· New hepatitis C drugs, including Sovaldi and Olysio, will increase 2015 federal spending on Medicare Part D by $2.9 to $5.8 billion for beneficiaries enrolled in Medicare Prescription Drug Plans (PDPs), an increase of $100 to $200 per beneficiary per year.
· Average monthly premiums for Medicare PDPs are projected to increase 4.3 percent to 8.6 percent next year as a result of new hepatitis C drugs, an increase of $17 to $33 per beneficiary per year.
Milliman's analysis measured the impact of these new drugs on the Medicare Part D program; the study did not include the effect of the drug therapy on other medical costs.
PCMA represents the nation's pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 216 million Americans.

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