Medicare overpays for new generics

When generics hit the market, the price drops. That's conventional wisdom. But in the case of Medicare, it's not always true. According to a new report from the Health and Human Services inspector general, the formula Medicare uses to pay for certain drugs doesn't incorporate the new price for months.

Take Camptosar, Pfizer's cancer drug that went generic in February. In March, Medicare paid $126 per dose, despite the fact that the average generic price for it was only $41--and the average price for both the generic and branded versions the same month was only $52. Even now, Medicare is still paying $75.

The IG suggests that Medicare figure out how to pay less, sooner. Even if that means changing the laws that determine what Medicare pays for drugs.

- read the WSJ Health Blog item

Related Articles:
Part D 'windfall' for pharma, report says
Medicare program helps slow rate of drug spend
U.S healthcare costs more, gives less