Drug prices stable for Medicare patients, report shows

• Prescription drug prices did not rise for Medicare patients after discounts for government
• Democrats says health care law did not penalize consumers, despite initial concerns

WASHINGTON -- Prescription drug prices did not increase for other Medicare consumers after pharmaceutical companies gave the government discounts to help seniors deal with a gap in benefits known as the "doughnut hole," a new report shows.

The Government Accountability Office, the non-partisan watchdog arm of Congress, found that prices for brand-name drugs used by Medicare beneficiaries increased at a similar rate before and after the government required discounts in January 2011.

"This report shows how health reform is working to save seniors $4.8 billion and helping them afford their prescription drugs, closing the donut hole," Senate Finance Committee Chairman Max Baucus said in a press statement. "We need to help seniors save every dollar they can and that's exactly what the Affordable Care Act does – reducing seniors' out-of-pocket costs while providing more benefits."

Republican presidential nominee Mitt Romney has vowed to overturn the law if elected.

The 2010 health care law required a 50% discount on prescription drugs in the gap between traditional and catastrophic coverage in the Medicare drug benefit, or Part D. In 2011, seniors saved about $2.16 billion through the program, Department of Health and Human Services records show.

Critics of the law, such as the health insurance industry, worried that the discounts would push prescription costs up for those not within the gap to offset the manufacturer discounts. Several members of Congress, including Baucus, asked GAO to investigate.

GAO found that 77 brand-name drugs increased 36% for those within the coverage gap from January 2007 to December 2010 – or before the discount program began – and 35% for those not within the gap. From December 2010 to December 2011, after the program was in place, they increased 13% in both categories. HHS said GAO's findings mirrored its own, though each agency used different reporting methods.

Medicare "will continue to manage this program aggressively to ensure that brand-name discounts are applied accurately and timely," wrote Jim Esquea, assistant secretary for legislation at HHS.

Robert Zirkelbach, spokesman for America's Health Insurance Plans, expressed concern about the 13% overall increases.

"In order to make health care coverage more affordable, there needs to be a much greater focus on the prices that are being charged for prescription drugs and other medical services, which continue to increase at unsustainable rates," he said.

AHIP launched a new iPad app today, U.S. Health Care Spending 101, designed to help people better understand those rising costs, Zirkelbach said.

In 2010, 75% of Part D Medicare drugs were generic, according to the Center for Medicare Services. In 2012, the coverage gap is $2,930, and the health care law will eliminate the doughnut hole by 2020.