How Rising Drug Prices Affect Retirees
AARP Study Reveals Soaring Drug Prices
Retirees already face the challenges of general inflation, but recent research shows that drug prices are increasing at a much faster rate. According to a study conducted by AARP, the top 25 costliest drugs covered by Medicare have seen an average price increase of 226% since entering the market.
Leigh Purvis, the author of the study and AARP’s prescription drug policy principal, states that this report confirms the significant impact of drug companies’ consistent price hikes year after year.
Drug Prices vs. Inflation
Out of the top 25 most expensive drugs, 24 have experienced price increases that surpass general inflation. For example, the price of the insulin brand Lantus has risen by 739% since its introduction in 2000, while general inflation has only been 71% during the same period.
Similar trends can be seen with other drugs like Humira and Enbrel, which have experienced price increases of 562% and 701%, respectively, compared to general inflation rates of 66% and 85%.
The Reason Behind Soaring Drug Prices
“There’s one reason: Because they can,” says Mary Johnson, a Social Security and Medicare analyst at The Senior Citizens League. While the Department of Veterans Affairs and Medicaid have the authority to negotiate drug prices, Medicare does not. This lack of bargaining power has allowed medicine costs to rise unchecked, putting pressure on American retirees who rely on their savings to cover healthcare expenses as they age.
The Inflation Reduction Act and Future Changes
The Inflation Reduction Act is set to bring about changes in this situation. Starting in 2026, Medicare will have the authority to negotiate with pharmaceutical companies regarding their most expensive drugs. Although negotiations have already begun this year, the haggled-down prices won’t take effect until 2026.
Medicare Part D and Coping Strategies
Currently, Medicare Part D ensures that seniors only pay 25% of their prescription drug costs. Additionally, the Inflation Reduction Act has already implemented a cap on insulin prices at $35 per month. However, even paying a quarter of the cost of expensive drugs can be overwhelming. For instance, a month’s worth of Enbrel costs $14,099, making the patient responsible for $3,525.
To navigate these expenses, retirees need to strategize. Wealth managers, like Nicholas Bunio from Retirement Wealth Advisors, suggest helping clients select the right health plan, such as opting for a Medigap policy over Part C. Planning for healthcare costs well in advance and factoring in substantial price increases is also crucial.
Read More of this Story at www.benefitnews.com – 2023-10-03 13:00:00
Read More US Economic News
