Medicare Part D causes loss of drug-maker rebates, professor says

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As if the start-up troubles associated with the Medicare Part D program weren't enough, the government may now be dealing with a new Part D wrinkle: the loss of certain government rebates.

Speaking during a Jan. 20 congressional briefing, Stephen W. Schondelmeyer, professor of pharmaceutical management and economics at the University of Minnesota, said prescription medication previously "paid for under the Medicaid program cost the government less than the same drug will cost under the Medicare program."

Drug benefits for so-called dual eligibles are now covered under the Medicare drug benefit instead of Medicaid. As a result, drug makers are no longer providing rebates to the government under the Medicaid program that sometimes amounted to as much as 30%, Schondelmeyer said.

A major overhaul of the Medicare drug program is needed to address the cost problem, he told members of the House Government Reform Committee.