Is Medicare’s list of drugs bogus?
Regardless of what Medicare has to say, Nexium isn’t the most expensive drug as part of the US Medicare drug program. According to data which was released by the Centers for Medicare and Medicaid Services, giving Nexium to patients of Medicare cost taxpayers in America $2.5 billion in the year 2013. Despite this, AstraZeneca, the maker of Nexium only booked $2.1 billion in sales made throughout America. Not only does this include Medicare which is the program for senior citizens but it is also for Medicaid which is the program meant for the poor, people who have private health insurance as well as those who pay for these drugs from their own income. In reality, Medicare has spent on Nexium less than $1 billion.
The data however doesn’t include rebates. These are the refunds which drug companies pay to the insurance companies after the medicine has been given to the consumer. This is of importance because the free market in the US with respect to the price of prescription drugs exists mostly because of these refunds which are paid after the fact.
According to a Medicare spokesman, the data only presents one aspect of the care which is delivered through the Medicare program which consists of prescribing practices by healthcare professionals and doctors for recipients of Part D. he also stated that Medicare has outlines what the limitations of the fact sheet provided is as well as the limitations of the methodology used to collect data.
CMS has released this data. However the list of top selling drugs which has been released by them is something misleading and CMS makes it even worse by not including in it any clear context regarding what would happen if rebates weren’t included in the press release and what this would do to the numbers. By stating that Nexium is the worst example of overspending on drugs distracts one from the real discussion which is that how spending on other prescription drugs should be made similar to that of Nexium.
The discounts can be figured out which drug makers pay in the US through IMS health which is a company which tracks the sales of drugs at the pharmacy level. This data is sold for the purpose of marketing to drug companies as well as to Wall Street to give it some investment edge. Every year the IMS releases a list of 20 of the top selling drugs through undiscounted sales. By making a comparison using their figures with actual sales reported by a drug company can help in arriving at just how much is paid to Medicaid, Medicare and to insurers in terms of rebate.
Rebates however don’t affect every drug in the same manner; this is where competition works. A drug such as Nexium cannot command the premium which can be commanded by a medicine for a more serious problem. If rebates would be brought back in the next quarter, the question remains whether costs can be controlled for drugs which are expensive and likely to come into the market. Cancer drugs are being sold for melanoma at $150,000 annually for example and it isn’t clear whether or not competition will help in reducing the price. Thus whether or not patients will opt for medicines they want and leave behind Medicare and insurers is the question.