Generic Drug Savings Possibilities: $3.6 Billion to Medicare Using DTC Pricing

In January of this year, entrepreneur and Dallas Mavericks owner Mark Cuban launched a direct-to-consumer pharmacy called the Cost Plus Drug Company, promising savings by eliminating middlemen and charging cost plus 15% and a pharmacy fee. What if Medicare could do the same? On this episode of Managed Care Cast, we speak with a researcher who coauthored a study out this week that looked at the savings to Medicare Part D if the same model had been employed for some of the most used generic drugs.

Hussain S. Lalani, MD, MPH, an internist and one of the coauthors, discussed the findings of the paper, published Monday in the Annals of Internal Medicine. The analysis compared the price paid by Medicare Part D plans in 2020 with the price of 89 generic drugs sold by the pharmacy in 2022.

The researchers, from Brigham and Women’s Hospital and Harvard Medical School, used the price paid by Medicare Part D plans in 2020 and looked at the price of 89 generic drugs sold by the pharmacy in 2022.

After adjusting for changes in drug costs between 2020 and 2022, the researchers found that Medicare paid more on 77 of the 89 generic drugs: $8.1 billion compared with $4.5 billion. Medicare would have saved as much as $3.6 billion over 1 year.

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