Commissioned CBO Report Finds Medicare Part D Pays More than Medicaid for Prescriptions

(WASHINGTON) – The Medicare Part D program pays far more than any other federal health program for prescription drugs, according to a report released today by the Congressional Budget Office (CBO).

The report, “A Comparison of Brand-Name Drug Prices Among Selected Federal Programs,” commissioned by Senate Budget Committee Chair, Sen. Bernie Sanders (I-Vt.), found that on average Medicare Part D pays nearly three times more for brand-name drugs purchased at retail pharmacies than Medicaid.

“There is no rational reason why Medicare pays nearly three times more than Medicaid and about twice as much as the VA for the same exact medicine,” said Sanders. “Negotiating directly with pharmaceutical companies will substantially reduce the price of prescription drugs, and it is a national embarrassment that the Secretary of Health and Human Services is prohibited from doing that on behalf of the more than 40 million Americans who get their prescription drug coverage from Medicare Part D. It is time for Congress to take on the greed of the pharmaceutical industry and require Medicare to negotiate lower drug prices.”

The CBO study found that, for a sample of 176 top-selling brand name drugs, the average net price for a 30-day supply of medicine was $118 in Medicaid, compared to $343 in Medicare Part D. For a subset of specialty drugs, which typically treat chronic, complex, or rare conditions, the average price was $1,889 in Medicaid, compared to $4,293 in Medicare Part D.

The study also noted that Medicare Part D pays roughly 25 percent more than the Department of Defense’s TRICARE program for the same drugs in retail settings; when compared to the prices the agencies pay to directly purchase brand-name drugs, Medicare Part D pays nearly twice as much as TRICARE and the Department of Veterans Affairs.

These findings complement a recent Government Accountability Office report commissioned by Sen. Sanders which found that Medicare paid twice as much as the VA for a sample of brand name and generic drugs in 2017, on average.

In the last Congress, Senator Sanders sponsored the Prescription Drug Price Relief Act (S. 102), which would cut prescription drug prices in half by pegging prices in the United States to median drug prices in five major countries: Canada, the United Kingdom, France, Germany, and Japan.

Read the report here.