Part D Price Negotiation: Why we need it

1
Part D Price Negotiation Why we need it

• Marc Steinberg, Families USA
• Health Action 2007 Washington, DC
• January 25, 2007
• msteinberg_at_familiesusa.org 202-628-3030

2
Part D Prices Are High

• VA Prices vs. Prices for 5 largest Part D
  insurers
• For every top 20 drug used by seniors, lowest VA
  prices is below lowest Part D price.
• Median difference 58 percent

3
Annual Price Differences, VA and Top Part D
Insurerssource Families USA, 2007
4
Part D Drug Prices Matter

• Beneficiaries
• Costs in deductible, coinsurance, doughnut hole
• Timing of doughnut hole
• Taxpayers
• Part D Premiums (pay 75)
• Low-income benefit costs
• Catastrophic Costs (pay 80)

5
Is Action Needed?

• Claim Market works now
• VA prices show room for savings
• Private market costs are wrong comparison
• Increased costs for dual eligibles drugs
• Claim Part D is cheaper than expected
• Lower projections driven by other factors
• Claim Wont save anything
• Why the fuss?

6
Would Negotiation Get Good Results?

• Claim VA comparison inappropriate
• Useful illustration
• Access in VA system very good
• Claim RD would be threatened
• For large US drug manufacturers, marketing/
  advertising /administration is roughly twice the
  size of RD

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Conclusion Areas to Examine

• Single-source drugs
• Monopoly pricing argues for powerful buyer
• Dual eligibles
• Price of drugs has increased over Medicaid prices
• Overall transparency
• Prices paid by Part D plans known only to CMS

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Appendix Part Ds Basic Benefit