Trends in the U.S. Healthcare Industry, Part 2 (continued): Medicare Part D

Our Founder and Principal Consultant, Mike Rawaan, continues discussing trends impacting the U.S. Healthcare industry, focusing on Medicare Part D.

Part D makes up 15% of the total Medicare annual budget, at approximately $137 B. Most Part D benefits are covered by a Prescription Drug Plan (PDP) or a Medicare Advantage Drug Plan (MA-DP).

As prescription drug costs continue to rise, the federal government continues to explore ways to contain the cost. Methods such as the Medicare Drug Price Negotiation have yielded positive results. In contrast, other programs, such as 340B, seem to be helping provider organizations more than beneficiaries and the low-income patients the program was designed for.

Final Thoughts

• Part D benefits are a significant differentiator for many Medicare beneficiaries, especially for those with chronic illnesses.

• Vertically integrated organizations such as UHG and CVS Health have an advantage.

• The Trump Administration’s “Make America Healthy Again” agenda poses a threat to all stakeholders in the value chain.

• Tariffs on imports will impact drug prices since China and India account for more than 50% of pharmaceutical manufacturing.

• In spite of the scrutiny and political pressure, PDPs and PBMs are not going anywhere

  • Primarily due to the rising cost of prescription drugs

• The 340B program is not sustainable and will be overhauled in the near future

  • This is more bad news for the covered entities vs. the plans