Less Restrictive Medicare Rx Formularies Increase Cost Estimate, CBO Says

The nonpartisan Congressional Budget Office (CBO) has boosted its cost estimate for the Medicare prescription drug benefit, in part because the law's final rules allow drug plan sponsors to design more generous Rx formularies than had been expected.

Spending on Medicare Part D -- the drug benefit that starts in January 2006 -- is now estimated to total $593 billion during the 2004-2013 period, an increase of $41 billion over the CBO's original November 2003 estimate of $552 billion, according to a CBO report.

Part D spending is expected to total approximately $258 billion during the additional two years of the plan, which is now being calculated from 2006-2015, the CBO noted. This would bring total spending on the drug benefit to approximately $850 billion, according to calculations of the CBO's budget figures.

The new CBO estimate, however, does not factor in some expected savings to the program, including savings to Medicaid and other federal programs.