Federal officials study how to cut drug prices for Medicare patients

In the wake of rising drug prices over years for Medicare patients, federal officials appear ready to finally take some kind of action to help with out of pocket costs many seniors and disabled persons struggle with. Recently, federal officials have begun to explore the possibility of achieving lower drug prices by getting some of the same discounts insurers and pharmacy benefit managers (PBM) that administer Medicare’s Part D drug program already get for themselves.


Supporters of the idea hope the approach could reduce the overall price tag of prescription drugs and save Medicare the cost of making up the gap. Under the plan, the Center for Medicaid and Medicare Studies (CMS) would apply those fees that PBMs and insurers pay and apply those to what enrollees pay for their prescriptions.


Unlike the health insurers and PBMs able to negotiate with manufacturers willing to pay discounts so their products land a spot on a health plan’s list of approved drugs, CMS cannot haggle on drug prices. The restrictions have long been criticized by critics and supporters of how CMS is currently administered. Advocates for the pharmacy industry have also criticized the current drug price exchange which allows PBMs and insurers to recoup their benefits from pharmacies at a later date.


PBMs and insurance companies content they actually do a service to enrollees by keeping drug prices down and help increase the availability of certain drugs patients need to live healthy, more productive lives. However, earlier this year CMS released a report detailing that although the fees generated by PBMs do keep monthly premiums low, they ultimately result in higher out of pocket fees for Medicare enrollees and higher costs overall to maintaining the program.


Much of Congress’ heightened focus on making real and lasting change to the program has come from enrollees and Medicare advocates voicing their concerns over the effect rising out of pocket drug costs are having on the public. Those concerns appear to be backed by the CMS study on Medicare drug prices published earlier this year, showing a growing problem for both seniors and the program itself.


Unless Congress takes action, enrollees will continue to pay more out-of-pocket for each drug which will cause them to reach the program’s coverage gap quicker. Furthermore, taxpayers will continue to pay more per enrollee as Medicare pays the bulk cost of prescription drugs once enrollees reach the threshold for catastrophic coverage.

Contact Information