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PCMA: Eight Ways to Reduce Federal Health Spending and Improve Prescription Drug Benefits in Medicare and Medicaid
Date:10/23/2013

Taco Bells, Kentucky Fried Chickens, Domino’s Pizzas, and Dunkin’ Donuts combined, creating a highly competitive environment. New research finds that preferred pharmacy networks will reduce federal Medicare Part D costs up to $9.3 billion over the next 10 years.

  •     Encourage Chronic Care Pharmacy and Home Delivery in Medicare. Currently, beneficiaries in private-sector retiree plans use home delivery four times more often than those in Part D plans because Medicare places restrictions on home delivery benefit options. Removing Medicare’s restrictions on home delivery and encouraging beneficiaries to get their maintenance medications by mail would improve drug adherence and save Medicare on hospital and physician costs. Home delivery is popular with patients because it offers less expensive 90-day prescriptions and is more convenient than driving to the drugstore.
  •     Allow Medicare Plans to Negotiate Discounts on Every Brand Drug. Removing the mandate that entitles “all or substantially all” drugs in Medicare’s six protected classes to be covered—whether or not the manufacturer offers price concessions—would increase competition among brand manufacturers. When manufacturers are guaranteed that their drug will be covered, they have no incentive to offer price concessions. The “protected drug class” rule in Part D makes it virtually impossible to negotiate price concessions on certain brand drugs.
  •     Increase Cost-Sharing Incentives for Part D Low Income Subsidy (LIS) Enrollees to Use Generic Drugs. Compared to other Part D enrollees, LIS enrollees are using more expensive brand drugs even when a lower cost generic are available. Consistent with the Medicare Payment Advisory Commission’s recommendations, incentivizing the use of lower cost generics in this population will reduce costs without compromising quality or access.
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