According to the Gannet News Service, a study conducted by researchers at the University of Minnesota finds that some pharmaceutical manufacturers have been quietly increasing prices for a small number of prescription drugs by 100 percent or more—driving up costs for insurers, patients, and government programs. In 2007, the average wholesale prices of 26 brand-name drugs increased by 100 percent or more in a single cost adjustment, up from 15 in 2004. During the first half of 2008, 17 medications have done the same. Drug companies have stated that such price hikes are often needed to cover the costs of keeping the drugs on the market.
The issue is of concern because the costs of Medicare-covered outpatient drugs and biologicals are included in setting the expenditure target for physicians’ services under the current Medicare sustained growth rate (SGR) formula, even though these items are not physicians’ services. The AAOS supports removing retroactively Medicare-covered outpatient drugs and other incident-to services that are included in the expenditure target as part of a fix to the SGR formula.
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