What You Need to Know
- Policymakers need to take a closer look at the practices that allow for intermediaries to negotiate drug prices on behalf of Medicare but don’t necessarily pass those savings on to beneficiaries and taxpayers.
- Researchers determined that Medicare plans paid more than Costco members on almost 53% of 90-day fills.
- USC researchers suggest drug pricing reform also should span the full distribution system and include generic drugs.
Costco has a reputation for low prices, on everything from bulk frozen food to 60-inch TVs, and even its pharmacy. In many cases, Costco’s prescription drug prices are better than Medicare prices.
This suggests that policymakers need to take a closer look at the practices that allow for intermediaries to negotiate drug prices on behalf of Medicare but don’t necessarily pass those savings on to beneficiaries and taxpayers.
That’s the takeaway by University of Southern California researchers who compared Medicare Part D prescription drug prices with those paid by Costco members and found that the federal government overpaid on roughly half of the most common generic medicines in 2018.
“Our analysis shows that in systems like Costco’s, where incentives are set up to deliver value directly to the consumer at the pharmacy counter, that’s what happens,” Erin Trish, associate director of the USC Schaeffer Center for Health Policy and Economics, an assistant professor of pharmaceutical and health economics at the USC School of Pharmacy, and one of the study’s authors, said in a statement.
“It’s time to fix those incentives in the Medicare Part D system to put the patient first,” she added.
USC’s analysis, titled “Comparison of Spending on Common Generic Drugs by Medicare vs. Costco Members,” appeared July 6 in a research letter in JAMA Internal Medicine.
Researchers determined that Medicare plans paid more than Costco members on almost 53% of 90-day fills analyzed in 2018. On all 30- and 90-day prescription fills, Medicare plans overpaid 43% of the time.
What’s more, across more than 1.4 billion Medicare Part D claims for 184 products, Medicare plans overspent by 13% in 2017 and almost 21% in 2018, compared to Costco member prices.