TALLAHASSEE—A
new analysis of Medicare Part D drug prices in one large Florida county
has 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.
The
report by Consumers Union and released with Florida senior and consumer
groups, 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.
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 ‘donut
hole’ coverage gap could usually get lower prices at retail most of the
time than they could through their insurance plan,” said Chuck Bell,
Programs Director with Consumers Union.
“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,” Bell said. “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.
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 Brad Ashwell, legislative advocate for Florida PIRG.
“Congress should act now to create a Medicare-administered Part D plan
that directly negotiates for lower prices with the drug industry.”
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. Consumers should
consult with their plan to find out whether out-of-plan shopping would
count toward the plan’s “true out-of-pocket costs,” since it is
important that they get full credit for any prescriptions they buy.
