MMA debate centers on drug overpayment

Sunday, April 11, 2004

April 12, 2004

WASHINGTON - The government’s new prescription drug act could fail seniors if Medicare doesn’t start paying less for albuterol and other drugs, according to a Washington Post story last week.
While Medicare pays 47 cents per milligram for albuterol, the VA pays just a nickel.
"Medicare and its beneficiaries would save $1.6 billion a year if 24 drugs were reimbursed at amounts available to the VA," said an Inspector General report on the "excessive overpayment" by Medicare for some prescription drugs.
The difference between the VA's and Medicare's payments for albuterol and other covered drugs has become ammunition in the disagreement over how the MMA's new drug coverage should be run. 
The VA leverages its buying power to negotiate prescriptions drug prices. Medicare, however, is barred from negotiating costs with pharmaceutical companies, and contention over this aspect of the new law, which takes full effect in 2006, runs deep within the government.
If the government did use its bargaining power on behalf of all 41 million Medicare recipients, "it would drive down prices for Medicare first and eventually across the board," Rep. Tom Allen, D-Maine, told the Washington Post.
Prescriptions bought by the VA cost at least 24% less than the average retail price, according to the article. The VA's price is on average 40% less than what consumers pay.