Medicare spent nearly 14 percent more on pharmaceuticals last year compared to 2013, the biggest jump in more than a decade.
Medicare health plans spent nearly $3,000 per member, with medication costs the sole reason, according to a report issued Wednesday by Express Scripts, which decides which prescription drugs millions of health plans should cover.
One reason for the largest rise since 2003 is spending on compounded products and specialty drugs such as $1,000-a-pill hepatitis C cures, the report said.
Three costly drugs, Harvoni and Sovaldi, made by Gilead, and Olysio by Johnson & Johnson, threw Medicare for a loop when they hit the market, Express Scripts said.
“Medicare plans were unable to manage the costs of these new medications,” Express Scripts said. “As a result, plan sponsors spent an average of $102” on the three drugs. That is more than the per-member, per-year cost for all anti-inflammatory drugs.
Express Scripts has taken on the expensive drugs before, so the criticism isn’t surprising. The company dropped Sovaldi and Harvoni from the health plans it manages in favor of a cheaper treatment called Viekira Pak made by AbbVie.
The spending on specialty drugs that treat serious diseases such as cancer, hepatitis C and multiple sclerosis makes up only 25 percent of total Medicare spending — meaning that spending on hepatitis C drugs wasn’t the only increase last year.
Spending on diabetes drugs jumped by nearly 30 percent in 2014, built largely on price increases to existing drugs.
Compounded drugs, which are customized drugs made by a pharmacist, also contributed to the sharp increase. Such medications often cost more than conventional drugs, and resulted in more than 100 percent increases compared to last year.
