Lower generic drug costs are saving money for the Medicare program and its beneficiaries, according to a new report by researchers at the Intercontinental Marketing Services’ Institute for Healthcare Informatics, the Massachusetts Institute of Technology and the National Bureau of Economic Research. The report concludes that eight of the 10 most commonly prescribed drug classes covered by Part D have fallen to an average cost of $1 per day. In 2006, the average cost was $1.50.
As brand-name drug patents continue to expire, costs are expected to fall even further. Researchers say the average daily cost could drop to 65 cents by 2015. The hope is that this trend will alleviate some of the financial pressure Medicare has come under amid Washington debt-reduction talks.
In May, Medicare trustees reported that Part D costs reached $62 billion in 2010 and placed their forecast for 2011 at $67 billion. By 2020, the trustees said, spending on the drug benefit could balloon to $157 billion due in part to the legions of new beneficiaries expected to enroll.
The authors of the report, however, claim this figure is overblown and suggest that trustee projections don’t take into account the amount that will be saved due to expected drug patent expirations.
For more on Part D, see: