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Medicare Will Begin Testing New Ways to Cut Costs on Prescription Drugs

Medicare recently announced that it will begin to experiment with new ways of lowering prescription drug costs for Medicare Part B plan holders. With the current system in place, doctors are incentivized to prescribe higher-cost drugs even in cases when a cheaper drug would offer equivalent–or even superior–benefits and this new program aims to change that. Learn more about these proposed changes and what they could mean for Medicare in the future in today’s blog, below.

cut costs on prescription drugs

Medicare is exploring new ways to cut costs on prescription drugs.

Medicare Will Begin Testing New Ways to Cut Costs on Prescription Drugs

The current formula used by Medicare to determine prescription drug prices is the average sale price of the medicine plus 6%. Because 6% of a more expensive drug can be substantially more than a prescription that costs significantly less, this means that medical institutions earn a higher profit when they prescribe more expensive medications. Under the new guidelines providers would earn the average sale price plus 2.5% in addition to a flat fee of $16.80 per drug. The trial will only cover targeted intravenous drugs, including those prescribed to treat cancer, certain antibiotics, and some eye treatments.


During the second phase of the proposal, which is slated to go into effect in 2017, the program will test further interventions, including tying the price to a drug’s effectiveness and eliminating copays for highly needed medications.


The pilot program will be national, but certain areas may only see some changes implemented in order to act as a control group to analyze the effectiveness of the changes. However, the plan is open to a 60 day review period and the agency is seeking public comments on the proposed changes. It is likely that it will face strong opposition from oncologists and the pharmaceutical industry.

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Are you interested in learning more about the benefits of Medicare Advantage? Contact Global Premier Benefits today! Global Premier Benefits offers education for seniors on healthcare options available to them that could improve their quality of life and defray their healthcare costs as well. We have agents and clients in more than 16 states, including the District of Columbia. Our goal is to enable seniors to live healthy, rewarding lives without compromising their finances. Call us at 1-866-229-8447 to speak with a certified specialist to see if you qualify for extra help! You can also keep up with Global Premier Benefits on Facebook, Twitter, Google+, YouTube, and Pinterest.

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