Big Pharma's Secret Weapon
Pharma companies say Medicare Part D is a simple trade: increased volume in exchange for decreased prices. Six months into the program, the deal is working out very well for manufacturers-but don't expect anyone to celebrate just yet.
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The battle between CVS and Express Scripts for ownership of Caremark has made little impact on drug-company executives. But there is an important implication for pricing in the Medicare Part D world: CVS wants to use Caremark to help it get higher payments for providing pharmacy services. But in the zero-sum game of reimbursement, any additional profits for chains will likely come from reduced prices on drugs.
There is a new variable to consider in drug development: which Medicare coverage system is more desirable: the Part B system for physician-administered drugs or Part D for the traditional retail market. But why choose one when you can play in both?
UnitedHealth and Humana are the runaway winners in the rush to enroll Medicare beneficiaries in private drug plans. Now they have to fight to hold onto their turf.