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Prescription Drugs: Department of Veterans Affairs Paid About Half as Much as Medicare Part D for Selected Drugs in 2017

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[Technical Report, Congressional Report]

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In 2017, combined, Medicare Part D and VA accounted for approximately 105 billion in prescription drug sales - nearly one-third of total U.S. expenditures - and covered nearly 52 million individuals. The two programs use different methods to pay for prescription drugs. Medicare reimburses Part D plan sponsors, which in turn pay pharmacies to dispense drugs. VA primarily uses a direct purchase approach to acquire drugs from manufacturers. GAO was asked to examine differences in the amounts major federal programs paid for prescription drugs. This report 1 compares average unit prices for prescription drugs in Medicare Part D to those in the VA and 2 describes factors affecting prices in the two programs. GAO analyzed 1 CMS data for Medicare Part D payments to retail pharmacies as well as rebates and other price concessions Part D plans received and 2 VA drug purchasing data. These data were from 2017, the most recent data available at the time of GAOs analysis. To select a sample of drugs GAO identified the top 100 brand-name and 100 generic drugs in Medicare Part D in 2017 for three categories 1 highest expenditure, 2 highest utilization, and 3 highest cost per use. In total, this yielded 399 nonduplicate drugs 203 generic and 196 brand-name, which represented 44 percent of Medicare Part D spending in 2017. GAO compared weighted average unit prices for these drugs. GAO interviewed CMS and VA officials, and reviewed academic and government reports to understand factors that may affect prices in the two programs.

Subject Categories:

  • Pharmacology
  • Personnel Management and Labor Relations

Distribution Statement:

[A, Approved For Public Release]