Medicare Drug Plans’ Preferred Stores May Be Costlier

Jonathon Blum, CMS deputy administrator, wrote a letter (pdf) to the private insurers who offer government-subsidized drug plans under Part D, saying they may have chosen preferred pharmacies that are more expensive than other stores.

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In one example, one plan offered by UnitedHealth Group listed preferred pharmacies, generally larger chain stores like Walgreen’s, that charged as much as 10 percent more for four common drugs than nearby competitors, including independent pharmacies not commonly offered preferred-store contracts.

In theory, an insurer would give a preferred-store contract to a pharmacy promising customers in exchange for discounts. Medicare Part D will subsidize insurers’ costs to administer those plans, expecting to share in the savings. If the findings are true that the preferred options are cheaper, that would mean taxpayers bear a larger burden for such agreements, not the expected smaller one.

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