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Part D Price Negotiation: Why we need it Marc Steinberg, Families USA Health Action 2007 * Washington, DC January 25, 2007

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Presentation on theme: "Part D Price Negotiation: Why we need it Marc Steinberg, Families USA Health Action 2007 * Washington, DC January 25, 2007"— Presentation transcript:

1 Part D Price Negotiation: Why we need it Marc Steinberg, Families USA Health Action 2007 * Washington, DC January 25, 2007 *

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 Insurers source: Families USA, 2007 DrugLowest VA Price Lowest Part D Price % difference Protonix$214.52$1, % Fosamax$250.32$ % Toprol$250.06$ % Celebrex$632.09$ %

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: R&D would be threatened For large US drug manufacturers, marketing/ advertising /administration is roughly twice the size of R&D

7 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

8 Appendix: Part Ds Basic Benefit Total Costs, 2006 Total Costs, 2007 You Pay Deductible$0-$250$0-$265100% Initial Coverage$251-$2,250$266-$2,40025% Coverage Gap (Doughnut Hole) $2,251- $5,100 $2,401-$5,451100% CatastrophicAbove $5,100Above $5,4515%


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