Consolidated Drug Purchasing Across Federal Agencies: A Policy to Decrease Cost Sharing for Medicare Beneficiaries

Abstract

Medicare beneficiaries would experience lower cost-sharing if all federal agencies purchased prescription drugs collectively, even if total drug spending remained the same. Assuming all federal agencies paid the same price for the same drug, prices would decline for Medicare Part D by 4.7% and overall Medicare Part D spending would decline by $3.17 billion. Prices would increase for Veterans Affairs (VA) and the Department of Defense (DoD) and spending would increase by $3.17 billion. The main advantage is that cost-sharing for Medicare beneficiaries would decline by $251.5 million, and there would be no change in cost-sharing for patients receiving drugs through the VA and DoD since cost sharing in these other programs are not based on the price of the drug. Our results suggest that consolidated purchasing could improve the economic well-being of seniors without affecting other government recipients.