Keeping you updated on the latest Medicare and Part D news

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Medicare Part D Pays Substantially More for Brand-Name Drugs than Other OECD Countries

A provision in Medicare Part D that precludes The Centers for Medicare and Medicaid Services from negotiating brand-name drug prices is proving costly. The provision, which was implemented in exchange for the support of Medicare Part D from the pharmaceutical industry, means that Medicare Part D pays higher prices for brand-name drugs than other Organization for Economic Co-operation and Development (OECD) countries and similar U.S. government programs.

According to a recent policy brief released by Carleton University in Ottawa, ON Canada, brand-name drugs cost Medicare Part D 198% of the median costs for the same brand-name drugs in 31 OECD countries. This estimate also includes the rebates that are often used by pharmaceutical companies to help relieve the financial burden on consumers of brand-name drug prices. Additionally, Medicare Part D pays significantly more for brand-name drugs than other comparable U.S. programs, such as Medicaid and the Veterans Benefit Administration (VBA). The brief estimates that Medicare Part D would save between $15.2B and $16B annually if it were able to pay the same price for brand-name drugs as Medicaid and the VBA.

While Medicare Part D alone represents 7% of the global pharmaceutical market, Medicare Part D beneficiaries pay double the amount that other OECD countries pay for the same drugs. The brief’s recommendations include reducing the price of brand-name drugs for Medicare Part D to at least the levels of Medicaid and the VBA, mandatory rebates on official prices, and mandatory generic substitution.

Policy Brief



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Medicare Fraud Takedown Results in 243 Arrests

On June 18th, Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced a nationwide sweep led by the Medicare Fraud Strike Force across 17 districts that led to the arrest of 243 individuals for their alleged participation in Medicare fraud schemes. The 243 individuals are accused of producing approximately $712 million in false billings spanning across various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment and pharmacy fraud.  Among the 243 individuals arrested, at least 44 are charged with fraud related to Medicare prescription drug benefits under Part D.

The arrests came shortly after an HHS Office of Inspector General (OIG) report titled, “Ensuring the Integrity of Medicare Part D,” in which the OIG outlined a number of vulnerabilities to fraud that exist within the Part D program. Among the potential fraud vulnerabilities outlined were the billing of non-rendered services, drug diversion, and an increase in organized criminal networks committing health care fraud, including medical identity theft. Additionally, the OIG had 540 pending complaints and cases involving Part D as of May 2015, a 134% increase in the last 5 years.

The OIG report stresses the evident vulnerability of Part D to fraud schemes that often result in beneficiaries being victimized or being complicit.  The recommendations to curb Part D fraud schemes going forward include requiring sponsors to report all potential fraud and abuse to CMS and/or MEDIC, requiring sponsors to report data on all incidents filed and corrective actions taken related to fraud and abuse, and implementing greater restrictions to ensure certain providers and beneficiaries are limited in their prescription access.

OIG Report
DOJ Report

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Heroin-related Overdose Deaths Quadruple Since 2002

A new CDC Vital Signs report released last week found that heroin use has increased in the U.S. among men and women, most age groups, and all income levels.  Surprisingly, some of the greatest increases in heroin use were among demographic groups that have historically low rates of use: women, the privately-insured, and people with high incomes. Heroin use doubled among women and young adults, while use more than doubled among non-Hispanic whites. The increases in heroin use have led to increased heroin-related overdose deaths. Between 2002-2013, the rate of heroin-related overdose deaths nearly quadrupled, with more than 8,200 people dying in 2013.

Referring to the reasons for the increase in heroin use, CDC director Dr. Thomas Freiden told CNN: “First, more and more people are susceptible to heroin because they have been prescribed prescription opiates, like OxyContin. And the second reason is that heroin itself seems to be cheaper and more widely available.” The CDC report finds that more than 9 in 10 people that used heroin used at least one other drug, with those addicted to opioid painkillers to be 40 times more likely to be addicted to heroin. Additionally, 45% of heroin users were also addicted to prescription opioid painkillers.

There are signs that the U.S. is making progress in curbing opioid painkiller abuse, but it remains the strongest risk factor for heroin addiction. The CDC report calls for increased education and monitoring efforts by state governments and local health care providers.  Other suggestions from the CDC include increased access to substance abuse treatment services through the Affordable Care Act, expanded use of Medication-Assisted Treatment, and supported developments of pain medications that are less prone to abuse.