Medicare spends too much on brand-name drugs

Medicare spends too much on brand-name drugs

If Medicare's drug spending patterns regarding brand-name and generic drugs were the same as the U.S. Department of Veterans Affairs (VA), it would save over one billion dollars every year, according to a new study published in Annals of Internal Medicine.

The authors explained, as background information, that the VA and Medicare Part D use different approaches to managing prescription drug benefits - with huge differences in their drug spending. While the VA administers its own benefit using a national formulary, Medicare relies on private plans with their own formularies.

Walid F. Gellad, MD, MPH, from the Veterans Affairs Pittsburgh Healthcare System, and the University of Pittsburgh, set out to compare brand-name drug use patterns in the VA and Medicare for older adult patients with diabetes.

The team carried out a retrospective cohort study involving 1,061,095 Medicare Part D beneficiaries and 510,485 VA patients. They all had diabetes and were aged 65+ years.

The researchers measured the percentage of patients taking statins, ACE inhibitors, ARBs (angiotensin-receptor blocker) and oral hypoglycemics who filled brand name drug prescriptions, as well as the percentage of those taking long-acting insulins who filled analogue prescriptions.

Medicare's usage of brand name drugs was two to three times greater than in the VA.

Below are some of the results of the study regarding Medicare's and the VA's usage of brand-name drugs:

  • Oral hypoglycemics - 35.3% versus VA 12.7%
  • Statins - Medicare 50.7% versus VA 18.2%
  • ACE inhibitors or ARBs - Medicare 42.5% versus VA 20.8%
  • Insulin analogues - Medicare 75.1% versus VA 27.0%
The authors added that a limitation in the study was that their analysis could not fully describe the factors underlying the differences in drug use between Medicare and the VA.

The researchers concluded:

"Medicare beneficiaries with diabetes use 2 to 3 times more brand-name drugs than a comparable group within the VA, at substantial excess cost."

The study was mainly funded by the Robert Wood Johnson Foundation, the U.S. Department of Veterans Affairs, and National Institutes of Health.

The US government and some other organizations are going through health care expenditures with a toothcomb. A study carried out by the US Department of Health and Humans Services which found huge variations in how much hospitals charge for the same procedures.

The report gave as examples three suburban hospitals in Denver which charged from $28,237 to $97,214 for a respiratory infection procedure without complications.

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Section Issues On Medicine: Retirees