Tremendous Waste in Medicare Diabetes Drugs Revealed

by MARTHA ROSENBERG

Walid Gellad, M.D., M.P.H. is an assistant professor of medicine at the University of Pittsburgh, and a staff physician and researcher at the Pittsburgh VA Medical Center.  His research focuses on physician prescribing practices and on policy issues affecting access to medications for patients. He recently granted this interview with CounterPunch reporter Martha Rosenberg.

Martha Rosenberg: Your study in the Annals of Internal Medicine’s July 16 issue [Brand-Name Prescription Drug Use Among Veterans Affairs and Medicare Part D Patients With Diabetes] compares the use of brand name diabetes drugs in Medicare and the VA and concludes that one billion dollars a year could be saved a year if Medicare adopted the VA’s prescribing habits.

Walid Gellad: Yes we looked at diabetes-related medications like oral hypoglycemics, insulins, statins and ACE inhibitors and found that use of brand-name drugs was much greater in Medicare than the VA in almost every region of the country–two to three times as high as Medicare.

Rosenberg: When you started this research, did you expect such dramatic findings?

Gellad: I expected rates would be higher in Medicare, but didn’t realize they would be so much higher. As a VA doctor, I often see veterans who have outside insurance but still come to the VA to get cheaper drugs. For example, some patients might come in to get Lipitor at the discounted, VA price, but they didn’t realize they could switch drugs to get a less expensive, generic instead–one that could be filled outside the VA.

Rosenberg: Can you explain the difference between the two agencies’ prescribing systems?

Gellad: Medicare uses over 1,000 private plans with distinct formularies to administer its drug benefit, whereas the VA administers its own benefit using one national formulary. All veterans face the same low cost sharing, and benefits are managed by a central pharmacy benefits manager which has substantially lowered pharmacy spending for the VA.

Rosenberg: You write that previous studies have compared medication pricesbetween the VA and Medicare but not medication choices and cite the VA’s promotion of therapeutic substitution. Can you explain?

Gellad: That’s rightand medication choice is just as important for controlling spending as price is.  In this paper we look at what might happen to spending if price actually stays the same, but we changed the drugs prescribed. Unlike generic substitution in which a generic drug might be switched for a brand drug like simvastatin for Zocor [the generic and brand names of the same drug] therapeutic substitution, done by a clinician, interchanges generic drugs that are in the same class but not identical to the brand drug–for example, generic simvastatin might be substituted for the brand name atorvastatin which is Lipitor.

Rosenberg: Another factor you cite in cost savings is the lack of visits of drug reps to the VA.

Gellad: That is one potential factor, yes. Most VA doctors are not visited by pharmaceutical sales representatives and do not give out free samples. We are also a salaried workforce and it may be possible that doctors who are willing to accept salaries have a different perspective on marketed drugs.

Rosenberg: You write that private Part D plans can lose market share if they don’t offer the popular, brand name drugs. Yet those are the exact drugs that inflate costs!

Gellad: Yes, it was thought that if the Part D plans had to compete to get members they will keep prices lower, but the flip side is they need to offer the drugs patients are asking for if they want Medicare beneficiaries to enroll.

Rosenberg: If government administered plans produce such cost savings, what is the appeal of private plans?

Gellad: The appeal of having many private plans administer the drug benefit is that competition between them presumably will offer patients more choices and better prices, in a well functioning marketMany people would not accept a central government authority making decisions about drugs available to them. It turns out, however, that all drugs are available to individuals receiving benefits through VA, it’s just that in some cases physicians have to make a good case for why they are needed.  I am not proposing Medicare turn into the VA, but the truth is that financial resources for Medicare are limited. Money spent in one place that is not needed cannot be spent in another. There can’t be a medical reason that so many more patients on Medicare need brand name drugs compared to those than at the VA.

Martha Rosenberg is an investigative health reporter. She is the author of  Born With A Junk Food Deficiency: How Flaks, Quacks and Hacks Pimp The Public Health (Prometheus).

