WSJ Your Money Briefing - Why Some Seniors Are Paying Different Prices for the Same Drug Under Medicare

Episode Date: November 26, 2024

The price Medicare pays for a single medicine can range by thousands of dollars, even for people enrolled in the same plan. Wall Street Journal health and science reporter Jared S. Hopkins joins host J.R. Whalen to discuss why this happens. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Exchanges. The Goldman Sachs podcast featuring exchanges on rates, inflation, and U.S. recession risk. Exchanges on the market impact of AI. For the sharpest analysis on forces driving the markets and the economy, count on exchanges between the leading minds at Goldman Sachs. New episodes every week. Listen now. Here's your Money Briefing for Tuesday, November 26th. I'm JR Whalen for The Wall Street Journal. Seniors enrolled in Medicare health plans could be on the hook for potentially thousands of dollars in additional out-of-pocket expenses for prescription drugs.

If there's 2,000 different prescription drug plans, there Medicare maybe 50, 60 dollars. And it could go all the way up where the most expensive price is maybe 8,000, 10,000 dollars. We'll talk to Wall Street Journal reporter Jared Hopkins after the break. Shop Cyber Monday deals now on Amazon with up to 35% off home goods to deck their halls, toys to stuff their stocking, and electronics like noise-canceling headphones to silent their night. Shop Amazon Cyber Monday deals now. Medicare often pays vastly different prices for the same drug, even for people insured under the same plan.

Wall Street Journal reporter Jared Hopkins joins me. Jared, take us through the process of how a drug gets from the manufacturer to Medicare to the consumer. Medicare is the largest purchaser of drugs. It's obviously a government program, primarily for people 65 and older in the US, as well as a few other subsets of patients. Within Medicare, there is something

called Medicare Part D, which covers prescription drugs. And Medicare participants, known as beneficiaries, they pick a plan and they can go online and they can put in what drug and what it would cost them from a co-pay perspective or a co-insurance. And eventually, they pick a prescription drug plan. It's not unlike what individuals have on the commercial market. It might differ though in terms of pricing and in terms of formulary or what type of drugs their Medicare plan will cover. How much do Medicare health plans typically cover for treatments?

So Medicare shares costs with patients, and patients usually pay a percentage of the drug cost, which is typically a copay or what's known as a co-insurance, which is a percentage of the overall cost. Why does Medicare wind up paying different prices for the same drug, even for people insured under the same plan? I mean, how much time do we have here? So the complex, complicated nature of the U.S. healthcare system is why we have so many different prices here with so much different variability. There is a factor such as just geography. Where people live is going to affect the overall cost of the drug. You also have

sort of what pharmacy they are picking it up at. So a mom-and-pop pharmacy versus a national chain might have different prices. Correct. How many different prices could a drug have? Hundreds or thousands upon prices for some drugs. A drug might have more than 2,200 prices across all the different health plans. If there's 2,000 different prescription drug plans, there might be 2,000 different prices. And they might range from the lowest price costing Medicare, I don't know, maybe 50, 60 dollars, and it

could go all the way up where the most expensive price is maybe 8,000, 10,000 dollars. In the story we wrote about the generic version of Ticurb, which is a cancer drug. There are 460 different prices in the US for a generic version of that drug. For example, in central Illinois, there are a handful of plans that are charging more than $3,000 for that. However, there are also in the same area, the same county, charging double that price for that drug. But guess what?

Maybe that sounds like a lot of money to you or that's an expensive drug. There's other parts of the country where that drug costs $10,000 on a prescription drug plan or $12,000. In your story, you talk about why this is the case and you mentioned PBMs, which are the pharmacy benefit managers. How do PBMs contribute to these different prices? Experts told us that the wide variability is likely due to a multitude of factors. And that includes where a pharmacy might be located,

if it's located in an urban area or a rural area. It could be determined by what prescription drug plans formulary might be, which is what drugs are covered. And that's often determined by the plan sponsored by the insurance company. And how they determine that is sort of up to them. One other variable here is you have what are the negotiating powers, right? So the pharmacies are negotiating, the PBMs are negotiating. With brand name drugs, the PBMs are negotiating, with brand name drugs, the PBMs are negotiating with drug manufacturers. So there's a multitude of different reasons of why these drug prices are all very different. If you

talk to some experts about this, they will say, hey, there's going to be some variability in all this, like the country's big, there's lots of different health plans. The question is how much variability is appropriate. Has there been any input from lawmakers on this scenario and the impact on consumers? Lawmakers always have Medicare and cost seniors high up on their priority list. I think we've seen that over the years. What's important is that pharmacy benefit managers, these middlemen, have been caught in the crossfire of lawmakers in DC for the last couple of years. And there have been a number of bills and legislation considered that

would impact the industry and which supporters say will help seniors and patients. But I don't think any of that has actually become law just yet. Are seniors taken by surprise by these price differentials? Seniors, they might not know about these numbers that I'm throwing out there right now, right? Because this is the back end of Medicare. But this affects copays and this can affect coinsurance. So ultimately means that seniors might end up paying more for their drugs than they might have

to. It might mean that the government is paying more than it should be for certain drugs. We asked the agency that that oversees Medicare for comment and they said that they do not comment on analyses of Medicare. And so this variability, how do seniors keep up with this who are working within a budget to afford medication? Many seniors we talked to had really no idea

about any of this, because when they pick a plan, they're looking at what their drug costs them out of pocket, what their copay or their coinsurance looks like. But what could be more helpful is knowing what a total drug costs, because then if they are paying a percentage of that cost as their co-insurance, maybe that would affect which plan they want to go to.

There's people who, there's sort of consultants that people hire to help seniors pick a good plan sometimes because some of this stuff is so complicated. And in terms of the plan that they're in, if they see a drug is less expensive than another plan, is it easy enough for them to change plans? Sometimes it is. Usually you can go to another plan, but that's usually once a year when Medicare enrollment rolls around.

And also just because you go into a plan one time, the cost of the drugs out of pocket to a senior could change the next year. That's WSJ reporter Jared Hopkins. And that's it for your Money Briefing. This episode was produced by Ariana Asparu with supervising producer Melanie Roy. I'm JR Whalen for The Wall Street Journal.

Thanks for listening.