Premiums paid by US seniors enrolled with the federal Medicare prescription drug benefit will go up about 12%, or $3, to $28 per month next year, reflecting the rise in drug costs, says the government. This is about 37% lower than the $44.12 originally projected in 2003, when the Medicare Prescription Drug, Improvement, and Modernization Act (MMA), which established the drug benefit, known as Part D, was enacted. However, it is being suggested that 2010’s increase could be much higher, given that the prices of 64 drugs are likely to more than double this year.

“Measured by enrollment, lower costs than originally expected and persistently high satisfaction rates, the Part D drug benefit program has in a short time become a stable, familiar, and vital part of Medicare,” said Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services (CMS), which administers the plan.

The CMS adds that while premiums are rising, overall estimates of the 10-year cost of the drug benefit are now $395 billion, down from an initial $634 billion.

However, after declining for six years, the US prescription drugs bill showed an increase of 8.5% in 2006, the year in which the Medicare prescription drug benefit began and the most recent year for which figures are available. Moreover, researchers at the University of Minnesota have forecast that the prices of 64 prescription drugs will go up by more than 100% this year, compared to just 22 which did so in 2004. Many of these drugs are for rare diseases, which makes it easier for drugmakers to increase their prices without attracting attention, said the researchers, led by Professor Stephen Schondelmeyer of the University’s PRIME Institute.

“When you get past the top 500 drugs or so, most employers and payers just don’t have time to monitor this information, and that creates an opportunity for extraordinary price increases,” he said.

Concern has also been growing within Congress over where drug pricing is going. An analysis released by the House Oversight and Government Reform Committee last month showed that pharmaceuticals covered under the Medicare drug benefit cost 30% more than medicines provided through Medicaid, the federal programme which covers people on low incomes, creating a “windfall” for drugmakers of at least $3.7 billion, and possibly billions more, in its first two years of operation. Medicaid’s programme is administered by the federal government while Medicare Part D uses private insurance companies.

Also last month, the Senate Joint Economic Committee asked the Federal Trade Commission (FTC) and General Accountability Office (GAO) to investigate allegations that drugmakers have been increasing the prices of long-established medicines “to the very highest levels the market will bear.”