In the first seven weeks of the Medicare Part D drug program, prescription drug plans raised the prices of prescription drugs.  Prices charged by Part D plans are also considerably higher than prices charged under Medicare’s former Prescription Drug Card program.

Medicare Drug Plan Prices Are Increasing Rapidly, a February, 2006 study prepared by the Minority Staff of the House Committee on Government Reform, Special Investigations Division, calculated the price negotiated by each of 10 leading Part D plans, in 5 different locations around the country, for a one-month supply of each of 10 brand-name drugs.  These are the prices that the government, as well as individuals who are meeting their deductible or who are in the “donut hole”, will have to pay.  Committee staff obtained and compared prices in December 2005 and February 2006.  The Report found:

A second report, Medicare Drug Plan Prices Are Higher than Medicare Drug Card Prices (Feb. 2006), found that “the average Medicare drug plan prices are 14% higher than the prices offered by the Medicare drug cards.”  Committee staff compared prices for “the ten highest-selling brand-name drugs used by seniors in 2003” that were charged by Medicare drug cards in April 2005 and by ten leading Medicare drug plans on February 20, 2006.  They found:

An earlier study by Committee staff found that Part D plans are the most expensive option for prescription drugs in Chicago.  Prescription drug costs for the “ten drugs with the highest sales to beneficiaries in 2004” are higher under Medicare Part D plans in Chicago than the costs of the same drugs purchased with federally negotiated prices or purchased from Canada,, and Costco.  A study for seven Chicago-area Members of Congress, New Medicare Drug Plans Fail to Provide Meaningful Drug Price Discounts in Chicago (Feb. 2006) found:

Source of drugs

Average monthly cost

Average Part D cost (10 Chicago plans)

% that Part D cost exceeds average monthly cost from other sources

Federally negotiated prices




Canadian prices






       6% (3-month supply)

  $3,235 (3-month mail order supply)

     $3,269 (3-month mail order supply)






Contrary to the repeated claim of the Centers for Medicare & Medicaid Services that Part D will drive down the prices of prescription drugs, these reports demonstrate that the prices of drugs under Part D are higher than prices available elsewhere and getting even higher.  These reports also demonstrate that competition and the marketplace are less successful in reducing drug prices than direct negotiations by the government.

The reports cited in this piece are available at the links below.

Medicare Drug Plan Prices Are Increasing Rapidly (Feb. 2006),

Medicare Drug Plan Prices Are Higher than Medicare Drug Card Prices (Feb. 2006),

Copyright © Center for Medicare Advocacy, Inc. 08/19/2013