House Members Call for Overhaul of Medicare Drug Pricing
During a Sept. 21 hearing of the House Energy and Commerce oversight and health subcommittees that focused on Medicare overpayment for prescription drugs, subcommittee members called for an overhaul of the drug-pricing system, the AP/Philadelphia Inquirer reports. According to a report by the HHS inspector general, last year Medicare overpaid by $1.9 billion for 24 popular prescription drugs. HHS Deputy Inspector General George Grob said, "The waste gets bigger every year. The current system is based on make-believe numbers that are too easy to manipulate. It is time for Medicare to get under control." Medicare drug reimbursements are based on an "average wholesale price" reported to the government by drug makers. But drug makers then often sell medications to providers for a lower amount, allowing doctors and pharmacists to receive a profit. The OIG report suggested that overpayments could be avoided by creating a commission to set rates, collecting "more accurate" pricing information and basing payments on how much drug stores and physicians pay. A separate report by the General Accounting Office said that Medicare reimbursed doctors at least $532 million more than they paid for drugs last year. Further, investigators for the Energy and Commerce committee found some drug companies inflated their prices to boost profits for doctors and pharmacists. Energy and Commerce Chair Billy Tauzin (R-La.) said, "Patients may not be receiving the most effective treatments because of the perverse incentives of the Medicare reimbursement system" (Marx, AP/Philadelphia Inquirer, 9/22).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.