Medicare Rx Prices Top VA by Half

Group Blames Lack of Bargaining Power for Difference

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Dec. 21, 2005 -- Popular drugs soon to be covered by Medicare are set to cost seniors and taxpayers nearly 50% more on average than they do under the existing Veterans health system, according to a report released Wednesday.

The study comes just days before the Jan. 1 start of Medicare's new prescription drug benefit, which pays part of seniors' medication costs for the first time.

The group issuing the report called it proof that Medicare could save billions of dollars or improve benefits if it had the VA's authority to negotiate lower prices from drug makers. Medicare is legally barred from such negotiations, a point of ongoing contention among supporters and detractors of the program.

The study, by the consumer health group Families USA, found that Medicare is set to pay substantially more for 19 of the 20 drugs most used by seniors and in some cases may pay several times as much.

For example, the best VA price for a year's supply of 75-milligram tablets of the popular drug Plavix, which is used to prevent clotting in patients with heart disease and strokes, is $887.16. This is 39% lower than the $1,229.64 charged by the cheapest prescription drug plan available through Medicare.

In other cases, the gastrointestinal drug Protinix and the cholesterol-lowering drug Zocor were 326% and 689% more expensive, respectively, under the best Medicare price than at the VA. In all, the 20 most popular drugs cost a median of 48.2% more under Medicare, according to the study.

The Fight Continues

The prices don't reflect what patients using the plan -- known as Part D -- can expect to pay. Medicare is set to pay 75% of most beneficiaries' drug costs up to $2,250 per year after the patients pay a $250 deductible and around $35 dollars per month in premiums.

Still, Ron Pollack, Families USA's executive director, maintained that the differences showed the federal government and seniors together would pay far too much for drugs under Medicare.

"Millions of seniors will be burned with unaffordable costs and the American taxpayer will be fleeced," he says.


The group compared VA's lowest prices to the lowest prices available through a multitude of plans operating in the Washington, D.C., Maryland, and Virginia region, and in Ohio -- as listed on the web site.

Pollack says the prices were comparable to what would be offered in the rest of the country.

Pharmaceutical manufacturers strongly opposed allowing the government to bargain for lower prices when Congress debated the Part D law in 2003. Several lawmakers continue to push legislation granting Medicare that authority.

Estimates of the program's 10-year cost have ballooned from $395 billion in 2003 to nearly $750 billion today.

"If the prices of drugs are high and inappropriately high, that means that benefits are worse than they could be," Pollack says.

Industry groups and Medicare officials did not dispute the findings. They suggested that the wider access to drugs available under Medicare make it more difficult to control costs than under the more restricted drug list of the VA.

"Medicare beneficiaries would never accept a drug benefit with sharply reduced drug choices and very limited access to pharmacies," says Mark Merritt, president of the Pharmaceutical Care Management Association, a group representing companies set to manage Medicare drug benefits.

Gary Karr, a spokesman for the Centers for Medicare and Medicaid Services, says that insurers and management companies have been successful in negotiating cheaper drug prices.

"It's cheaper than it was expected to be and the coverage is better than it was expected to be," he says.

WebMD Health News Reviewed by Ann Edmundson, MD, PhD on December 21, 2005


SOURCES: Families USA, "Falling Short: Medicare Prescription Drug Plans Offer Meager Savings," Dec. 21, 2005. Ron Pollack, executive director, Families USA. Mark Merritt, president, Pharmaceutical Care Management Association. Gary Karr, spokesman, Centers for Medicare and Medicaid Services.
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