Medicare Is Overpaying For Certain Common, Over-The-Counter Drugs: Study

Medicare Part D will cover certain over-the-counter products when prescribed by a clinician, and when it does, the program pays far more for these drugs, according to a recent study.

Researchers at Johns Hopkins identified 22 drugs that are available both over-the-counter and via prescription; in 2020, Medicare paid out claims for 20 of those therapies. The analysts then identified the OTC price for these drugs, finding prices for 19.

For 16 of the 19 drugs, cash prices were lower than the costs to Medicare. Savings ranged from 10% on the low end to a whopping 97% on the high end, according to the study. For example, omeprazole tablets to treat acid reflux cost 80 cents per unit over the counter, and $27.85 per unit in Part D.

The study estimates that Medicare could have avoided $406 million in unnecessary spending if it paid the cash price for all 19 over-the-counter products.

In addition, these higher costs filtered down to beneficiaries, as in some cases their cost-sharing was also higher, according to the study.

“Medicare Part D frequently paid more for dual OTC and prescription drugs than the OTC cash prices,” the researchers wrote. “Patients’ cost sharing was sometimes higher than what they would pay for the same drug without insurance or a prescription.”

The researchers note that out-of-pocket costs can vary geographically, which could skew the results somewhat.


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