Martha Rosenberg is an investigative health reporter. She is the author of  Born With A Junk Food Deficiency: How Flaks, Quacks and Hacks Pimp The Public Health (Prometheus).

Like What You’ve Read? Support CounterPunch
September 02, 2015
Paul Street
Strange Words From St. Bernard and the Sandernistas
Jose Martinez
Houston, We Have a Problem: False Equivalences on Police Violence
Henry Giroux
Global Capitalism and the Culture of Mad Violence
Ajamu Baraka
Making Black Lives Matter in Riohacha, Colombia
William Edstrom
Wall Street and the Military are Draining Americans High and Dry
David Altheide
The Media Syndrome Between a Glock and a GoPro
Ruth Fowler
Ask Not: Lost in the Crowd with Amanda Palmer
Yves Engler
Canada vs. Africa
Ron Jacobs
The League of Empire
Stephen Lendman
Gaza: a Socioeconomic Dead Zone
Andrew Smolski
Democracy and Privatization in Neoliberal Mexico
Norman Pollack
Obama, Flim-Flam Artist: Alaska Off-Shore Drilling
Kim Nicolini
Remembering Wes Craven’s The Hills Have Eyes
September 01, 2015
Mike Whitney
Return to Crisis: Things Keep Getting Worse
Michael Schwalbe
The Moral Hazards of Capitalism
Eric Mann
Inside the Civil Rights Movement: a Conversation With Julian Bond
Pam Martens
How Wall Street Parasites Have Devoured Their Hosts, Your Retirement Plan and the U.S. Economy
Jonathan Latham
Growing Doubt: a Scientist’s Experience of GMOs
Fran Shor
Occupy Wall Street and the Sanders Campaign: a Case of Historical Amnesia?
Joe Paff
The Big Trees: Cockburn, Marx and Shostakovich
Randy Blazak
University Administrators Allow Fraternities to Turn Colleges Into Rape Factories
Robert Hunziker
The IPCC Caught in a Pressure Cooker
George Wuerthner
Myths of the Anthropocene Boosters: Truthout’s Misguided Attack on Wilderness and National Park Ideals
Robert Koehler
Sending Your Children Off to Safe Spaces in College
Jesse Jackson
Season of the Insurgents: From Trump to Sanders
August 31, 2015
Michael Hudson
Whitewashing the IMF’s Destructive Role in Greece
Conn Hallinan
Europe’s New Barbarians
Lawrence Ware
George Bush (Still) Doesn’t Care About Black People
Joseph Natoli
Plutocracy, Gentrification and Racial Violence
Franklin Spinney
One Presidential Debate You Won’t Hear: Why It is Time to Adopt a Sensible Grand Strategy
Dave Lindorff
What’s Wrong with Police in America
Louis Proyect
Jacobin and “The War on Syria”
Lawrence Wittner
Militarism Run Amok: How Russians and Americans are Preparing Their Children for War
Binoy Kampmark
Tales of Darkness: Europe’s Refugee Woes
Ralph Nader
Lo, the Poor Enlightened Billionaire!
Peter Koenig
Greece: a New Beginning? A New Hope?
Dean Baker
America Needs an “Idiot-Proof” Retirement System
Vijay Prashad
Why the Iran Deal is Essential
Tom Clifford
The Marco Polo Bridge Incident: a History That Continues to Resonate
Peter Belmont
The Salaita Affair: a Scandal That Never Should Have Happened
Weekend Edition
August 28-30, 2015
Randy Blazak
Donald Trump is the New Face of White Supremacy
Jeffrey St. Clair
Long Time Coming, Long Time Gone
Mike Whitney
Looting Made Easy: the $2 Trillion Buyback Binge
Alan Nasser
The Myth of the Middle Class: Have Most Americans Always Been Poor?
Rob Urie
Wall Street and the Cycle of Crises