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Medicare Could Have Saved $3.6B on Generic Drugs

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

#51

Post by rayiner »

Spooky23 wrote: post #24
naniwaduni wrote: post #12

Earlier quoted context omitted.

> 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…

The Federal government and government in general is really good at commodity procurement. The processes and legal requirements give them the ability to price and fairly procure even single source commodities. I’ve done scaled procurements at a very large, not federal level. We were almost always 10-20% lower unit cost than large corporate, and sometimes even better. At the Federal level, the law gives them “most favo…

Most drugs aren’t commodities.

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

#52

Post by dehrmann »

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"

Elon Musk would spend $4.20 billion on a joke.

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

#53

Post by Spooky23 »

refurb wrote: post #37
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.

This is correct and Medicare Part D came in under budget due to private negotiation of drug prices. I love how accurate posts on HN get aggressively downvoted off they go against the narrative.

The fact is that a manufacturer sells a product at 80% gross margin to a distributor. Attempting to negotiate with the manufacturer is illegal. The resellers of said product go through an intense competitive process and earn a 2-4% margin. So the plans will offer cheap loss leaders… “free metformin!” and make it up elsewhere. Meanwhile, the government is paying $5/pill for some amoxicillin reformulation or whatever.

What “narrative” are you upset about again? Personally, I don’t think getting a stream of risk-free government guaranteed business should yield higher margins than coke dealers.

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

#54

Post by jahewson »

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.

The marginal cost of a cup of coffee is basically nil but I don’t expect a free cup every day from Starbucks.

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

#55

Post by boberoni »

This is like a news article/research paper version of a cost savings calculator on a pricing page.

You could save 90% on storage costs if you switch from AWS to XCloudProvider

This makes me want to dig into the research data and build an interactive cost savings calculator with a slider. It would also probably be a great marketing page for Drugs.com

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

#57

Post by rayiner »

Spooky23 wrote: post #47
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.

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.

You’re confusing two different things: monopsony power versus competitive pricing.

Monopsony power is when the market dominance of a buyer allows it to drive prices below the efficient level. But monopsony prices aren’t necessarily efficient prices. Wal-Mart’s pricing power, for example, has well demonstrated negative impacts on the upstream supply chain.

A competitive market, with numerous buyers and sellers, by contrast, will have higher prices than a market with a monopsony buyer. But at least in theory those prices will be efficient.

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

#58

Post by ipaddr »

jpgvm wrote: post #7
SamoyedFurFluff wrote: post #2

This is comparing to generic drugs from one specific company, based on the notion that the specific company is capable of providing a cheaper generic drug in a situation most favorable to the drug maker (a bulk purchase). It doesn’t actually go into if the generic will actually be a suitable replacement for each patient. For people with complex health needs, like the over 65+ folks on Medicare, it makes total sense t…

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...

Coke and Pepsi and RC Cola are equivalent but they are not the same. People can react differently to equivalent medication.

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

#59

Post by chimeracoder »

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 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 with the for profit insurance companies and subsidize the copays so that nobody complains to their congress person.

This is all completely wrong, to a point where I don't even know where to begin to correct it, because there are three separate misconceptions here layered on top of each other.

Not only does Medicare get most-favored-nation pricing (ensuring that they pay less than private insurers do), but pharmaceutical benefits for Medicare are provided under Part D, through for-profit insurance companies.

Furthermore, it is illegal to use copay assistance from manufacturers for brand-name drugs if you are using Medicare or Medicaid.

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

#60

Post by refurb »

Spooky23 wrote: post #53
refurb wrote: post #37

Earlier quoted context omitted.

This is correct and Medicare Part D came in under budget due to private negotiation of drug prices. I love how accurate posts on HN get aggressively downvoted off they go against the narrative.

The fact is that a manufacturer sells a product at 80% gross margin to a distributor. Attempting to negotiate with the manufacturer is illegal. The resellers of said product go through an intense competitive process and earn a 2-4% margin. So the plans will offer cheap loss leaders… “free metformin!” and make it up elsewhere. Meanwhile, the government is paying $5/pill for some amoxicillin reformulation or whatever.…

That's not how it works at all.

This is Medicare Part D - the plans are administered by private insurance companies - Medicare just pays the premiums, they don't pay directly for the drugs.. Private insurers compete for Medicare patients to sign up for their plans.

Private insurers do negotiate directly with manufacturers. Studies I've seen show they get similar (or better!) price they do with their private insurance plans.

The narrative I'm complaining about is - "there is no negotiation". This comments are typically by people who don't even know how it works.

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