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Whoa! Some Medicare plans hike drug prices after just one month

February 5, 2006

Some Medicare Drug Plans Hiked Prices After One Month; Consumers Union Calls for Halt to Increases and Price-Tracking Information

CU asks CMS Director to track, make public price increases in plans

(Washington, D.C.) — A cursory sample by Consumers Union of various Medicare prescription drug plans has found that the cost of some prescriptions has dramatically increased in just one month. A large majority of plans showed price increases averaging about 5 percent — an ominous warning sign that seniors cannot count on price stability in the private plans. Very few plans showed any price decreases.
“Most seniors assumed that the drug prices in their plans would be locked in for a year, but we’re finding most plans in five large states are hiking prices after just one month,” said Bill Vaughan, senior policy analyst for Consumers Union.
“Seniors and their families spent a lot of time picking a plan based on what their drugs would cost, and now they may find those prices aren’t valid anymore,” Vaughan added. “In some cases, the price increases are so large, they smell of a bait-and-switch.”
Consumers Union’s small, cursory sampling of drug prices in five Zip Codes throughout the country from the Medicare.gov Web site (which states that it cannot guarantee the accuracy of company data) included an examination of the popular drug Lipitor (which showed relatively few, small price increases), as well as a bundle of five drugs for various common ailments. The prices were sampled at the end of December 2005 before the benefit began, and at the end of January — one month into the program.
The sample found that increases ranged from as little as $1 to, in some cases, over $400 annually. Several companies did reduce annual costs, but overwhelmingly, the annual cost of plans for this sample package of drugs was upward. In the New York survey, for example, 38 plans increased the cost of the five-drug package, with an average increase of $155.80.
Consumers Union sent a letter to CMS Director Mark McClellan (PDF file) pointing out the price increases and asked the agency to immediately and publicly urge the drug plans to halt these price increases. CU also urged the Medicare agency to publicly report on the full range of price movements so that consumers can avoid plans that are showing this type of bad faith at the very beginning of this vital health program.
“Most seniors live on a fixed income so they need to have faith that the plan they signed up for won’t hike their drug costs every month,” Vaughan said.

Bill Vaughan, 202-462-6262 (w); 703-241-5572 (h)