Medicare prescription drug pricing variance: 5 things to know

Medicare beneficiaries are facing wide price discrepancies for prescription drugs, with the same medication costing vastly different amounts, depending on the plan and location, The Wall Street Journal  reported Nov. 26. 

Here are five key reasons why costs can vary significantly: 

  1. Pharmacy benefits managers negotiate prices for Medicare, but they do so differently across health plans. For example, CVS Caremark has 643 different prices for generic versions of Zytiga, while Express Scripts has 500 and Optum Rx has 445. By comparison, Capital Rx, a smaller PBM, only has two prices for the same drug pegged to the U.S. government's national average drug acquisition cost. 

  2. The price for prescription drugs can also vary widely depending on where the beneficiary lives. A recent analysis found that generic versions of Zytiga cost about $815 per month in northern Michigan, but $3,356 in another part of the state. Similarly, Xarelto prices vary across Florida, ranging from $456 to $884 per month across different Medicare plans. 

  3. Medicare's drug pricing plan is complicated, with prices often varying depending on the region and the PBM managing the drug plan. Medicare divides the U.S. into 34 regions, with health plans submitting separate bids for each. Prices are not uniform even within the same region because of different deals negotiated by PBMs with drugmakers and pharmacies. 

  4. Even if the same PBM is managing different Medicare plans, prices can still differ significantly. For example, Medicare pays 67 different prices for Xarelto in a single Florida county even though the same PBM (Express Scripts) is managing the plan. This shows how the same PBM can negotiate different rates for the same drug across various health plans. 

  5. The price variations can also result in significant out-of-pocket costs for Medicare beneficiaries. Due to the complex pricing system, seniors may face significantly higher costs for the same medication, depending on which plan they choose.

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