A recent study sheds light on concerning practices within Medicare Part D, where patients are reportedly overpaying for generic drugs due to inflated prices orchestrated by health insurers. The study, a collaboration between West Health, the University of Washington, and the Skaggs School of Pharmacy and Pharmaceutical Sciences at the University of California San Diego, scrutinized pricing practices and found that private health insurers sponsoring Medicare Part D prescription drug plans utilize pharmacy benefit managers (PBMs) that inflate drug costs by overcompensating pharmacies for medicines.
Published in JAMA, the research letter emphasized the significant repercussions for patients, as these reimbursement practices influence copays and deductibles by basing them on inflated drug costs. The study, analyzing data from the U.S. Centers for Medicare & Medicaid Services (CMS) for the top 50 generic drugs in terms of CMS spending in 2021, revealed markups as high as 6,000% to 7,000%.
Inmaculada Hernandez, PharmD, PhD, the corresponding author, expressed alarm at the results, stating, “We are talking about markups of 6,000% or 7,000% in some cases.” The study exposed the impact of these practices on patients, with coauthor Sean D. Sullivan, PhD, noting the financial strain on pharmacies due to retroactive adjustments through clawbacks.
The study highlighted a cancer drug as a particularly egregious example, costing $4.20 per tablet to the pharmacy while insurers were reimbursing an average of $126 per pill—an average markup of 3,000%, resulting in a $3,600 charge for a 30-day supply.
The researchers underscored the opacity and harm caused by these practices, emphasizing the need for further investigation and potential legislative intervention. Anecdotal evidence from earlier this year by nonprofit drug maker CivicaRx had hinted at such reimbursement discrepancies, and the study confirms these concerns. The U.S. Senate is reportedly contemplating a bill to address these reimbursement practices in Medicare Part D.