Controversy ahead: HHS inspector general encourages more Part D drug rebates
- A new report from the HHS' Office of the Inspector General (OIG) found that Medicaid rebates exceeded Part D rebates in 2012.
- The OIG examined spending and rebates on 200 brand-name drugs, and found that although there was more prescription drug spending through Medicare Part D than Medicaid, Medicaid rebates were higher.
- Overall, 54% of total Medicaid rebates owed by pharma companies for the 200 drugs analyzed were a function of drug prices rising faster than overall inflation.
The numbers tell the story here. In 2012, Medicaid spent $35.7 billion, compared with $66.5 billion spent by Medicare Part D. But Medicaid rebates were $16.7 billion, compared with $10.3 billion for Medicare Part D. Based on this vast differential, the OIG is recommending that Medicare Part D should be allowed to obtain more rebates. And after all rebates were accounted for, Medicaid net unit costs were less than half of Part D Medicare costs for 110 brand-name drugs.
Based on this report, Senator Bill Nelson (D-FL) has introduced a bill requiring that Medicare Part D receive the same rebates as Medicaid. The Pharmaceutical Research and Manufacturers Association (PhRMA) disagrees and asserts that changing the structure of Medicare Part D, which it calls "successful," could jeopardize beneficiaries' access by driving up premiums, as well as reducing choice and restricting coverage.
This proposed law is sure to generate more controversy.