Industry News
Print
CRR Issues Brief on the Effect of Medicare Part D on Drugs and Pricing
On September 17, 2019, the Center for Retirement Research at Boston College (CRR) released its issue brief, Medicare Part D’s Effect on Evergreening, Generics, & Drug Prices. In 2006, the Medicare Part D Prescription Drug Benefit was enacted which expanded drug coverage for Medicare beneficiaries through private plans approved by the federal government. This brief examines the effect of Medicare Part D on prescription and generic drugs, and pricing.
The key findings include:
- Medicare Part D may affect the behavior of brand-name and generic drug producers by increasing the demand and shifting the market control from manufacturers to insurers;
- Brand-name drug companies may be more likely to maintain monopoly power by making slight changes to their drugs, known as “evergreening”;
- Generic companies may be less likely to introduce alternative drugs due to less bargaining power than insurers;
- Overall, Medicare Part D has increased evergreening and reduced the entry of generic drugs which has caused drug prices to rise; and
- Generally, Medicare Part D has expanded drug coverage for individuals age 65 and over which helped to keep drug prices lower than they otherwise would have been without it.
The brief is available here.