The Medicare prescription drug benefit has goosed pharma industry profits to the tune of $3.7 billion, said a report from Rep. Henry Waxman's Committee on Oversight and Government Reform.
The two-year boost, said the report, was due to the fact that Medicare Part D pays an average 30% more for drugs than does Medicaid.
The report, titled Medicare Part D: Drug Pricing and Manufacturer Windfalls, compared drug prices negotiated by private insurers under Medicare Part D with those paid through the federally administered Medicaid program, with a focus on “dual eligible” beneficiaries who are elderly and disabled and qualify for both Medicare and Medicaid. Those beneficiaries were previously covered under Medicaid but were transferred to Medicare under the Part D program.
The report found that Part D insurers paid $16.2 billion for $18.7 billion worth of the top 100 drugs for dual eligibles in 2006 and 2007 – realizing a 14% savings in rebates and other discounts from drug manufacturers. But Medicaid would have paid just $12.4 billion for the same drugs.
As a result, drugmakers pocketed $3.7 billion more than they would have without the program, the report said, naming the largest beneficiary as Johnson & Johnson, which saw $615 million more in sales for 2006 and 2007 – $500 million of that for Risperdal alone. Bristol-Myers Squibb made $400 more than it would have under Medicaid, half of that from Plavix sales through the program.