Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Medicare Could Have Saved $3.6B on Generic Drugs

drugs.com

Post reply on HN
Print view View original

41–50 of 86 posts

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#41

Post by encryptluks2 »

gumby wrote: post #6

Not just generics. Ever get a coupon from a drug manufacturer that drops your copay from hundreds of dollars to $10 or $20? Ever wonder why? It’s because Medicare gets an automatic discount (I think 20% these days but I’m no longer in the biz) from the manufacturer’s official price. So they simply set the official price at some huge figure and rake in huge bucks from the largest buyer, Medicare. Then they negotiate w…

Ever get a coupon from a drug manufacturer in exchange for all your personal information and some disclosure for them to share your medical information? That is why.

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#42

Post by yold__ »

naniwaduni wrote: post #12
gumby wrote: post #6

Not just generics. Ever get a coupon from a drug manufacturer that drops your copay from hundreds of dollars to $10 or $20? Ever wonder why? It’s because Medicare gets an automatic discount (I think 20% these days but I’m no longer in the biz) from the manufacturer’s official price. So they simply set the official price at some huge figure and rake in huge bucks from the largest buyer, Medicare. Then they negotiate w…

> It’s a huge rip off. Medicare should be paying a discount to the median price actually paid on the open market. But apparent nobody has an incentive to fix this. Then they start issuing rebates instead of discounts? Or yeah, sure, everyone's definitely paying $100 for this quantity of this drug, then we kick insurance back $80 for advertising for every unit that makes it to an end consumer through them. There's no…

> Then they start issuing rebates instead of discounts?

They already do, and it's a huge amount of money. It's how they keep prices opaque. There is a list price (retail price), the pharmacy dispenses the drug, and gets reimbursed a variable amount from the insurance company (called the reimbursement price), usually about 50% of the list price. Then, the insurance company gets a kick-back from the drug manufacturer (usually for non-generic drugs). Medicare also gets these kick-backs, and they stopped disclosing the actual amount around 2016.

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#43

Post by testfoobar »

$3.6 billion is not a lot of money.

Edit: E.g. In 2014, end of life care for age 65+ (final 12 months) is 25% of total Medicare spending.

https://www.kff.org/medicare/issue-brief/medicare-spending-a...

"Medicare Spending at the End of Life: A Snapshot of Beneficiaries Who Died in 2014 and the Cost of Their Care"

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#44

Post by saltminer »

Spivak wrote: post #14
jpgvm wrote: post #7

Earlier quoted context omitted.

Yeah no. Generics -are- equivalent and regulated to be as such. [1] If you are hearing anything different it's just BS. [1] https://www.fda.gov/drugs/questions-answers/generic-drugs-qu...

Yes but no. Generics are not 1-1 substitutes because the FDA allows some (a lot) of wiggle room when it comes to bioequivalence. A really good example where this fails miserably is Adderall for ADHD. The generics are absolutely miserable . And if you actually find a generic you tolerate you can never switch pharmacies because they’ll be different. I’m no pharmacological expert but when I asked my pharmacist they expl…

I believe it's therapeutic equivalence that the FDA is lax on, not bioequivalence. Bioequivalence is just "does it deliver the same amount of the active ingredient," theraputic equivalence is "does it deliver the active ingredient in the same manner." The active ingredient is the same, the inactive ones are where the difference lies. Usually, they're similar enough that it doesn't really matter, but some drugs really do benefit from buying the name brand.

A good example is with methylphenidate generics - you get the same amount of methylphenidate, but the name-brand extended release is far more effective than the generic extended release because it spreads the same amount of active ingredient over a longer period (the delivery mechanism created by the inactive ingredients in some generics is subpar).

Occasionally, you'll get non-bioequivalent generics that slip through FDA approval, which happened to some methylphenidate generics [0][1]. I remember getting switched to the name brand when this came out, as the supplier for all the pharmacies near me used a non-bioequivalent manufacturer. (Authorized generics don't have this problem since it's literally the name brand with generic labels slapped onto it, but the one the nearby pharmacies could get through their suppliers was not the authorized generic.)

[0]: https://www.fda.gov/drugs/drug-safety-and-availability/quest...

[1]: https://www.reddit.com/r/ADHD/comments/3af86d/fda_rules_2_fo...

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#45

Post by smugma »

ceejayoz wrote: post #17
gumby wrote: post #6

Not just generics. Ever get a coupon from a drug manufacturer that drops your copay from hundreds of dollars to $10 or $20? Ever wonder why? It’s because Medicare gets an automatic discount (I think 20% these days but I’m no longer in the biz) from the manufacturer’s official price. So they simply set the official price at some huge figure and rake in huge bucks from the largest buyer, Medicare. Then they negotiate w…

It doesn't just let them fuck Medicare, it lets them fuck private insurance too. I'm on a med that's $12k every two months. If I were on a high deductible plan, they'll happily cover that $12k for the first go, because I meet my deductible and then insurance pays the other five doses. The cost to them is basically nil; chances are the actual one mililiter of fluid costs them a marginal $20 or so to make.

