Generic Drugs Reduce Costs Under Medicare Drug Benefit
Medicare beneficiaries enrolled in the prescription drug benefit can significantly reduce their medication costs by switching from brand name treatments to generic drugs or lower-cost therapeutic equivalents, according to two separate studies released on Thursday by Consumers Union and CMS, CQ HealthBeat reports.
The Consumers Union study, which was prepared by Consumer Reports Best Buy Drugs, examines prices for medications in five common treatment areas -- high cholesterol, high blood pressure, post-heart attack care, arthritis pain and depression -- under Medicare drug plans in Arizona, California, Georgia, Maryland, Minnesota and Pennsylvania. The study finds that beneficiaries taking five drugs who switched from brand name drugs to lower-cost alternatives could save between $2,300 and $5,000 annually.
According to the study, the savings could be enough to prevent beneficiaries from reaching the so-called "doughnut hole," the coverage gap under which Medicare beneficiaries are responsible for annual drug costs between $2,250 and $5,100. In addition, the study finds that beneficiaries who switched just one brand name medication to a lower-cost treatment could save between $350 to $800 annually.
The study also says that Medicare could save about $8 billion annually beginning in 2007 if all beneficiaries taking cholesterol-lowering statins switched from brand names medications to lower-cost treatments.
The CMS study finds that beneficiaries enrolled in mid-priced drug plans could reduce their drug costs by as much as 59% by switching from brand name drugs to generics, while beneficiaries in the lowest-priced plans could reduce drug costs by as much as 83% by switching from brand-names to generics and brand-name therapeutic equivalents. Purchasing drugs by mail can produce further savings, according to the study.
In addition, the study finds that beneficiaries enrolled in the lowest-priced drug plan in their area save an average of nearly 60% compared with their medication costs before obtaining drug coverage. According to the study, competition among Medicare drug plans has reduced costs to the point that prices in some cases are lower than those negotiated by insurance companies and pharmacy benefit managers for the non-Medicare population.
Gail Shearer, director of Consumer Reports Best Buy Drugs, said in a news release, "It's important that seniors know they can significantly stretch their prescription drug dollars under Medicare if they first consider cost-effective medicines."
Ron Pollack, executive director of Families USA, said drug costs could be further reduced if the federal government negotiated prices with pharmaceutical companies. "[T]here's growing sentiment to make that kind of a change" to the Medicare drug benefit, Pollack said, adding, "I think this is going to receive serious consideration" (Carey, CQ HealthBeat, 3/2).
The Consumers Union report is available online. Note: You must have Adobe Acrobat Reader to view the report.
In related news, a survey by the North Dakota Pharmacists Association found that nearly one in five pharmacists borrowed money to cover expenses related to problems with the start of the Medicare drug benefit, the Fargo Forum reports.
State Insurance Commissioner Jim Poolman requested the survey after hearing anecdotal reports that pharmacists had experienced problems with the launch of the benefit. The survey received responses from 52 pharmacists, or about 30% of the state's pharmacist population.
It finds that:
- For the first month of the drug benefit, pharmacists reported an average of 115 rejected claims, with financial liability ranging from $1,000 to $25,000.
- 61% of pharmacists reported that beneficiaries have encountered changes in their drug plan formularies since enrolling, with two-thirds of changes reported as negative for the beneficiary.
- 77% of pharmacists said beneficiaries at their pharmacies learned their prescriptions were not fully covered after they had enrolled in a plan.
- Pharmacists were on hold on drug plan phone lines for an average of two hours, with wait times ranging from 30 minutes to six hours.
Problems experienced by low-income Medicare beneficiaries during the start of the drug benefit are an example of how "our country is being run by people who assume that things will turn out the way they want," columnist Paul Krugman writes in a New York Times opinion piece. According to Krugman, problems with the drug benefit are similar to problems the Bush administration has had with "Iraqi insurgents [and] hurricanes."
He writes, "[I]n each case experts warned about the impending disaster," and in each case they "were told to shut up" by administration officials. "If good luck is what happens when preparation meets opportunity, bad luck is what happens when lack of preparation meets a challenge," Krugman writes, concluding, "And our leaders, who think they can govern through a mix of wishful thinking and intimidation, are never, ever prepared" (Krugman, New York Times, 3/3).
KPBS' "KPBS News" on Thursday reported with pharmacists' financial difficulties with the new Medicare prescription drug benefit. The segment includes comments from Mike Negrete, vice president of clinical affairs for the California Pharmacists Association (Goldberg, "KPBS News," KPBS, 3/2).
The complete transcript is available online.
The complete segment is available online in RealPlayer.