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Why Medicare Spending is Slower

Last update on: Feb 02 2017

Spending on government medical programs, especially Medicare, has been slowing for several years. It still is growing, but at a slower rate than in the past. But in the last year spending per beneficiary actually decreased. This provokes a lot of discussion about the causes. This piece argues that most of the growth reductions are due to temporary factors or factors that should cause us to worry about the long term (especially the role lower prescription drug spending played). It’s an interesting read.

A recent CBO analysis highlighted that the recent slowdown in Part D can be nearly entirely explained by broader national trends in per-capita drug spending that occurred as a result of the pharmaceutical technological slowdown, as well as lower enrollment in Part D. CBO found that, between 2007 and 2010, the share of prescriptions filled with generic drugs rose from 67 percent to 78 percent nationwide (and from 63 percent to 73 percent in Part D). In addition, brand name drugs with a combined $117.2 billion in U.S. sales, including best-sellers like Nexium and Cymbalta, are expected to lose patent protection between 2012 and 2016 according to analysis from the Congressional Research Service. CBO also found that new branded pharmaceuticals have been introduced at a slower rate than in the late 1990s.



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