No-haggle policy on drug pricing cost Medicare at least $14.4B, study finds

Medicare Part D could have saved $14.4 billion on the top 50 medications covered in 2016 if the program had been able to pay the same prices as the Department of Veterans Affairs, which often negotiates discounts, according to new analysis published in JAMA Internal Medicine cited by STAT.

Five things to know:

1. In 2016, annual Part D spending on the top 50 pills that were covered hit $32.5 billion in 2016. However, if Medicare had obtained VA prices, the cost would have been 44 percent lower in 2016. 

2. In particular, the VA spent $1.7 billion of Gilead's Harvoni hepatitis C treatment in 2016, compared to Medicare Part D, which spent $3 billion on the drug. In addition, the VA spent about $1.2 billion on Celgene's top-selling cancer treatment Revlimid, compared to $1.8 million spent by Medicare.

3. The analysis comes as House and Senate Democrats renew the push for Medicare to directly negotiate with drugmakers.

4. "The VA is an example of how a government entity tries to negotiate in bulk for drug prices. So if you're looking how Medicare might negotiate or what might happen, this is a data point to use in those discussions," Walid Gellad, MD, one of the researchers who runs the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, told STAT.

5. The researchers said that they only studied 50 drugs and that they did not differentiate between dosages or long-acting formulations to calculate unit prices, although most medicines were brand-only products and were priced similarly regardless of dose.  

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