Humana hit by Rx cost increases in USA

The USA's second largest provider of Medicare prescription drug plans, Humana, has cut its forecast earnings for the current year because of higher-than-expected costs. The announcement follows a price war against the largest Medicare drug payer, UnitedHealth Group, in which Humana lowered co-payments for beneficiaries to tempt customers to switch providers.

According to a report by Bloomberg News, the Kentucky-headquartered insurance giant "miscalculated how many elderly people with serious medical conditions would choose its Medicare drug plan" under the Part D program. As a result, earnings have taken a $160.0 million drop since the beginning of the current year.

As a result of competition between insurers, as well as negotiated discounts with drugmakers, the cost of the Medicare Part D prescription drug program has been about 30% below initial forecasts (Marketletters passim).