CMS: Part D Costs $261 Billion Lower than Expected

August 19, 2010

Strong Negotiating from Part D Plans a Key Driver in  41% Drop from Initial Cost Estimate

(Washington, DC)—The Pharmaceutical Care Management Association (PCMA) issued the following statement on research cited by the Centers for Medicare & Medicaid Services (CMS) that found the most recent 10-year cost estimate for Medicare Part D came in at $373 billion, a 41 percent drop from the initial cost estimate of $634 billion for 2004-2013:

“The latest reduced CMS Part D cost estimate highlights that proven pharmacy benefit management tools utilized by Part D plans are saving money without sacrificing beneficiaries’ prescription drug choices.   In its analysis, CMS noted that ‘plans are negotiating better pricing than anticipated’ resulting in the benefit now costing $373 billion, a 41 percent drop from the initial cost estimate of $634 billion for 2004-2013.   Additional savings would result from the greater use of mail-service pharmacies and more flexible formularies.

“As Medicaid expands under PPACA, policymakers should explore the Part D model for consumer-friendly ways to reduce wasteful spending in Medicaid pharmacy.”

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