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Acknowledgements Author/researchers: Pete Sikora/Heather Schiavone We would like to gratefully acknowledge the assistance of our colleagues at Consumers Union: Chuck Bell, Noreen Browne, Steve Findlay, Elizabeth Foley, Sara Goralski, Susan Herold, Earl Lui, Michael Marrel, Chris Meyer, Keith Nesson-Stewart, Minerva Novoa, Alejandro Pedreira, Robert Schneider, Gail Shearer, Bill Vaughn, and Michael Wroblewski. We also thank for their assistance: Brad Ashwell of the Florida Public Interest Research Group (FloridaPIRG), Sarah Capps, Andrea Hillebrand, and Bill Newton of the Florida Consumer Action Network (FCAN), Tony Fransetta of the Florida Alliance for Retired Americans, and Nicholas Graber-Grace and Laurie Williams of Florida ACORN. Consumers Union Non-Profit Publisher of Consumer Reports 101 Yonkers Ave Yonkers, New York 10007 914-378-2000

Not Low Enough: Medicare Part D Donut Hole Prices Compared w ith Retail and VA Prices October 2006 CONTENT: Executive Summary 2 Background 3 Lowest Retail Prices in Broward County, Fla., are Usually Lower than Part D Full-Cost Prices 5 Department of Veterans Affairs Prices Much Lower than Retail and Part D 7 Agency-led Price Negotiation is a Major Difference Between VA Prices and Medicare Part D Prices 8 Methodology 8 Recommendations for Congress 9 Recommendations for Consumers 10 End Notes 13 Retail Prices by Pharmacy, Part D Plan Prices, and VA Prices 14

Page 2 October 2006 Executive Summary Medicare s new prescription drug program, Part D, relies on private insurance plans to deliver benefits. A standard Medicare Part D plan covers most of a beneficiary s drug costs until their spending reaches what is known as the coverage gap or donut hole. At that point, although the beneficiary continues to pay premiums, a standard Medicare Part D plan does not cover any drug costs for the beneficiary until the beneficiary spends another $2,850 of his or her own money. Estimates of the number of people who will hit the coverage gap this year vary widely, from less than 3 million to nearly 7 million. 1 We found that the lowest retail price is lower than the plan s full-cost price for those six drugs in 212 of 264 instances, or 80 percent of the time. This report surveys donut hole or full-cost prices for six top drugs 2 in all 44 Medicare Part D plans operating in Broward County, Florida. We also surveyed prices at all 261 retail pharmacies in Broward County for the same drugs and dosages. We found that the lowest retail price is lower than the plan s full-cost price for those six drugs in 212 of 264 instances, or 80 percent of the time. However, shopping around was required to find the lowest prices. The average monthly retail cost for all of the six drugs surveyed was $335.16, or $55.86 per drug, while the average Part D "full cost" was $290.28, or $48.38 per drug. Nevertheless, in Broward County, retail prices are commonly available that are lower than Medicare Part D plan full-cost prices. Examples include: The lowest retail price for a 30-day supply of the most-prescribed medication and dosage 10 mg Lipitor pills is available at a Wal-Mart 3 for $62.85; the lowest full cost price for the same medications through a Part D plan is $67.46 with Silverscript Plus. Sometimes the price discrepancies between retail and Part D plans are significant: The lowest retail price for a 30-day supply of Zoloft 100mg is $77.72 at a Sam s Store, 23 percent lower than what is charged by the highest Part D plan s full-cost price, at $101.01. 4 The Department of Veterans Affairs (VA) uses its purchasing power to negotiate with the pharmaceutical industry to get lower prices for its beneficiaries. The monthly cost to the VA for the six drugs was $132.36, or $22.06 per drug. The VA s prices are 54 percent lower than Medicare Part D plans. Recommendation for Congress Lift the prohibition on Medicare s ability to negotiate lower prices from drug companies, and create a Medicare-administered optional Part D plan for seniors. Price negotiation and increased efficiency (as provided in bills such as S. 2342 and H.R. 752) would allow Medicare to leverage its buying power and offer a more robust benefit, potentially eliminating the donut hole without additional taxpayer funding. Some may criticize comparing VA, retail, and Part D full cost prices as

