DECEMBER 22, 2005 -- A new survey conducted by Families USA, a consumer health organization, reports that drug prices under the new Medicare plan will be much higher than those negotiated by the Department of Veterans Affairs.
The survey compared the lowest pharmacy price of the 20 drugs most frequently used by seniors and found that the median price paid by Medicare plans was 48 percent higher than the price paid by the VA.
In addition to premiums and deductibles, seniors enrolled in the new drug benefit plan would pay approximately 25 percent of the pharmacy price of the drug.
"Many seniors will be burdened with unaffordable high drug costs, and America's taxpayers will be fleeced," said Ron Pollack, executive director of Families USA.
In November, the minority staff of the House Government Reform Committee released a report also comparing the prices of Medicare and Veterans' drugs and found that Medicare drugs would be up to 80 percent higher.
The surveys used different methodologies. The Families survey examined the top 20 most used drugs, while the Committee examined the 10 most expensive drugs. The Committee took the average price of a drug across all the plans in a region, whereas the Families chose the cheapest price in all of the plans.
Government officials and a pharmacy benefit managers' group dispute the findings of both surveys.
"The [Families USA] press release overstates the amount people will pay," Gary Karr, spokesman for the Centers for Medicare and Medicaid Services, said on Wednesday.
He argued that the VA model is not a good one for Medicare because of limitations on drug choices and on where to fill prescriptions.
The Pharmaceutical Care Management Association (PMCA), an organization representing pharmacy benefit managers, released a statement contesting the findings of the Families USA report.
"Replicating a Veterans Administration–style approach to Medicare drug pricing would lead to higher costs for working families, unions, and small businesses," the statement said.
The new Medicare plan and the Veterans' plan represent two different approaches to getting cheap prescription drugs to seniors. The new Medicare plan relies on private insurers to negotiate drug prices with pharmaceutical companies. Seniors enrolled in the program would be able to choose their insurance plan and their drugs. The Department of Veterans' Affairs negotiates drug prices directly with pharmaceuticals.