A new study published in the Annals of Internal Medicine shows that the Medicare Part D insurers would have saved Medicare several billion dollars on generic drugs in 2020 if they paid Mark Cuban’s Cost Plus pharmacy prices. But, had they done so, these insurers would have lost billions in profits. Why is the administration continuing to promote a failed corporate health insurance model, over public health insurance, to the detriment of taxpayers and people with Medicare?
The whole idea behind having private health insurers “compete” to offer drug coverage is that competition will bring drug prices down. But, the Part D health insurers are not in business to bring down drug prices. They are unwilling to do what Mark Cuban is doing to bring costs down or even to offer their enrollees coverage of their generic drugs through Cuban’s Cost Plus Pharmacy.
Ed Silverman reports for Stat News that the study finds $3.6 billion in savings to Medicare in one year alone. Of course, that would mean savings to people with Medicare who use these drugs, as well, in the form of lower copays. When the study was done, Cuban’s company produced 100 generic drugs. Now, it produces 700 drugs, suggesting savings would be far greater now.
The study’s authors say that “The lower prices from [Cuban’s] direct-to-consumer model highlight inefficiencies in the existing generic pharmaceutical distribution and reimbursement system.” What’s more shocking is that it highlights that the Part D private health insurance model for providing drug coverage to people with Medicare will never put taxpayer interests or the interests of people with Medicare first. (Recently, Kaiser Health News exposed that people can’t even count on a given published price of a drug on the Medicare Part D web site. Drug prices can change at any time at the insurers’ whim.)
The authors say that 64 cents of every dollar spent on generic drugs goes to the producers and distributors, including pharmacy dispensing and shipping. How much of the price goes to the health insurers?
Meanwhile, many older adults and people with disabilities are cutting their pills in half, delaying filling their prescriptions or dropping their medications altogether because they can’t afford the cost. For thousands each year, an additional $10.40 in copays means stopping filling prescriptions and premature death, according to a recent NBER study.
For this study, the researchers looked at 77 generic drugs and found that if the insurers had paid Mark Cuban’s Cost Plus prices, they would have cut 37 percent of Medicare’s $9.6 billion in generic drug costs. An additional 12 generic drugs cost the same with Cuban’s pharmacy as Medicare paid.
Some of the price differences between what the insurers are paying and what Cuban charges are inexplicably huge. Esomeprazole, which is used to treat acid reflux (a generic for Nexium,) cost Medicare about $1.77 a pill. Cuban charges about one tenth the price–$0.19 a pill.
Here’s more from Just Care:
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