News/Commentary

The fundamental questions are:

Why was this pricing technique allowed in the first place? It now is acknowledged as what it has been—- a give-away to the sellers, not buyers—-but only if you knew how to understand the deal.

Why is Medicare not stopping this practice effective today? Why wait until 2010?

Bloomberg

“Jan. 6 (Bloomberg) — Medicare banned a pricing technique that lowered costs for health insurers and drug-benefits managers while pushing elderly beneficiaries over their coverage limits for prescriptions. (Emphasis added)

“The rule changing the definition of “negotiated prices” takes effect Jan. 1, 2010, the Centers for Medicare and Medicaid Services said today in an e-mail statement. The change will also save the government money, the agency said.

“Drug plans for 2009 cover their elderly members’ first $2,700 in prescriptions before they reach a gap known as the “doughnut hole.” Beneficiaries must pay all of the next $3,453 before the insurer starts paying again. Medicare spent $47.6 billion on the plans in 2007. (Emphasis added)

“It ends a scam, and it adds some much-needed transparency to drug prices under the benefit,” said Paul Precht, spokesman for the Medicare Rights Center consumer group in Washington, in a telephone interview today. “Hopefully that will spill over beyond Medicare into the commercial sector.”

Source: Bloomberg, January 6, 2009