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Medicare Rebates: Bigger is Better, But is Big Government Best?

This article was originally published in RPM Report

Executive Summary

An inspector General report takes the first public look at rebating under Medicare Par D.For Henry Waxman the message is that private negotiation isn't working to capture deep enough discounts. But the more important message for sponsors is that the report shows CMS remains firmly committed to the private sector drug insurance model.

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When it comes to Medicare Part D, the brand counts at least that’s what some of the biggest plans have concluded. From Humana/Walmart to CVS/Member Health, the drug benefit is increasingly a story of branding, both in the selling proposition to consumers and in the branding of certain plans as underperformers by CMS

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At present, the federal government is prohibited from negotiating outpatient prescription drug prices with pharmaceutical companies on behalf of Medicare Part D. But, Senator Barack Obama (and perhaps John McCain, whose stance on this policy is unclear) favors a health system in which the government can bring its bargaining power to the table. What happens when the other shoe drops?

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