Not Low Enough: Medicare Part D Donut Hole Prices Compared with Retail and VA Prices Page 3 apples to oranges comparisons. However, the substantially deeper discounts for medicines through the VA, along with the availability of lower prices at the retail level, underscore the argument that Congress has more work to do to lower drug prices for Medicare Part D beneficiaries. Recommendations for Consumers Though difficult, consumers should shop around. Prices vary significantly between various retail outlets, mail order, and Part D plans. Use Consumer Reports Best Buy Drugs, a free Web site, at www.crbestbuydrugs.org, to identify safe, cost-effective medications. Despite concerns about Part D plans ability to negotiate low costs, eligible consumers should strongly consider enrolling, because Part D pays for a substantial proportion of drug costs outside of the donut hole. However, the complexity of Medicare Part D precludes any one size-fits-all recommendation for consumers. Because a standard Medicare Part D plan resumes paying most of a beneficiaries drug costs once he or she is past the donut hole, beneficiaries should generally avoid buying prescription drugs outside of their plan. However, individual circumstances vary for those who do shop around, lower prices may be available locally. Because a standard Medicare Part D plan resumes paying most of a beneficiaries drug costs once he or she is past the donut hole, beneficiaries should generally avoid buying prescription drugs outside of their plan. B a c kg ro u n d In 1965, when Medicare was created, Congress did not include prescription drug coverage. At the time, pharmaceutical drugs were both relatively inexpensive and prescribed far less often. Today, they are a large proportion of the health-care budget and are frequently used by Americans: 10 percent of total health-care expenditures (or $188.5 billion) went for prescription drugs in 2004. 5 Brand-name drug prices have risen rapidly. From 2000 to 2005 those prices rose 40 percent, according to an AARP survey. 6 The basic rate of inflation of all goods and services over that time period was 17.3 percent, also according to the AARP survey. 7 More recently, prices increased at a 6.3 percent annualized rate from July 2005 to June 2006. 8 In 2004, Americans spent $15.5 billion dollars on statins, 9 which include the most-prescribed brand-name medication in America, Lipitor. In 2005, more than $6 billion dollars was spent on Lipitor. 10 Between 10 and 15 percent of Americans over the age of 20 are currently taking a statin. 11 Rising prices and usage put pressure on Congress to enact a Medicare prescription drug benefit. Seniors, a powerful voting demographic, demanded coverage. The result was passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (also known as the MMA ). Passage of the MMA was supported by pharmaceutical companies and many

Page 4 October 2006 insurance companies. While Consumers Union supports a Medicare prescription drug benefit, it opposed passage of the MMA, believing that the program in its current form would deliver too few benefits at too high a cost through an overly complicated delivery system. As part of the MMA, Congress specifically prohibited Medicare from negotiating with pharmaceutical companies for lower prescription drug prices (a position that Consumers Union and other consumer organizations strongly opposed). Medicare-eligible individuals must enroll in one of scores of various Part D plans offered by private health insurance companies; Medicare is prohibited from offering its own Part D plan. The full program is expected by the Congressional Budget Office (CBO) to cost taxpayers approximately $600 billion from 2004 to 2013. 12 The donut hole in a standard plan starts after a beneficiary and Medicare spend $2,250 for the year and ends after the beneficiary spends another $2,850 out of their own pocket A standard Medicare Part D plan includes a deductible and premiums. It covers most of a beneficiary s drug costs until their spending reaches what is known as the coverage gap or donut hole. A standard Medicare Part D plan does not cover any drug costs for the beneficiary while they are in the donut hole, although the beneficiary continues to pay premiums. The donut hole in a standard plan starts after a beneficiary and Medicare spend $2,250 for the year and ends after the beneficiary spends another $2,850 out of their own pocket. 13 An estimated range of from less than 3 million up to nearly 7 million people will hit the coverage gap this year. 14 Once past the donut hole, Medicare resumes paying most of the cost of the beneficiaries drugs. What does Full-Cost Price for Part D Mean? Medicare Part D pays for a substantial share of drug costs for an enrolled individual. However, a standard plan has what is known as a donut hole or coverage gap within which the enrollee pays 100 percent of the costs of their medication. Enrollees must pay the full cost of their drugs out-of-pocket when they hit this coverage gap. For this report, full cost is the cost when a particular enrollee is paying 100 percent of their medication costs that is, when they are in the donut hole or coverage gap of a standard Part D plan.

Not Low Enough: Medicare Part D Donut Hole Prices Compared with Retail and VA Prices Page 5 Lowest Retail Prices in Broward County, Fla., are Usually Lower than Part D Full-Cost Prices At $48.38, average full-cost prices per drug charged by Part D plans (according to www.medicare.gov) for the six drugs and dosages we examined are somewhat lower than average retail prices for the same drugs and dosages at $55.86. For one month s supply of all six drugs added together, the average Part D full-cost is $290.28, while the average retail price for the same drugs added together is $335.16. However, by shopping around we identified numerous pharmacies in Broward County with prices lower than many Medicare Part D plan full-cost prices. Four out of five (80 percent) Part D plans charge higher full-cost prices than the lowest retail price available for the same drug and dosage in Broward County. 15 As an example, the lowest retail price in Broward County for a 30-day supply of 10mg Lipitor is $62.85 at a Wal-Mart pharmacy in Sunrise. 16 In contrast, the lowest Part D plan full-cost price according to www.medicare.gov is $67.46 with Silverscript Plus. 17 Lipitor Price Example Four out of five (80 percent) Part D plans charge higher full-cost prices than the lowest retail price available for the same drug and dosage in Broward County. In some individual cases, the price disparity between retail price and a Part D

