The U.S. government should monitor the effect that rebates have on Medicare Part D plans and whether these discounts ultimately discourage some people from enrolling in the prescription drug program, according to a new report by a federal watchdog.
At issue is the opaque pharmaceutical pricing system. To win coveted placement on formularies – the list of medicines covered by insurers – drug companies pay rebates to Medicare Part D and commercial health plans. But while the rebates generally lower purchase costs for the plans, they generally do not benefit all beneficiaries, whether they are enrolled in commercial plans or Medicare Part D.
Why? As the Government Accountability Office noted in its report, it’s complicated. In general, rebates may not only reduce what a health plan pays for a drug, but bring the price low enough so that this drug costs less than a rival medicine. The good news is this behind-the-scenes maneuvering can lower overall Medicare spending on prescription drugs.