Medicare spent nearly $8 billion on insulin in 2017, but it could have cut that bill by more than half if it had been allowed to negotiate with drugmakers in the same way the U.S. Department of Veterans Affairs does, according to a new research report published Monday in JAMA Internal Medicine.
The researchers calculated that Medicare Part D spent $7.8 billion (after rebates) on 31 different types of insulin, and then compared the prices paid to the prices negotiated by the VA. If Medicare used the same prices as the VA, it would have saved $2.9 billion. If Medicare used the same prices and a national formulary – a list of approved drugs, which typically cuts down on the number of options while increasing price competition among those that remain on the list – it would have saved $4.4 billion, the researchers said.
More broadly, the researchers found that Medicare would have saved $14.4 billion on the $32.5 billion it spent in 2016 on the 50 costliest Medicare Part D oral drugs.
"Medicare now accounts for a third of all drug spending,” said Harvard Medical School’s Dr. William Feldman, the study’s lead author. “Legislation allowing Medicare to negotiate prices and establish a central formulary would help save taxpayers money.”