In a comparison between Medicare’s spending in 2020 and the prices of Cuban’s Cost Plus Drug Company, researchers found that Medicare could have saved $3.6 billion, according to new research from Brigham and Women’s Hospital and Harvard Medical School published Monday in the journal Annals of Internal Medicine.
Dr. Hussain Saleem Lalani, a researcher at Brigham and Women’s Hospital in Boston and the study’s lead author, said that the study “does show that Medicare is overpaying for some of the generic drugs.”
“This is a conservative estimate, so the actual savings are likely higher,” Lalani added.
The study analyzed the cost of 89 generic drugs sold by Cost Plus Drug in 2022 alongside the prices Medicare Part D plans paid in 2020. With an adjustment for price-point changes between 2020 and 2022, researchers found that Medicare paid $8.1 billion in comparison to Cost Plus Drug’s $4.5 billion price tag. The study noted that the savings would have applied to 77 of the 89 generic drugs.
The researchers’ analysis did not consider out-of-pocket costs for Medicare enrollees, making it difficult to know the exact impact on costs at the pharmacy counter if Medicare had purchased the generic drugs at the cheaper rate.
Cuban’s Cost Plus Drug Company sells hundreds of medications at the cost of production with a 15% service fee and a $3 pharmacy fee, promising up to 90% savings on prescription drugs, according to the company’s website.