Healthy Skepticism Library item: 298

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Publication type: news

Pear R.
Medicare Web Site to Shine Light on Drug Prices
The New York Times 2004 Apr 12

Full text:

Medicare will soon publish detailed information comparing the prices of most prescription drugs, shining a bright light on some of the biggest secrets in the health care industry.

Economists and federal officials say the information, intended to help Medicare beneficiaries, could also be immensely useful to other consumers, as well as to private insurers and employers who provide drug coverage to employees and retirees.

The data will be available late this month on a government Web site, Medicare.gov. The site will list the prices charged for various dosages of specific drugs at retail pharmacies in or near a given ZIP code. If a brand-name drug has generic equivalents, their prices will be displayed as well.

Medicare officials said the Web site would also show prices for competing brand-name drugs used to treat the same condition. Thus, a person shopping for Lipitor could see the prices for other cholesterol-lowering agents like Zocor and Crestor.

Ana Nunez-Poole, Web site manager at the Centers for Medicare and Medicaid Services, said the main purpose of providing such information was to help beneficiaries compare the merits of the drug discount cards issued by private entities and approved by the government.

Beneficiaries will be able to sign up for the cards next month. Card sponsors have negotiated discounts with drug manufacturers. The site will list the retail prices for different drugs under different cards, so beneficiaries can choose the card that best meets their needs.

Through the federal Web site, consumers and government officials will have access to prices for more than 60,000 products sold at nearly 75,000 pharmacies around the country. “That has never happened before,” said James L. Yocum, executive vice president of DestinationRx, a contractor that helped develop the site.

The process of setting drug prices is notoriously secretive. Ten people buying the same drug at a retail pharmacy may pay 10 different prices, depending on what insurance coverage they have, if any.

Comparison shopping is difficult. “This type of information is hard to get today,” said John C. Rother, policy director of AARP, the lobby for older Americans. “Most consumers don’t have access to it.”

Tommy G. Thompson, the secretary of health and human services, said the act of making the data public would “help drive down drug prices,” as “companies will have to reduce prices to compete.”

Americans without drug coverage pay some of the world’s highest prices for their medicines. The Bush administration says the sponsors of drug discount cards have negotiated savings of 10 percent to 25 percent off retail prices. Democrats are generally skeptical and predict savings at the lower end of that range.

Elderly people who are not comfortable using the Internet will be able to call a toll-free telephone number, 800-MEDICARE (633-4227), to obtain prices for the medicines they use. About 22 percent of Americans 65 and older regularly use the Internet but the number is growing rapidly, according to the Pew Internet and American Life Project, a research organization.

DestinationRx, a small company based in Los Angeles, developed the software needed for comparison shopping and will tabulate the prices reported by drug-card sponsors.

“This is an enormous undertaking,” said Mr. Yocum of DestinationRx. “It’s as if the federal government were trying to find the price of milk at every supermarket in the country at the same time.”

The company already operates a Web site that compares prices of drugs available through large online pharmacies.

“The market for prescription drugs has been largely opaque,” Mr. Yocum said. “When markets become transparent, consumers see lower prices almost immediately.”

Pharmacists say they expect to be deluged with questions from Medicare beneficiaries and from other consumers who want the same discounts. “We are already getting lots of questions,” said Page Dunlap, the owner of a pharmacy in Hartselle, Ala., north of Birmingham.

Every state has a health insurance counseling program to help Medicare beneficiaries sort through their choices. Counselors who saw a demonstration of the new Web site here last week said they were impressed, but had many questions.

Robin S. Szwanek, a counselor with the Nebraska Insurance Department, said the price data could be a “savior” for elderly people and those who advise them on how to cope with soaring drug costs.

Tracey A. Borgmeyer, a trainer with Missouri’s program, said the site would be useful to some Medicare beneficiaries, but confusing to others. “It’s too much information, too much data, for some beneficiaries,” she said.

Gail E. Shearer, a health policy expert at Consumers Union, said that “there is already a high degree of confusion and anxiety among seniors and the disabled about how to choose a drug discount card,” and that the information on the Web site could compound that confusion.