Medicare Is Paying $194 for a $20 Drug
$126 Million for Nothing
Medicare is on pace to waste $126 million this year overpaying for one generic drug.
The drug is lamotrigine ER, the extended-release version of a widely used medication for seizures and bipolar disorder. It's an old generic with several manufacturers, and its price has been coming down.
If you pay through insurance, though, you'd never know it. Medicare is paying nearly $200 per prescription. At our pharmacy, a 3-month supply costs about $20 without insurance.
The Numbers
In the first quarter of this year alone, Medicare paid for lamotrigine ER about 186,000 times. The total bill was $36 million, which works out to roughly $194 per prescription.
At that rate, Medicare is on pace to spend about $140 million on this one drug by the end of the year.
Here's what it should cost:
Medicare today | At a fair price | |
Price per prescription | ~$194 | ~$20 |
Q1 spending (186,000 fills) | $36 million | ~$3.7 million |
Full year pace | ~$140 million | ~$14 million |
Wasted | ~$126 million |
That's $126 million in taxpayer money for no extra medicine. The patient gets the same pill either way, and the only thing that changes is who gets paid.
The Price Is Falling. Insurance Isn't Passing It On.
Generic drug prices are supposed to drop over time. More manufacturers enter the market, they compete, and the cost to pharmacies falls. That's happening with lamotrigine ER right now.
The insurance side doesn't work that way. The price a plan pays is set by its pharmacy benefit manager (PBM), and it's built off inflated benchmark prices that have little to do with what the drug actually costs. When the real cost drops, the claim price can stay right where it was, and the difference goes to the middlemen instead of back to the plan.
So while the drug keeps getting cheaper, Medicare keeps paying nearly $200 a fill.
It's Not Just Medicare
Medicare is just the plan whose numbers are public. The same PBMs that run Medicare drug plans also run the plans for employers, unions, and families with commercial coverage. If Medicare is overpaying, your plan almost certainly is too.
The insurance companies don't mind high drug prices, because they own pharmacies. The biggest insurers own the biggest PBMs, and those PBMs own mail-order and specialty pharmacies. When a drug costs more, they make more at every step: on the claim, at the pharmacy counter, and in the spread in between.
That's a business model that only works when prices stay high. You pay for it in your premiums and your copays.
Why We Can Beat Their Price
We don't own a PBM, we don't take insurance, and we don't make more money when a drug costs more. So we have no reason to pretend a price is higher than it really is.
We price every medication at our actual cost plus a transparent fee. When generic prices fall, our prices fall with them. That's how a 3-month supply of lamotrigine ER comes out to about $20 here, while Medicare pays nearly $200 for a single fill.
We compete on price, and the price is the real one.
Head to forestparkpharmacy.com to look at our price checker and transfer today to save. See ya.
