(When I first ventured into hospital pharmacy in July of 1966, cheap medicines – like a 35 cent bottle of 100 aspirin - were considered no-charge "floor stock". Two months later, the hospital became a Medicare provider, and overnight that 35 cent bottle of aspirin became a $100 patient charge – simply because Medicare would reimburse the hospital one dollar for each tablet!)

I now have a copy of a "Medicare actuary’s" cost estimates applicable to the Medicare-Insured Drug Benefit, and not surprisingly, they indicate that this Medicare program is also designed to allow provider-profiteering at the expense of Medicare-funding taxpayers, insurers and enrollees. This becomes obvious when the actuary’s projected cost for the Medicare Drug Benefit is compared with actual, "real world" prescription costs for a Client’s Medicare-eligible members.

The actuary’s "Medicare cost" estimate: Medicare’s projected "average" gross benefit cost per enrollee is estimated at $2868 per year or $239 per month, of which $214 is the cost for prescriptions and $25 is for "administration". This even after any drug company rebates!

The insurer’s "actual cost" numbers: The insurer plan’s actual gross benefit cost per enrollee was $1680 per year or $140.38 per month, of which $139 was for prescriptions and $1.38 for administration – almost $100 per month (and 41%) less than the estimate for the Medicare program. (It is important to know that, unlike the Medicare Benefit, this insurer’s plan is a "rich benefit" in that it does not use a restrictive formulary – which in the prescription benefits world – including Medicare’s – is simply a tool to limit patient and physician choices for treatment.)

It will go to the Medicare PBM, of course – it designed the program.

Based on the actuary’s estimates, an enrollee who takes $2500 a year in drugs at the Medicare Pharmacy’s prices will have to pay out-of-pocket at least $1233. If that enrollee uses $5350 a year - at the Medicare Pharmacy’s prices - the enrollee will pay at least $4083. (This is "best case", because if the enrollee’s drugs are not all "covered" by the Medicare PBM’s formulary, the enrollee’s out-of-pocket could be much higher due to the PBM formulary’s "tiered copays".)

But remember– the actuary’s estimate shows that the Medicare Pharmacy’s prescription prices will be 41% higher than this plan’s "real world" costs. This means that for every dollar paid to the Medicare Pharmacy by the enrollee, insurer or taxpayer, the Medicare enrollee will actually only get 59 cents worth of drug; therefore, the "$2500 in drugs" obtained from the Medicare Pharmacy would have cost about $1475 in the competitive "real world", and the "$5350 in drugs" from the Medicare Pharmacy would have cost only $3156 in the "real world." (Note: To obtain this $3156 "real world" value, the Medicare enrollee will still pay $4083 to the Medicare Pharmacy – almost a thousand dollars more than the "real world" total prescription cost.)

And – these calculations do not even consider the savings that many Americans are already realizing through direct importation of their personal medications. While an import option will not be allowed for the Medicare Benefit enrollees, many private plans (and individuals) are doing so – with savings of 30 to 50% or more on their most costly brand name drugs. For example, with just a 30% savings on the 85%+ of their prescription dollars that are spent on brand name drugs, instead of the member paying $1233 for the "$2500 in drugs" obtained from the Medicare Pharmacy, the total drug spend would be about $1100 through a coordinated international program, and instead of the member paying $4083 for the "$5350 in drugs" obtained from the Medicare Pharmacy, the total drug spend would be about $2350. No wonder drug companies and Medicare PBM’s are wanting to deny Americans their right to personal importation!