Medicare and Prescription Drug Costs-Part VII of a VII Part Article
(8/24/11)- When prescription drug coverage was created for Medicare eligible beneficiaries, Congress determined that the individual insurers could bargain for lower prices for drugs than could the federal government. The data from a recent study that was required under the new health care law passed in 2010 showed that this was not true.
The data from the report, from the inspector general of the Department of Health and Human Services found that when rebates are included, spending on 100 widely used brand name drugs resulted in reduced costs of 19% in Medicare, while it was reduced by 45% in Medicaid.
Federal law specifies how the rebate is calculated under Medicaid. Under the law drug companies must pay additional rebates to Medicaid if a drug's price rises faster than general inflation. The inspector general, Daniel R. Levinson, found that the added rebates accounted for slightly more than half of all rebates paid to Medicaid on the top 100 drugs
"The inflation-based additional rebate is the primary reason Medicaid rebates are substantially higher" than Medicare rebates said Mr. Levinson.
About 50 million beneficiaries receive their drug coverage through Medicaid while about 30 million beneficiaries receive drug coverage through Part D of Medicare.
(12/16/10)- One of the reasons why the drug companies draw the public's animosity is because of their abuse of their pricing structure in connection with the "Average Wholesale Price" (AWP) used to determine the cost of various drugs for Medicare and Medicaid patients.
Time and time again, an inflated price is used in setting the AWP reimbursement price for the government. Once confronted by a governmental investigation, the companies settle the case and walk away without being criminally prosecuted.
In the latest example of this abuse, 3 drug companies agreed to pay a total of $421 million to settle claims that they overcharged the government for their drugs.
A Florida home-infusion company, Ven-a-Care of the Florida Keys, originally brought the cases as whistleblower suits. The government then joined the suits under the qui tam provisions of the False Claims Act, which allows whistleblowers to share in any proceeds that the government may recover as a result of their information.
As part of these settlements, Ven-a-Care will receive $88.4 million. The company's principals have already received several millions of dollars as a result of some of their prior whistleblower suits.
Abbott Laboratories Inc. will pay $126.5 million as its part of the settlement, Roxanne Laboratories Inc., will pay $280 million, and B. Braun Medical Inc., will pay $14.7 million.
The new health care law passed in 2010 provides for extra incentives for whistleblowers to report fraud and misdeeds by the pharmaceutical industry, and the law also provides for criminal penalties against the offenders. The big question will be if the criminal penalty clause will actually be utilized.
(4/28/10)- Prices for brand-name drugs rose 9.1% last year, the biggest increase in at least a decade, according to Express Script data. Express Script is one of the largest prescription benefits managers, and releases an annual-drug trend report.
The increase for specialty drugs, which includes biotech products, was 11.5% in 2009. The price increase had been 7.4% for traditional drugs in 2008, and 9.4% for specialty drugs.
According to figures from the investment banking firm Credit Suisse, which tracks the pricing of brand-name drugs made by the largest U.S. manufacturers, wholesale prices went up 7.8% in the first quarter of this year, compared to last year.
Under the terms of the new health-care legislation passed this year, drug companies, starting in 2011, will reduce by 50% the price paid by Part D card holders for drugs that fall into the "doughnut hole" category.
For our other articles in this series please see:
Medicare and the Cost of
Prescription Drugs-Part I
Medicare and the Cost of Prescription
Drugs-Part II
Medicare and the Cost of Prescription
Drugs-Part IIa- Medicare and Medicaid Drug Spending
Medicare and the Cost of Prescription
Drugs- Part III- HMOs and PBMs
Crossing the Border to Obtain Cheaper
Prescription Drugs-Part IV-Importing drugs from outside the
U.S.
Prescription and Generic Drug Costs-
Part V
Medicare and the Cost of Prescription
Drugs- Part VII
For a related article on the new prescription drug discount
cards:
The New Medicare Prescription Drug
Discount Cards
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