The United States federal government is a significant purchaser of prescription medications, acting directly through agencies like the Department of Defense (DoD) and indirectly via federal health insurance programs such as Medicare Part D. A recent report by the Congressional Budget Office (CBO) has shed light on how brand-name drug prices are established within different federal programs and provided a comparison of these prices as they stood in 2017.
The CBO’s analysis primarily scrutinized the prices, net of rebates and discounts, of 176 top-selling brand-name medications within Medicare Part D. To ensure a uniform comparison, the CBO calculated the average price per standardized prescription, which approximates a 30-day supply of medication.
Key findings from the CBO report include:
- The average price for the analyzed drugs varied considerably across programs. Medicaid exhibited the lowest average price at $118, while Medicare Part D registered the highest at $343. This price disparity is largely attributed to the higher manufacturer rebates negotiated within Medicaid compared to Medicare Part D.
- Both the Department of Veterans Affairs (VA) and the DoD secured average drug prices that fell between those of Medicaid and Medicare Part D, indicating a middle ground in pricing.
The CBO also extended its price comparison to specialty drugs—a subset of the top-selling drugs designed to treat chronic, complex, or rare conditions. These medications are often characterized by high costs and may necessitate specialized handling or patient monitoring. The average price of specialty drugs ranged from $1,889 in Medicaid to $4,293 in Medicare Part D, mirroring the trend observed with all drugs but at a significantly higher price point.
It is crucial to note that these price comparisons are specific to the pricing mechanisms in place in 2017 and do not predict price shifts if a uniform pricing method were adopted across all programs. Drug manufacturers would likely adjust their pricing strategies in response to such changes, potentially influencing drug prices across both federal programs and the private sector.
