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$3.6 billion in one year: Medicare paid far more for cheap generics than an online pharmacy charges
A study in the Annals of Internal Medicine estimated Medicare could have saved $3.6 billion in a single year by paying Mark Cuban Cost Plus Drug Company's prices for 77 generic drugs.
Medicare Part D
- Estimated savings, one year$3.6B1
- Generic drugs compared891
- Drugs where Medicare paid more771
- Esomeprazole, 90 pills: Medicare$1601
- Esomeprazole, 90 pills: Cost Plus$171
- Savings on esomeprazole alone$293M of $327M spent1
- Who kept the difference████████████████
What happened
Researchers compared what Medicare's drug plans paid for 89 generic drugs, using 2020 data, with the prices posted by Mark Cuban Cost Plus Drug Company, which sells at its cost plus a fixed markup.
Medicare paid more for 77 of them. Paying the posted prices would have saved an estimated $3.6 billion in one year. For one heartburn drug, Medicare paid $160 for 90 pills; Cost Plus charged $17.
Why nobody caught it
- Medicare doesn't buy drugs directly. Private drug plans negotiate the prices, and Medicare pays the bills.
How sure are we?
An auditor, inspector general or the agency itself estimated the fraud. It's a measured range, not a list of names.
A peer-reviewed estimate (Lalani et al., Annals of Internal Medicine, June 2022) using 2020 Medicare data and 2022 prices. Overpaying isn't fraud; it's the price problem the RECEIPTS Act is about.
Sources
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