Use Medicaid pricing to reduce Part D costs, study says

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Here's one way to limit the growth of Medicare Part D drug prices:  Require drug makers to sell drugs to prescription drug plans for dual-eligible beneficiaries at prices similar to what Medicaid pays.

So says a study that appears in the January/February 2008 issue of the journal Health Affairs. Dual-eligible beneficiaries are those who receive both Medicare and Medicaid benefits. Many such beneficiaries reside in nursing homes.

Such a move would help to control Medicare spending and, at the same time, protect research and development incentives for manufacturers, according to researchers Richard G. Frank and Joseph P. Newhouse. Earlier this week, the Centers for Medicare & Medicaid Services reported that Medicare spending expanded by 18.7% to $401.3 billion in 2006, as prescription drug spending shifted to Medicare from Medicaid and private coverage.