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Medicare Part D Spending Down As Generic Drug Use Grows

Ruzanna Harutyunyan's picture

Medicare prescription drug benefit spending in fiscal year 2008 totaled $44 billion -- $6 billion lower than estimated -- as the program experienced lower-than-expected enrollment, more use of low-cost generic drugs and beneficiaries reducing drug spending to avoid the program's "doughnut hole," USA Today reports.

According to USA Today, the drug benefit program in the last fiscal year had two million fewer participants than originally predicted because fewer low-income people enrolled than expected and some Medicare beneficiaries have elected to keep their existing drug coverage. About 32 million beneficiaries have enrolled in the drug benefit. Meanwhile, generic prescription drugs accounted for 64% of all Medicare prescriptions in FY 2008, compared with 61% in the private sector.

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The drug benefit program has cost about one-third less than expected since it launched in January 2006. When the drug benefit began, the Congressional Budget Office predicted it would cost $74 billion annually by 2008.

According to USA Today, Medicare drug costs are expected to rise by 2011 "as early savings fade" and the first of 79 million baby boomers start the program (Cauchon, USA Today, 10/31).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.