Last spring, Families USA issued Big Dollars, Little Sense, its latest report analyzing Medicare versus VA drug prices. Of the top 20 drugs prescribed— including Plavix (for fighting cardiovascular disease), Lipitor (a cholesterol-lowering agent), and Fosamax (to prevent bone loss)—the lowest price for any Part D drug plan Families USA analyzed was still higher than the VA’s prices for the same drug.
Specifically, the median price difference was 46%. That means for half these top 20 drugs, the lowest price charged by any Part D plan was at least 46% higher than the lowest price secured by the VA.
Failure to control costs
What does that come to in real dollars? Here’s one example from Families USA’s analysis: for a year’s supply of 70 mg Fosamax, the VA’s lowest price was $262.32. The lowest Medicare Part D plan price was $727.92—a difference of 174%.
If you are one of the 40% of people age 65-plus taking five prescription medications a week, the numbers get even worse. Comparing the VA prices for the top five drugs to those of the lowest Medicare plan—Humana PDP—“We found someone would save $2,134.78 in annual outof- pocket costs if the plan negotiated as effectively as the VA,” says Ron Pollack, executive director, Families USA.
Your savings could be even more substantial if any or all of your medications could be switched from the brand names analyzed to generic equivalents. That might keep you from falling into the donut hole at all, or at least postpone your reaching it.
Likelihood of change?
Even negotiating clout won’t automatically resolve Medicare’s pricing problems. “Savings for Medicare beneficiaries is based onmore than price. It is a drug list that encourages the use of generics, mail order pharmacy, and lower-cost alternatives. It also requires disease management that helps people manage their health comprehensively,” says Mohit Ghose. Ghose is vice president of public affairs for America’s Health Insurance Plans, a trade association representing drug plan providers.
Repealing the ban on negotiations can’t force the Bush administration to negotiate. Health and Human Services Secretary Mike Leavitt has repeatedly expressed the Administration’s opposition, and its inclination to veto such a bill, calling it really a front for “government-run health care.”
Joseph Antos, resident scholar at the American Enterprise Institute, is skeptical Part D negotiations will happen. “It is an execution problem. Negotiating prices on prescription drugs is a great slogan, but a difficult policy to implement. It is one thing to say you want them, another to say here’s how we’re going to do it,” he says.
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