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Study: Medicare Could Save Billions By Purchasing Generic Drugs ‘At Mark Cuban Prices’

A study indicates that Medicare could have saved billions of dollars by purchasing generic prescription drugs at the same prices as those offered by Mark Cuban’s online pharmacy. Photo courtesy of wp paarz/Flickr https://creativecommons.org/licenses/by-sa/2.0/legalcode

June 20 (UPI) — Medicare could overpay some generic drugs by up to $3.6 billion.

That’s how much the program could have “conservatively” saved in 2020 by buying generic prescription drugs at the same prices offered by billionaire entrepreneur Mark Cuban’s online direct-to-consumer pharmacy, according to a news report. study.

The brief research report was published Monday in the Annals of Internal Medicine.

In January 2022, the Mark Cuban Cost Plus Drug Co. launched an online pharmacy, selling over 100 generic prescription drugs at ingredient and manufacturing prices plus a 15% markup, $3 pharmacy fee and $5 shipping charge.

Researchers from Brigham and Women’s Hospital and Harvard Medical School compared the price of 89 generic drugs sold by Cuba’s online pharmacy to the price paid by Medicare in 2020 to estimate potential savings if Medicare Part D plans had paid the prices Cubans.

They estimated potential Medicare savings as the unit price difference between Cuban society and Medicare, multiplied by the number of units distributed to Medicare enrollees in 2020.

Their discovery of potential savings of $3.6 billion represents 37% of the total expenditure for 77 generic drugs if they had been purchased in the maximum quantity provided by the Cuban pharmacy, according to a press release.

In contrast, the researchers found that Medicare could have saved $1.7 billion, or 18% of total spending, on 42 drugs if the program had purchased drugs in the minimum quantity available from the company online.

The study was limited to generic drugs sold by the Cuban pharmacy, representing 25% of the approximately $38 billion in Medicare Part D generic drug spending in 2020. The researchers said they did not take into account disbursements to Medicare beneficiaries.

Cuba’s online direct-to-consumer pharmacy “does not accept insurance, so be prepared to pay out of pocket,” Dr. Hussain Lalani, lead author of the report, told UPI.

“If you’re insured, what you pay won’t count toward your health insurance deductible or maximum payout,” said Lalani, a clinical researcher at Brigham and Women’s.

Lalani added that for low-cost generic drugs in the analysis, “distributing the drug may be more expensive than producing it. About 50% of expenditure for 77 drugs through [Cuban’s company] would have been spent on distribution, including online pharmacy fees and shipping costs.”

According to the press release, the drop in drug prices from a direct-to-consumer model highlights the inefficiencies of the current generic drug distribution and reimbursement system comprised of wholesalers, intermediaries known as pharmacy benefit managers, pharmacies and insurers.

One estimate, according to the researchers, is that this supply chain holds back 64 cents of every dollar spent on generic drugs.

Policy reforms “that improve price transparency, increase competition for expensive generic drugs, prevent annual price escalations, and limit pharmacy and dispensing costs could increase the affordability of essential generic drugs for all Americans” , they said.

Joan J. Dean

The author Joan J. Dean