VA Drug Program Cheaper than Medicare
Associated Press
September 29, 2005

People who get their drug benefits through the Veterans Affairs Department paid about $220 less for a yearlong prescription than those who used the government's Medicare drug card, said a study released Tuesday.

Families USA, an advocacy group, said older people using the discount cards paid more than they would have paid through the VA for 49 of the 50 most frequently used drugs for senior citizens.

The discount cards have been in effect for less than 18 months. They will be replaced Jan. 1 by a comprehensive benefit that beneficiaries can obtain by enrolling with a private plan.

A spokesman for the Centers for Medicare and Medicaid Services, or CMS, said the discount cards did exactly as advertised - providing a savings of 10 to 25 percent for those who otherwise did not have drug coverage. It's not fair to compare them to the more comprehensive benefit to come, he said.

"This is old news," said the spokesman, Gary Karr. He also said there will be a greater choice of drugs under the coming benefit than there is under the VA program.

Families USA opposed legislation in 2003 that brought created the coming benefit under Medicare. Ron Pollack, the organization's executive director, said he believes the comparison between plans shows what can occur when the federal government negotiates on behalf of consumers.

The private plans can't bring about the kind of leverage that the federal government could bring by negotiating on behalf of 41 million beneficiaries, he said.

"I don't believe there's any serious likelihood the private plans will come close to matching the prices that the VA has achieved," Pollack said.

Families USA said the discount cards offered similar prices from region to region. For its study, the group focused on a ZIP code in Cincinnati. Every drug was offered through several discount card vendors. The prices were compared with prices shown on the Web site for VA pharmacy benefits, and were also confirmed with a VA employee.

For Plavix, a blood clot-reducing agent that is the most heavily prescribed medication for seniors, the best VA price is $887.16 per year, compared with the best Medicare drug discount price of $1,230.36 - a difference of $343.20, or 38.7 percent, Families USA said.

For Lipitor, a cholesterol-lowering agent that is the second most heavily prescribed medication, the annual VA price is $498.84, compared with $730.56 under the discount cards - a difference of $231.72, or 46.5 percent, the report said.

Karr pointed to findings from CMS's chief actuary, Richard Foster, that pharmacy benefit managers have a strong incentive to negotiate effective price reductions, and have demonstrated their effectiveness for many years.

He said the private plans are already showing their effectiveness by submitting plans that offer lower premiums than had originally been projected.

The average premium for the coming benefit will be $32 a month, but it could be higher or lower depending on the type of coverage offered. Every state but Alaska will have at least one plan that will offer premiums of less than $20 a month. The government is providing additional assistance for those with limited incomes.