Medicare spent billions more money on generic drugs for its beneficiaries than warehouse chain Costco did for the same drugs, according to an analysis published Tuesday. This overspending hit $2.6 billion in 2018, Erin Trish, associate director of the University of Southern California’s Schaeffer Center for Health Policy and Economics, and colleagues wrote in a letter to the Journal of the American Medical Association’s JAMA internal Medicine.
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| Figure 1: Five P’s of Decision-Making |
Tyrone’s Commentary:
Purchasers of PBM services need to recognize that smaller PBMs can provide similar or better levels of service at a lower cost. Your jobs are not at risk for trying a different approach when the current strategy is severely flawed. In fact, just the opposite is true. Save your company a few million bucks and you have grounds for a pay raise and/or promotion. What drives decisions in your PBM selection process? The best leaders, with P&L responsibility, make decisions at the top of the pyramid (see figure 1). Assess yourself as a plan sponsor.
They compared the amount Medicare pays for common generic prescriptions in its Part D prescription coverage with prices available to patients without insurance at Costco for 184 common generic drug products. “Medicare overspent by 13.2% in 2017 and 20.6% in 2018 compared with Costco member prices for these prescriptions,” they wrote. “Total overspending increased from $1.7 billion in 2017 to $2.6 billion in 2018.”
