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Studies Show Medicare Drug Plans Offer Significant
Discounts and Savings
March 9, 2006 – Medicare released an analysis today
showing seniors citizens and people with disabilities enrolled in
Medicare prescription drug plans are seeing significant savings on the
costs of their prescription drugs over what they would have paid with no
drug coverage. The announcement also points to similar findings by
Consumers Union that were released last week. The analysis also
indicates seniors can do well with a wide range of plans, rather than
with just the ideal one for their needs.
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Medicare Drug Program |
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Savings on many of the drugs that seniors take most
often can be found through nearly all of the prescription drug plans
included in the Centers for Medicare & Medicaid Services (CMS) analysis.
With strong competition among the drug plans,
beneficiaries are finding they are able to get deeper discounts on their
drugs at local pharmacies. Much of these savings are the result of the
negotiated discounts that the Medicare prescription drug plans are able
to obtain directly from pharmaceutical manufacturers.
In many cases, these discounts are substantially
better than "third party" prices negotiated by insurance companies and
pharmacy benefit managers (PBMs) for populations other than Medicare
beneficiaries. Taking rebates into account for both Medicaid and
Medicare, Medicare drug plans are usually getting prices that are as
good as or better than Medicaid prices.
Those who use generic drugs will find even deeper
discounts for the cost of their drugs. And beneficiaries who switch to
similar drugs in the same class, "therapeutic alternatives" that have
been shown to provide similar benefits to their current drug, can get
still larger savings.
Because large savings are available on a broad
range of plans, especially when they use generic drugs and less costly
brand-name drugs that work in a similar way to their current drugs, most
Medicare beneficiaries with common health problems can find a range of
plans having features they want that will provide them with large
savings.
Similar findings were released last week by
Consumers Union in a new report that shows "many seniors could save
enough money to cover the cost of their Medicare drug benefit premiums
if they consider switching to equally effective, lower-cost medicines."
The report can be found at
http://www.crbestbuydrugs.org/.
Findings:
● Beneficiaries enrolling in the lowest-cost plan
(including premiums and drug costs) in their area may save an average of
almost 60 percent off the cost of their drugs compared to what they were
paying without any coverage, with potential savings of as much as 71
percent.
● Beneficiaries do not need to select the
lowest-cost plan to realize substantial savings. Even those enrolling
in a range of lower-cost plans -- those that fall within the first five
or ten plans on the Prescription Drug Plan Finder -- could save up to 49
percent over the course of the year.
● Beneficiaries can increase their savings by
switching to lower-cost medications, including generics and brand-name
drugs in the same class that work in a similar way. Even those
selecting the mid-priced plan available based on the analysis can save
as much as 59 percent off of their drug bills by switching to generic
medications alone. This is because, when Medicare plans do not provide
large discounts on a particular brand-name drug, they generally provide
large discounts on a generic version of the drug or of other, similar
"therapeutic alternative" drugs in the same drug class.
● Beneficiaries can maximize their savings by
switching to both generic and brand-name therapeutic equivalents --
saving as much as 83 percent for the lowest-cost plan for certain drugs.
● Many beneficiaries can also save by enrolling
in a plan with a low premium, saving between 33 percent and 68 percent
off of what they would pay on average without coverage by choosing the
plan with the lowest premium in their area.
● Beneficiaries with both high and low drug costs
will see significant savings by enrolling in a Medicare PDP due to price
discounts and coverage, as well as the availability of options that fill
in the coverage gap. Beneficiaries with low spending, for instance, can
often see particularly substantial savings by choosing a plan with low
premiums and/or no deductibles.
● Beneficiaries may also realize greater savings
by using their plan's mail-order option. Medicare prescription drug
plan mail-order prices are consistently lower than those available from
Drugstore.com and Costco.com even, in many cases, among mid-priced
plans.
● In rare instances, some plans do not result in
savings for beneficiaries for these particular drug profiles. However,
in these cases, the plans are covering cheaper generics and/or
therapeutic alternatives on their formularies. When these equivalent
generic and/or brand-name therapeutic alternatives are made,
beneficiaries see large savings.
Methodology:
CMS' study is based on information available through the Medicare
Prescription Drug Plan Finder at
http://www.medicare.gov/. The information is calculated on a range
of beneficiary drug "profiles," comprised of the drugs most often used
to treat certain conditions commonly experienced by people with
Medicare, such as high blood pressure, high cholesterol, coronary artery
disease, heart failure, diabetes, osteoporosis, thyroid problems, and
chronic lung diseases like asthma, among others. The profiles were drawn
from about 100 brand-name and generic medications, including many of the
top drugs taken by Medicare beneficiaries.
Results were obtained for each profile from two zip
codes, representing urban and rural locations in most regions across the
country. The profiles were created early in 2005 and CMS has been
conducting this analysis since the program's implementation on January
1, 2006.
For the Medicaid price analysis, CMS compared
prices net of rebates for a range of profiles and estimated prices net
of rebates by applying state- specific average rebate percentages to the
state-specific Medicaid payment amounts. Similarly, plan-specific
estimated rebate percentages (as included in the 2006 plan bids) were
applied to plan-specific payment amounts.
Web sites:
Consumer Reports Best Buy Drugs -
http://www.crbestbuydrugs.org/
Medicare -
http://www.medicare.gov/
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