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Medicare drug plans continue to hike costs

Monday, Oct. 1, 2007

Medicare Part D Plans Continue to Hike Drug Costs After Seniors Sign up for Coverage

As open enrollment approaches, seniors can’t rely on publicized drug costs

(Washington, D.C.) – Consumers Union’s latest sampling of Medicare prescription drug plans again finds that most insurers hike the cost of their drugs during the year – in one extreme case by 28 percent. The data calls for major changes in the law to protect seniors against bait and switch-type practices as the open enrollment season approaches.
“It makes no sense to ask a senior to carefully shop around in October and sign up for a drug plan, when the plan just turns around a few months later and dramatically hikes the cost of the medicines,” said Bill Vaughan, senior health policy analyst for Consumers Union, publisher of Consumer Reports.
Click here for complete results of latest tracking data.
The latest period tracked – from February to September 2007 – found that 95 percent of the plans offered in the sampled areas raised their drug costs. A quarter of the plans raised prices by 5 percent or more, with a $140 average state increase during the seven-month period. Only 15 of the 289 plans in the sampled areas lowered their prices.
“Medicare expects seniors to lock into a drug plan for 12 months, but it doesn’t require the drug plan to lock in their prices for that same time. How is that logical?” Vaughan added. “Consumers should try to get a lower-cost plan that has decent quality indicators. Unfortunately, the plans can change their prices and wipe out those careful calculations in a second.”
For example, in the New York area, the Rx 1 drug plan dropped from being the third-lowest cost plan sampled in February 2007, to the 14th lowest-cost in September. In Texas, Blue Medicare Rx Standard went from the lowest-cost plan in February, to the eighth-lowest cost in September.
Since December 2005, Consumers Union has used the Medicare.gov Web site to track Medicare Part D plan costs for five widely used drugs offered by companies in five zip codes in New York, Florida, Texas, Illinois and California. The tracking has found that most drug plans consistently hike costs during the year seniors are locked into a plan.
The plan with the biggest increase during the latest period was Blue Medicare Rx-Standard in Illinois, which increased its costs for the five drugs by 28 percent, or $679.
“Folks on Medicare shouldn’t have to worry about the costs in their drug plans rising $600 or more after they sign up,” Vaughan said. “The instability in drug costs under these Part D plans is simply unacceptable. Each time costs go up under these plans, seniors are pushed that much closer to the brink of the doughnut-hole coverage gap.”
Vaughan noted that one of the sample brand drugs, Zoloft, now has a generic competitor. Consumers Union strongly encourages the substitute of generics for brands, and supports companies offering lower co-pays on generics than brands. “Consumers should be offered incentives to encourage them to move from brands to generics,” said Vaughan.
Vaughan also said the cost increases in Part D plans underscore the need for Congress to require drug price negotiation to get the best deal for seniors, as well as offer a consistently priced, Medicare-administered drug plan in addition to the private plans.
“Seniors and taxpayers deserve a Medicare drug insurance plan that has the best possible prices, and is consistent throughout the year,” Vaughan said.
Consumers Union is urging CMS to warn consumers that some plans increase prices significantly during the year, and said the agency should make public the names of plans that frequently change the cost of commonly used drugs by significant amounts. CU also has asked Medicare to allow beneficiaries who select a plan based on the Web site information, and have proof of that listing, be allowed to change plans anytime during the following year when the plan has increased drug costs by more than 5 percent.
Contact: Bill Vaughan, Susan Herold, 202-462-6262