To hear it from the pharmaceutical industry, Medicare Part D, the federal program that helps American seniors and the disabled cover medication costs, is a highly popular, successful, low-cost program. That’s bunk. According to a new paper, written by authors Marc-Andrew Gagon, PhD. and Sidney Wolfe, MD (Carleton University’s School of Public Policy and Administration and Public Citizen, respectively), drug prices covered under Medicare Part D are wildly inflated compared to drug prices in all other countries. Ok. We knew that already. That’s why seniors continue to import medication from other countries! But seriously, this report includes fresh data and critical analysis to reminds us, and hopefully convince Congress, that not only are we paying too much as taxpayers and consumers but Americans often cannot afford to take prescribed medication at all, and that leads to more hospitalizations and higher healthcare costs.
We’ve noted on many occasions the government’s survey data showing that about five million Americans import prescription drugs for personal use due to cost. About 750,000 are seniors, most who are subject to the coverage gap known as the “doughnut hole” of Part D, which, despite improvements under Obamacare, still leads to millions of seniors struggling to afford medication. Their decision to buy more affordable medication internationally makes sense. According to the new report, even the rebated brand name drugs under Part D are almost twice (198%) the cost paid in countries that make up the Organization of Economic Cooperation and Development (OECD) – the most advanced economies.
The report is called “Mirror, Mirror, on the Wall: Medicare Part D pays needlessly high brand-name drug prices compared with other OECD countries and U.S. government programs.” You can find it here.
Out of 640 brand name drugs, the median drug price among OECD countries is 42% of the U.S. price. Overall, pharmaceutical costs per person in the U.S. are $1,010 compared to $498 among OECD countries.
Despite spending so much more on pharmaceuticals, Americans are far less able to access medication than in other countries because of drug prices! Known as cost-related non-adherence (CRNA), the report cites a figure from the Commonwealth Fund showing that 19% of Americans do not fill a prescription each year due to cost. We know that this figure actually covers non-senior adults (ages 19-64), 35 million Americans and not seniors. The CRNA range for the other OECD countries is from 13%, which is still really high to only 2%. (Further research to determine accurately how many seniors are going without prescribed medication is badly needed).
The paper’s main recommendation is that the Centers for Medicare and Medicaid (CMS) should be able to use a variety of policy tools to lower drug prices for Medicare enrollees. Currently, U.S. law restricts CMS from negotiating drug prices making this impossible without action by Congress. There are already two large federal programs to control drug costs: one, Medicaid, which covers Americans at the lowest income levels; and two, the Veterans Benefits Administration (VBA), which covers our nation’s veterans.
Of course under Part D, plan sponsors, like UnitedHealth, Aetna, and Caremark act as pharmacy benefit managers to negotiate prices with drug companies, but the savings are incredibly weak compared to the savings by Medicaid and the VBA. Here’s how it plays out: A drug that costs $100, is discounted per each program as follows: Medicare Part D, $83, Medicaid, $48, Veteran’s Benefits Administration, $46. If Medicare could employ the same policy tools as the other programs, we would collectively save between $15.2 and $16 billion annually.
Predicting a backlash against their paper by the pharmaceutical industry, the authors are convincing and very skillful at debunking myths that drug companies love to propagate in their opposition to rational public policies for controlling drug costs. Quite simply, pharmaceutical research and development spending will not just dry up if Medicare works to reign in drug prices…innovation will continue and could even improve! Also, pharmaceutical industry jobs will not flee America, as the drug companies threaten, if U.S. drug prices are better aligned with other countries. For policy wonks this makes for great reading.
Getting out of the “policy weeds” – it’s so important not to forget the real world of seniors facing unaffordable medications. That real world includes about 750,000 seniors buying medication from foreign pharmacies over the Internet, and sometimes forgoing needed treatments all together. That’s why the information PharmacyChecker publishes about safe international online pharmacies is critical to public health. It prevents such seniors from falling victim to rogue online pharmacies.
Our sister site www.medicaredrugplans.com shows the very human face of seniors who often can’t stand their part D plans due to high out-of-pocket costs. It’s true that many review sites attract angry consumers – but the reviews are overwhelmingly bad, often downright scathing. Each year we hope for more balanced and positive reviews but they are few and far between.gagnon, OECD, Part D, public citizne, seniors, sidney wolfe
WE did NOT buy the Part D prescription plan because it simply paid little, if anything. Also, my husband is asthmatic and it doesn’t cover hardly any of the drugs; and the ones it does cover, WE CAN’T afford! Seniors are being ripped off by the drug companies.