Thursday, July 24, 2008

Government Oversight & Reform Committee Hearing

Rep. Henry Waxman held a House Government Oversight & Reform Committee hearing today titled, “The Medicare Drug Benefit: Are Private Insurers Getting Good Discounts for the Taxpayer?”Rep. Waxman is upset because Medicare Part D prices are higher than the artificially low Medicaid drug prices.

Under the Medicaid program, a brand name drug manufacturer by law must give the Medicaid program its lowest price, subject to a number of arcane exceptions. If the manufacturer agrees to sell a brand name drug below the Medicaid price floor, then the Medicaid price comes down. Medicare Part D, however, is exempt from the Medicaid price floor. For that reason, I expected that Medicare Part D plans would be able to cut better deals for brand name drugs than FEHB plans. However, according to testimony today from Mark Merritt, President of PCMA, the PBM lobby, "overall savings of PDPs in Part D are comparable to levels achieved by PBMs in the Federal Employees Health Benefits Program (FEHBP), according to analysis conducted by PricewaterhouseCoopers (PwC)."

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