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Panel Would Make Insurers Help Contain Rising Drug Costs, NY Times

An influential federal advisory panel is calling for Congress to force private insurers to rein in rapid increases in prescription drug costs — by cutting some Medicare payments to insurance companies while shielding older Americans from higher out-of-pocket expenses.

The recommendations by the nonpartisan Medicare Payment Advisory Commission would squeeze private insurers and drug makers alike, creating strong new incentives for insurance companies to manage the use of prescription medicines by beneficiaries and negotiate larger price discounts with pharmaceutical manufacturers. The Obama administration agrees with the reasoning.

Since its start a decade ago, the Medicare drug program, known as Part D of Medicare, has been hailed as a success: a benefit delivered entirely by private insurance companies and subsidized by the government at a cost far below expectations.

But with drug prices increasing, Medicare beneficiaries now find that they may have thousands of dollars in out-of-pocket costs, even with prescription coverage, and the government is subsidizing more of the benefit than originally intended.

Federal spending on prescription drugs under Part D rose 16.6 percent last year, to $75 billion, in part because of new drugs to treat hepatitis C. The Congressional Budget Office expects similar growth this year.

Click here for the full story by Robert Pear, New York Times.