Medicare Could Have Saved $3.6 Billion on Generic Drugs in 2020

MONDAY, June 20, 2022 (HealthDay News) -- Medicare could have saved up to $3.6 billion in 2020 by purchasing drugs at Mark Cuban Cost Plus Drug Company (MCCPDC) online pharmacy prices, according to a research letter published online June 21 in the Annals of Internal Medicine.

Hussain S. Lalani, M.D., M.P.H., from Brigham and Women's Hospital in Boston, and colleagues estimated the potential savings if Medicare Part D plans paid MCCPDC prices. Medicare Part D spending for 89 drugs was compared to prices for their generic equivalents sold by MCCPDC.

The researchers found that for the 89 drugs, estimated annual Medicare spending was $9.6 billion. Medicare could have saved $3.6 billion (37 percent) on 77 of 89 generic drugs (87 percent) if generic drugs had been purchased in maximum quantity supplied by MCCPDC. MCCPDC prices did not offer savings for 12 drugs ($1.5 billion) of the $6 billion in total estimated Medicare spending. Of the $4.5 billion in drug spending where savings were available, costs were $1.9 billion, $1.4 billion, $820 million, and $402 million for ingredients and manufacturing, shipping, pharmacy fees, and the 15 percent margin, respectively. Esomeprazole was the drug with the highest potential savings ($293 million). Medicare could have saved $1.7 billion on 42 of 89 drugs if it had purchased the minimum quantity available from MCCPDC.

"The lower prices from a direct-to-consumer model highlight inefficiencies in the existing generic pharmaceutical distribution and reimbursement system, which includes wholesalers, pharmacy benefit managers, pharmacies, and insurers," the authors write.

Two authors disclosed financial ties to Arnold Ventures.

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