Brand-Name Rx Drugs Drive Up Medicare Spending, Study Finds
Medicare could save more than $1 billion dollars annually by adopting policies that address the program's spending on brand-name prescription drugs, according to a study published Monday in the Annals of Internal Medicine, Kaiser Health News' "Capsules" reports (Rao, "Capsules," Kaiser Health News, 6/11).
For the study, researchers at the Veterans Affairs Center for Health Equity and Research compared the rates of brand-name drug use among older adults with diabetes. The study involved more than one million Medicare beneficiaries in the Part D program and 510,485 veterans ages 65 and older who were prescribed four common diabetes medications (Fiore, MedPage Today, 6/10).
Overall, the study found Medicare beneficiaries were three times more likely than veterans to be prescribed brand-name diabetes medications.
The study authors suggested that the variation in brand-name drug rates "likely reflect structural differences in formulary management between the two systems" (MedPage Today, 6/10).
According to "Capsules," the VA system requires physicians to follow an approval process that encourages the use of generic drugs over a brand-name version ("Capsules," Kaiser Health News, 6/11). In addition, the VA system administers its own benefits, while Medicare relies on private plans with different formularies.
The authors also noted that the prescribing differences resulted in "substantial economic implication." For example, the study found Medicare Part D would have spent $1.4 billion less in 2008 if it had adopted the VA system. Conversely, VA's prescription drug spending would have spent an additional $108 million if it had followed Medicare's practices (MedPage Today, 6/10).
Reactions to Study
Walid Gellad -- a lead study author and internist with the VA Pittsburgh Healthcare System and the University of Pittsburgh -- said he hopes the results will motivate lawmakers as they seek ways to control Medicare spending. Gellad said, "It's an easy solution," adding, "You don't have to change a law or do anything special to decrease costs -- you just have to change the kind of drugs people are using" ("Capsules," Kaiser Health News, 6/11).
Meanwhile, Alex Federman -- who has studied generic drug use at the Icahn School of Medicine at Mount Sinai -- said it is not politically feasible for Medicare to adopt a system like VA's. However, he added that Medicare and private insurers could work to encourage physicians to consider costs in their prescribing (Pittman, Reuters, 6/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.