Issue Brief 16-19
April 7, 2016

The Centers for Medicare & Medicaid Services (CMS) announced the parameters that will guide calendar year (CY) 2017 individual and state costs for the Medicare Part D drug benefit. CMS projects a 6.99% annual percentage increase in per capita Part D expenditures. After accounting for prior-year revisions, the annual percentage increase is 11.75%. This marks the second consecutive year of double-digit increases. Prior to this, the Part D program benefited from a slowdown in prescription drug costs, particularly as major specialty medications lost their patent protection. With the availability of new specialty drugs—such as Hepatitis C drugs—growth in prescription drug utilization, and rising drug prices overall, this trend is reversing.

The release of the annual percentage increase, enrollment data for persons dually eligible for Medicare and Medicaid, and FFIS projections of Federal Medical Assistance Percentages (FMAPs) for federal fiscal year (FY) 2018, allow for preliminary estimates of state clawback costs for CY 2017. Based on the projections, CY 2017 clawbacks are estimated to cost states $10.9 billion, $1.1 billion more than CY 2016.