Like in software (less so in the cloud days), marginal costs are not particularly relevant.

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#46

Post by dehrmann »

Spooky23 wrote: post #15
gumby wrote: post #6

Not just generics. Ever get a coupon from a drug manufacturer that drops your copay from hundreds of dollars to $10 or $20? Ever wonder why? It’s because Medicare gets an automatic discount (I think 20% these days but I’m no longer in the biz) from the manufacturer’s official price. So they simply set the official price at some huge figure and rake in huge bucks from the largest buyer, Medicare. Then they negotiate w…

It’s by design. The republican position was that allowing Medicare to negotiate drug prices would amount to price controls. They also forbade the using of Federal funds to reimport drugs from countries like Canada who negotiate prices. It’s a specious argument with predictable outcomes that were in fact predicted and widely discussed at the time the legislation was enacted.

> They also forbade the using of Federal funds to reimport drugs from countries like Canada who negotiate prices

Seems easier to grant Medicare most-favored nation status for prices since that's effectively what reimporting does.

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#47

Post by Spooky23 »

maxerickson wrote: post #29
Spooky23 wrote: post #15

Earlier quoted context omitted.

It’s by design. The republican position was that allowing Medicare to negotiate drug prices would amount to price controls. They also forbade the using of Federal funds to reimport drugs from countries like Canada who negotiate prices. It’s a specious argument with predictable outcomes that were in fact predicted and widely discussed at the time the legislation was enacted.

Part D plans are privately administered by companies that are supposed to compete with each other. The prices aren't just whatever the drug companies want.

Sure, they fight for pennies for plan administration, but don’t have the market power to have any leverage, by design.

It’s not a meaningful competitive process.

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#48

Post by rayiner »

Spooky23 wrote: post #15
gumby wrote: post #6

Not just generics. Ever get a coupon from a drug manufacturer that drops your copay from hundreds of dollars to $10 or $20? Ever wonder why? It’s because Medicare gets an automatic discount (I think 20% these days but I’m no longer in the biz) from the manufacturer’s official price. So they simply set the official price at some huge figure and rake in huge bucks from the largest buyer, Medicare. Then they negotiate w…

It’s by design. The republican position was that allowing Medicare to negotiate drug prices would amount to price controls. They also forbade the using of Federal funds to reimport drugs from countries like Canada who negotiate prices. It’s a specious argument with predictable outcomes that were in fact predicted and widely discussed at the time the legislation was enacted.

Medicare doesn’t cover drugs, except for drugs administered in a hospital setting.

The Republican position was that drug coverage should be through private insurance (Medicare Part D plans), instead of through Medicare itself. Part of the rationale was that Medicare would have monopsony power over drug pricing: https://www.britannica.com/topic/monopsony, as opposed to a compatible market with multiple buyers and sellers.

The Medicare Part D plans themselves assuredly do negotiate drug prices: https://crsreports.congress.gov/product/pdf/IF/IF11318 (“Part D sponsors, working with pharmacy benefit managers (PBMs), negotiate prices with drug manufacturers and contract with pharmacies to dispense drugs to plan enrollees. Negotiated price concessions mainly take the form of rebates (after-sale reductions) from a manufacturer’s list price for brand-name drugs.”).

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#49

Post by colinmhayes »

testfoobar wrote: post #43

$3.6 billion is not a lot of money. Edit: E.g. In 2014, end of life care for age 65+ (final 12 months) is 25% of total Medicare spending. https://www.kff.org/medicare/issue-brief/medicare-spending-a... "Medicare Spending at the End of Life: A Snapshot of Beneficiaries Who Died in 2014 and the Cost of Their Care"

$10/person year

Re: Medicare Could Have Saved $3.6B on Generic Drugs

#50

Post by rayiner »

ta988 wrote: post #30
maxerickson wrote: post #29

Earlier quoted context omitted.

Part D plans are privately administered by companies that are supposed to compete with each other. The prices aren't just whatever the drug companies want.

Interesting how there doesn't seem to be much competition.

https://www.kff.org/medicare/issue-brief/medicare-part-d-a-f...

“The average Medicare beneficiary has a choice of 54 Medicare plans with Part D drug coverage in 2022, including 23 Medicare stand-alone drug plans and 31 Medicare advantage drug plans.

Post reply on HN