Medicare prescription drug spending surpasses development costs, study says

Medicare Part D spending on top brand-name drugs over a five-year period "more than made up the money" that drugmakers say it costs to develop new medications, according to a May 11 AARP report. 

AARP's Public Policy Institute researched Medicare spending between between 2016 and 2020 on the 10 brand-name drugs the program spent the most on in 2020, according to the report. 

The institute's research found that, on average, Medicare Part D spending was more than five times higher than the average costs to develop a new drug. 

Medicare spent $27.2 billion over that period on the blood thinner Eliquis, according to the report. AARP said that is more than 10 times what the pharmacy industry says is the average cost to develop a new drug ($2.6 billion). 

AARP said it is asking Congress to lower the prices of prescription drugs by allowing Medicare to negotiate prices with drugmakers, placing a cap on Part D out-of-pocket costs and levying penalties on companies that raise medication prices higher than the rate of inflation.

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