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Are seniors, disabled in Medicare donut hole, getting raw deal?

Tuesday, Oct. 10, 2006

Report Finds Floridians in Medicare Donut Hole Can Get Better Drug Prices 80% of Instances by Shopping Around Than thru Drug Plans

Groups Call on Congress to Allow Medicare to Negotiate Lower Prices

(Pompano Beach, FL.) – A new analysis of Medicare Part D drug prices in one large Florida county has found that seniors can get a better price in 80 percent of instances by shopping around for their prescriptions retail than they can get by paying the “full-cost” price under their Medicare insurance plan.
The report by Consumers Union, and being released with Florida senior and consumer groups, reinforces the need for Congress to lift the ban prohibiting Medicare from using its massive purchasing power to negotiate lower drug prices for beneficiaries, especially as Part D plans this week begin marketing to seniors for the 2007 benefit year.
To read the full report, click here.
The “full-cost” price is what a Medicare beneficiary must pay once they’ve used $2,250 of their drug benefit under most standard plans and land in the so-called “donut hole” coverage gap.
“By simply shopping around, we found Florida seniors in the Medicare ‘doughnut hole’ coverage gap could usually get lower prices at retail most of the time than they could through their insurance plan,” said Pete Sikora, outreach coordinator with Consumers Union. “What’s happening with Medicare ‘doughnut hole’ prices in this one Florida county is likely illustrative of the rest of the nation.”
“These results beg the question as to why taxpayer-funded Medicare plans aren’t getting as good or better prices than seniors can get at their local pharmacy,” Sikora added. “Congress should take the handcuffs off Medicare and let it negotiate better deals from the drug industry, which could help fill the ‘donut hole,’ giving seniors and taxpayers a much better deal.”
An estimated 3 million to 7 million Medicare beneficiaries are expected to fall into the “donut hole” coverage gap this year. Once in the coverage gap, a beneficiary must spend $2,850 out of their own pocket for “full-cost” drugs through their Part D plan before Medicare coverage kicks in again.
Consumers Union surveyed in August the price of six widely used prescription drugs at 261 retail pharmacies in Broward County. Those prices were compared against the Part D “full-cost” price for the same drugs offered by the 44 insurance plans operating in the county. They also were compared to prices paid by the Department of Veterans Affairs.
The survey found that in 80 percent of instances, the lowest retail price for each of the six drugs was below the Part D plans’ “full-cost” price. For example, a 30-day supply of the most-prescribed medication, Lipitor (10mg for reducing cholesterol), was available at a Wal-Mart for $62.85. The lowest “full-cost” price for the same prescription under a Medicare Part D plan was $67.46.
Savings from shopping around could be significant. The lowest price found at the retail level for a 30-day supply of Zoloft (100 mg antidepressant) was $77.72 at a Sam’s Club. That was 23 percent lower than the highest Part D plan price at $101.01.
However, the survey found that consumers had to shop around to find prices that beat Medicare plan prices on average. That’s because the average per drug retail price for the six prescriptions surveyed was $55.86, while the average Part D “full-cost” price was $48.38. Yet the survey found individual retail prices often were significantly below that average price, and with the addition of Wal-Mart’s announcement offering $4 generic prescriptions in Florida, the retail market may become more competitive.
The Veterans Administration uses its purchasing power to negotiate with the pharmaceutical industry to get lower prices for its beneficiaries. The average per drug VA price for the six drugs surveyed was $22.06 per drug; the average “full-cost” price under the Medicare Part D plans surveyed in Broward County was $48.38.
“The Veterans Administration can get prices that are half of what Medicare plans charge seniors in Florida. The VA negotiates these prices, so why doesn’t Congress let Medicare do the same for seniors throughout the nation?” Sikora said.
Because Medicare resumes paying most of a beneficiary’s drug costs once they have spent enough with their plan to get past the “donut hole,” consumers should generally avoid buying prescription drugs outside of their plan, although individual circumstances vary.
Pete Sikora (917) 648-7786 (cell) 914-378-2755 (office)
Susan Herold (202) 462-6262