A new report out today reveals taxpayers are charged at least double the amount of money for prescription drugs provided under Medicare than those provided under Medicaid.

That's because the government receives significantly larger rebates when a drug is prescribed through Medicaid, as compared to Medicare.  And the rebates given under Medicaid go up when drugmakers increase prices faster than inflation – while those given under Medicare do not. 

The study, sought by U.S. Sen. Bill Nelson (D-FL) and released today by the inspector general of the Department of Health and Human Services, examined 200 brand-name drugs and found that they were at least twice as expensive on average through Medicare than Medicaid.

Medicare is the government-run health insurance plan for the elderly, while Medicaid serves the same function for the poor.  Low-income patients over 65, who qualify for both Medicare and Medicaid, are known as “dual eligible.” And under current federal law these dual eligibles are required to get all of their prescriptions under the more expensive Medicare drug program – which, according to the Congressional Budget Office, costs taxpayers an extra $12 billion a year. 

“A report out today reveals that we taxpayers are charged double the amount for prescription drugs under the Medicare program compared to the Medicaid program,” Nelson said. “This is costly. It’s a huge windfall for the drug companies, it costs the taxpayers $120 billion extra over 10 years and it needs to be changed.”

In response to the study, Nelson, who originally requested the report in his former capacity as chairman of the Senate Special Committee on Aging, and U.S. Rep. Kathy Castor, of Tampa, have filed legislation that would require drugmakers to provide Medicare the same rebates as Medicaid. 

"Our seniors have worked hard all of their lives and deserve to live their retirement with dignity and financial security,” said Castor, who filed the companion measure in the House, the Medicare Drug Savings Act of 2015. “But forcing taxpayers to pay inflated bills for seniors' prescription drugs does not reflect American values, either.  Congress should act to eliminate a special deal that allows drug companies to charge Medicare higher prices for certain seniors’ prescription drugs.”

The lawmakers’ legislation has already drawn the support of several groups including AARP, AFL-CIO, the Alliance for Retired Americans and the Medicare Rights Center. 

Nelson previously filed a similar bill that also would have eliminated the so-called dual eligible requirement.  But it was narrowly defeated in the Senate Finance Committee mostly along party lines after an intense lobbying campaign by the pharmaceutical industry.

The Congressional Budget Office now estimates that eliminating the dual-elgibile requirement would save taxpayers an estimated $121 billion over ten years. 

Following are links to Nelson’s letter asking for the report, the report, a copy of Castor and Nelson’s legislation and letters of support from various organizations:

Nelson’s letter requesting the report: http://1.usa.gov/1DEW7Rl

The report: http://1.usa.gov/1I11dxD

Text of legislation: http://1.usa.gov/1PpztEZ

AARP’s letter of support: http://1.usa.gov/1DnKq2g

AFL-CIO’s letter of support: http://1.usa.gov/1yTECkr

Alliance for Retired Americans’ letter of support: http://1.usa.gov/1DgQbxn

Medicare Rights Center’s letter of support: http://1.usa.gov/1EiL995

###