Report: Drug companies profit from dual eligibles

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The pharmaceutical industry is experiencing a "windfall" from Medicare's coverage of dual eligibles in the Part D drug program, according to a news report.

Companies are benefiting from the transfer of drug coverage for dual eligible beneficiaries from state Medicaid programs to the Medicare prescription drug benefit. The new benefit exempts Part D drugs from "best price" price rebates. Before the implementation of the drug benefit, drug makers were required to give these rebates to state Medicaid programs.

Without the rebates, the annual cost to states for drugs for beneficiaries who are eligible for both Medicare and Medicaid would have been about 25% higher, said Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota.
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