Why Some Seniors Are Paying Different Prices for the Same Drug Under Medicare
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What is the main topic discussed in this episode?
and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise.
Here's your Money Briefing for Tuesday, November 26th.
What problem does the episode introduce about Medicare drug pricing?
I'm J.R. Whelan for The Wall Street Journal. Seniors enrolled in Medicare health plans could be on the hook for potentially thousands of dollars in additional out-of-pocket expenses for prescription drugs.
If there's 2,000 different prescription drug plans, there might be 2,000 different prices. And they might range from the lowest price, costing Medicare maybe $50, $60. And it could go all the way up where the most expensive price is maybe $8,000, $10,000.
We'll talk to Wall Street Journal reporter Jared Hopkins after the break.
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How does the Medicare prescription plan enrollment process affect drug costs?
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Medicare often pays vastly different prices for the same drug, even for people insured under the same plan. Wall Street Journal reporter Jared Hopkins joins me.
Why can the same drug have hundreds or thousands of different Medicare prices?
Jared, take us through the process of how a drug gets from the manufacturer to Medicare to the consumer.
Medicare is the largest purchaser of drugs. It's They pick a plan, and they can go online, and they can put in what drug and what it would cost them from a copay perspective or a coinsurance. And eventually, they pick a prescription drug plan. It's not unlike what individuals have on the commercial market.
How big can price differences be for a single drug across plans and regions?
It might differ, though, in terms of pricing and in terms of formulary or what type of drugs their Medicare plan will cover.
How much do Medicare health plans typically cover for treatments?
So Medicare shares costs with patients, and patients usually pay a percentage of the drug cost, which is typically a copay or what's known as a coinsurance, which is a percentage of the overall cost.
Why does Medicare wind up paying different prices for the same drug, even for people insured under the same plan?
I mean, how much time do we have here? So the complex, complicated nature of the US healthcare system is why we have so many different prices here with so much different variability. There is a factor such as just geography. where people live is going to affect the overall cost of the drug. You also have sort of what pharmacy they are picking it up at.
So a mom and pop pharmacy versus a national chain might have different prices. Correct.
What role do pharmacy benefit managers (PBMs) and formularies play in price variation?
How many different prices could a drug have?
hundreds or thousands upon prices for some drugs. A drug might have more than 2,200 prices across all the different health plans. If there's 2,000 different prescription drug plans, there might be 2,000 different prices. And they might range from the lowest price, costing Medicare, I don't know, maybe $50, $60. And it could go all the way up where the most expensive price is maybe $8,000, $10,000. In the story, we wrote about the generic version of Tycurb, which is a cancer drug. There are 460 different prices in the U.S. for a generic version of that drug. For example, in central Illinois, there are a handful of plans that are charging more than $3,000 for that.
How are lawmakers responding and what protections exist for seniors?
However, there are also in the same area, the same county, charging double that price for that drug. But guess what? Maybe that sounds like a lot of money to you or that's an expensive drug. There's other parts of the country where that drug costs $10,000 on a prescription drug plan or $12,000.
In your story, you talk about why this is the case. And you mentioned PBMs, which are the pharmacy benefit managers. How do PBMs contribute to these different prices?
Experts told us that the wide variability is likely due to a multitude of factors. And that includes where a pharmacy might be located.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:01–0:31
2
What problem does the episode introduce about Medicare drug pricing?
0:31–1:35
3
How does the Medicare prescription plan enrollment process affect drug costs?
1:35–2:07
4
Why can the same drug have hundreds or thousands of different Medicare prices?
2:07–2:58
5
How big can price differences be for a single drug across plans and regions?
2:58–4:11
6
What role do pharmacy benefit managers (PBMs) and formularies play in price variation?
4:11–5:09
7
How are lawmakers responding and what protections exist for seniors?
5:09–6:14
8
What practical steps can seniors take to avoid overpaying for Medicare drugs?
6:14–9:56
Speakers
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