Medicare Could Have Saved $2.6 Billion on Drugs the Costco Way

medicare drug prices, costco

According to a new letter published in JAMA Internal Medicine on July 6, Medicare could have saved billions on generic drugs had they done things more like Costco.

Medicare plans spent more than Costco by 13 percent in 2017 and 21 percent in 2018. USC researchers also found that Medicare plans overpaid 43 percent of the time for 30- and 90-day prescription fills. “Total overspending increased from $1.7 billion in 2017 to $2.6 billion in 2018,” the study authors wrote.

Now, these costs are not paid directly by the beneficiaries, but by Medicare as a system. 

Study author Erin Trish said: “Our analysis shows that in systems like Costco’s, where incentives are set up to deliver value directly to the consumer at the pharmacy counter, that’s what happens … It’s time to fix those incentives in the Medicare Part D system to put the patient first.”   

According to CNN, “The issue is more about bringing additional transparency to the supply chain and to the practice of spread pricing, where [Pharmacy Benefit Managers] keep a portion of the amount paid for a drug as profit, Trish said.”

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