Tuesday, July 18, 2006

Well Color Us Surprised

Jeepers. Who could have predicted this? NYTimes (07.18.06):
"The pharmaceutical industry is beginning to reap a windfall from a surprisingly lucrative niche market: drugs for poor people. And analysts expect the benefits to show up in many of the quarterly financial results that drug makers will begin posting this week." A Windfall From Shifts to Medicare
This is a surprise? "The windfall, which by some estimates could be $2 billion or more this year, is a result of the transfer of millions of low-income people into the new Medicare Part D drug program that went into effect in January. Under that program, as it turns out, the prices paid by insurers, and eventually the taxpayer, for the medications given to those transferred are likely to be higher than what was paid under the federal-state Medicaid programs for the poor." This happened when something like "6.5 million low-income elderly people or younger disabled poor people were automatically transferred into the Part D program for drug coverage." The drugs for people who weren't automatically transferred "are still paid for under state Medicaid programs. For those folks, drugs "tend to be cheaper under the Medicaid programs because the states are the buyers and by law they receive the lowest available prices for drugs." Not so the Feds!! In its infinite wisdom and grace, Congress "barred the government from having a negotiating role. Instead, prices are worked out between drug makers and the dozens of large and small Part D drug plans run by commercial insurers." Considering all the pharmaceuticals in our portfolio, we couldn't be happier. How about you?


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