|
Friday, July 25, 2008
Drug Manufacturers See $3.7 Billion Medicare Windfall
 The law that created the Medicare drug benefit, or Medicare Part D, mandates that Medicaid beneficiaries who were also eligible for Medicare ("dual eligibles") receive their drug coverage from the Medicare drug program rather than Medicaid. So, rather than be allowed dual eligibles to choose between two programs, when the new Medicare law went into effect, it shifted Medicare-eligible Medicaid beneficiaries into the new program. As it turns out, drug manufacturers benefited handsomely from the switch.
According to a House Committee on Oversight and Government Reform report, Medicare Part D insurers spent (and drug manufacturers took in) $3.7 billion more on the 100 most-prescribed drugs than Medicaid would have spent on those same drugs.
In 2006 and 2007, the private Part D insurers spent $18.7 billion to purchase the top 100 drugs for dual eligible beneficiaries. On average, the Part D insurers received rebates and otherdiscounts from drug manufacturers that reduced these costs by 14%, lowering the total cost of providing these drugs to dual eligible beneficiaries to $16.2 billion.
Medicaid purchases the same drugs for low-income beneficiaries who are not dual eligible and pays significantly lower prices. If the private Part D insurers had paid the same prices as Medicaid, their total cost for the drugs used by the dual eligible beneficiaries would have been $12.4 billion. The higher prices paid by the private Medicare Part D insurers increased the costs to the taxpayer for these drugs by 30%.
Responding to the committee's findings, CMS Acting Administrator Kerry Weems said, "Beneficiaries moved from a state-run price fixing program into a risk-based insurance product where they have the dignity of choice, broader access to more drugs and no limits on the number of prescriptions," "Diginity of choice" is an odd way to say that Medicaid beneficiaries must participate in the Medicare drug benefit. It's certainly a "choice" that drug manufactures certainly prefer.
House Committee on Oversight and Government hearing: The Medicare Drug Benefit: Are Private Insurers Getting Good Discounts for the Taxpayer?
Posted by Craig Jennings
|