Senior Citizens Pay More for Drugs Because Congress
Refuses to Allow Medicare to Negotiate Like VA
Consumer Union finds seniors in donut hole can
do better shopping around for best price
|
Price for Six Drugs Compared |
|
Veterans Administration |
$22.06 |
|
Medicare Part D Full Price |
$48.38 |
|
Average Retail |
$55.86 |
October 12, 2006 – Consumers Union released a
report this week highlighting a study that found senior citizens who
have fallen into the Medicare Part D "donut hole" can get better prices
shopping around than through their Medicare drug plan. The headline was
"Floridians in Medicare Donut Hole Can Get Better Drug Prices." What the
headline should have been, however, is "All Senior Citizens Paying Big
Drug Price Because Medicare Does Not Negotiate Prices Like Veterans
Administration."
The analysis of Medicare Part D drug prices focused
on one large Florida county (Broward) and found that seniors can get a
better price in 80 percent of instances by shopping around for their
prescriptions retail than they can get by paying the “full-cost” price
under their Medicare insurance plan.
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The report by Consumers Union, however, does note
that this study "reinforces the need for Congress to lift the ban
prohibiting Medicare from using its massive purchasing power to
negotiate lower drug prices for beneficiaries, especially as Part D
plans this week begin marketing to seniors for the 2007 benefit year."
Attempts by Democrats in Congress to amend the law
to allow these negotiations has been opposed by the Bush administration
and blocked in Congress by the Republican leadership.
The Veterans Administration uses its purchasing
power to negotiate with the pharmaceutical industry to get lower prices
for its beneficiaries. The average per drug VA price for the six drugs
surveyed was $22.06 per drug; the average “full-cost” price under the
Medicare Part D plans surveyed in Broward County was $48.38.
“The Veterans Administration can get prices that
are half of what Medicare plans charge seniors in Florida. The VA
negotiates these prices, so why doesn’t Congress let Medicare do the
same for seniors throughout the nation?” said Pete Sikora, outreach
coordinator with Consumers Union.
The “full-cost” price is what a Medicare
beneficiary must pay once they’ve used $2,250 of their drug benefit
under most standard plans and land in the so-called “donut hole”
coverage gap.
“By simply shopping around, we found Florida
seniors in the Medicare ‘doughnut hole’ coverage gap could usually get
lower prices at retail most of the time than they could through their
insurance plan,” said Sikora.
“What’s happening with Medicare ‘doughnut hole’
prices in this one Florida county is likely illustrative of the rest of
the nation.”
“These results beg the question as to why
taxpayer-funded Medicare plans aren’t getting as good or better prices
than seniors can get at their local pharmacy,” Sikora added. “Congress
should take the handcuffs off Medicare and let it negotiate better deals
from the drug industry, which could help fill the ‘donut hole,’ giving
seniors and taxpayers a much better deal.”
An estimated 3 million to 7 million Medicare
beneficiaries are expected to fall into the “donut hole” coverage gap
this year. Once in the coverage gap, a beneficiary must spend $2,850 out
of their own pocket for “full-cost” drugs through their Part D plan
before Medicare coverage kicks in again.
Consumers Union surveyed in August the price of six
widely used prescription drugs at 261 retail pharmacies in Broward
County. Those prices were compared against the Part D “full-cost” price
for the same drugs offered by the 44 insurance plans operating in the
county. They also were compared to prices paid by the Department of
Veterans Affairs.
The survey found that in 80 percent of instances,
the lowest retail price for each of the six drugs was below the Part D
plans’ “full-cost” price. For example, a 30-day supply of the
most-prescribed medication, Lipitor (10mg for reducing cholesterol), was
available at a Wal-Mart for $62.85. The lowest “full-cost” price for the
same prescription under a Medicare Part D plan was $67.46.
Savings from shopping around could be significant.
The lowest price found at the retail level for a 30-day supply of Zoloft
(100 mg antidepressant) was $77.72 at a Sam’s Club. That was 23 percent
lower than the highest Part D plan price at $101.01.
However, the survey found that consumers had to
shop around to find prices that beat Medicare plan prices on average.
That’s because the average per drug retail price for the six
prescriptions surveyed was $55.86, while the average Part D “full-cost”
price was $48.38.
Yet the survey found individual retail prices often
were significantly below that average price, and with the addition of
Wal-Mart’s announcement offering $4 generic prescriptions in Florida,
the retail market may become more competitive.
Because Medicare resumes paying most of a
beneficiary’s drug costs once they have spent enough with their plan to
get past the “donut hole,” consumers should generally avoid buying
prescription drugs outside of their plan, although individual
circumstances vary.
To read the full report,
click here.