Page 6 October 2006 plan full-cost price is large: The lowest retail price for a 30-day supply of Zoloft 100mg is $77.72, 23 percent lower than what is charged by the highest Part D plan s full-cost price, at $101.01. 18 Wal-Mart Drugs? and $4.00 Generic Zoloft Price Example Wal-Mart recently announced that it will offer nearly 300 generic drugs at the price of $4.00 for a 30-day supply at 65 Tampa-area stores. 19 The retailer also says it plans to expand this pricing to all of Florida in January of 2007. 20 Target responded by announcing that it would lower its prices on some generic drugs in the Tampa area. 21 About 300 out of the more than 11,000 brand-name and generic p r e s c r i p t i o n d r u g s 2 2 a r e c o v e r e d b y W a l - M a r t s a n n o u n c e m e n t. T h e m o s t - p r e s c r i b e d g e n e r i c medication, Hydrocodone APAP, which is examined in this report, is not on that list, nor are any brand-name medications. 23 Generic drugs are a key piece in the puzzle of bringing down h e a l t h -care c o s t s. R e c e n t announcements by Wal-Mart and other retailers may lead to greater price competition for lower generic drug costs, which would benefit consumers. Consumers should discuss alternatives to high-cost brand-name drugs, such as generics or lower-cost alternatives, with their doctors and consult resources such as www.crbestbuydrugs.org. While Zoloft and Lipitor are examples, they illustrate a significant point: Prices at the retail level are sometimes lower than what Part D plans charge their enrollees at full cost. By shopping around, a consumer can find the lowest available retail price, which is lower than the full-cost price of four out of five (80 percent) available Part D plans. In other words, an individual with no prescription drug coverage or health insurance can in many cases find a pharmacy in Broward County with a lower retail price than the full-cost price of most of the Part D plans.

Not Low Enough: Medicare Part D Donut Hole Prices Compared with Retail and VA Prices Page 7 Department of Veterans Affairs Prices Much Lower than Retail and Part D VA prices are substantially lower than average retail or Part D full-cost prices for the identical drugs and dosages. VA prices are 54 percent lower than Part D full-cost prices. Average VA Price per Drug versus Average Retail Price per Drug and Average Part D "full-cost" Price per Drug (for all drugs and dosages examined) The lowest full-cost price for any drug and dosage we studied through any Part D plan is much higher than the VA price for the same drug and dosage. $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 Lipitor 10mg VA Price and Lowest Part D "full-cost" Price for 30 days Supply of Each Drug Toprol XL 50mg Norvasc 10mg Synthroid 100mcg Zoloft 100mg Hydrocodone APAP 10-325mg VA Price Lowest Part D "full-cost" Is VA prices compared to Part D prices an Apples to Oranges comparison? Advocates for Part D s current structure have argued that comparing Part D plan full-cost prices, retail prices, or mailorder prices with VA prices is an apples to oranges comparison. They argue that a more appropriate comparison is the VA price with the price which the insurance company that offers a particular Part D plan pays for medications. Unfortunately, those prices are not available for public review. We have no way of knowing what prices private insurance plans pay for prescription drugs. As such, there is no way to determine whether a Part D plan is negotiating a lower price, but not passing that price on to enrollees who are paying out-of-pocket in the donut hole. It is impossible to know whether private insurance Part D plans are as efficient as possible in delivering low prices to enrollees. What is known is that the VA pays far lower prices than Part D plans offer to their enrollees. Whether the difference reflects higher costs of marketing, administration and profit-taking, ineffective negotiation for lower drug prices by private insurance plans, or some other reason is unknown.

Page 8 October 2006 Agency-led Price Negotiation is a Major Difference Between VA Prices and Medicare Part D Prices Consumer Reports Best Buy Drugs Consumers Union s free Web site, at www.crbestbuydrugs.org, provides information that can help consumers begin a conversation with their doctor about safe, effective, and affordable prescription medicines and particularly about which medicines will best meet their medical needs while giving them the most value for their health-care dollar. The findings presented on the site combine both an expert medical review of the scientific evidence on prescription drugs and information about prices. The analysis compares and contrasts prescription drugs by category that is, drugs in the same class that are used to treat a specific condition or illness such as high blood pressure, high cholesterol, heartburn, or depression. Reports on the drugs in various categories can be downloaded to print out and discuss with a doctor. By providing both effectiveness and cost information, Consumer Reports Best Buy Drugs makes it easier for consumers to discuss choices for their medications in a more informed manner. The Department of Veterans Affairs law allows it to drive a hard bargain on behalf of its enrollees with the pharmaceutical companies. The VA cares for an estimated 5 million patients, 24 which gives it huge volume purchasing power. In addition, the VA also uses a preferred drug list 25 to drive down prices. With approximately 42 million beneficiaries, 26 Medicare Parts A and B also benefit from large volume purchasing. Part A is primarily hospital care, while Part B primarily covers doctors offices. In either case, the Medicare general public. system is purchasing services on a massive scale. The agency that administers Medicare, the Center for Medicare and Medicaid Services (CMS), sets a price for a particular service doctors and hospitals can choose whether or not to provide service at that price. Part D is different. CMS is expressly prohibited from setting or negotiating prescription drug prices. Instead, individual plans negotiate prices with drug companies directly. The plans divide the purchasing power of the total program, each using their own formularies and preferred drug lists. They also carry the costs of their marketing, individual bureaucracies, and profit. As of June 2006, 22.5 million people were enrolled in Medicare Part D plans. 27 Methodology Consumers Union anonymously placed more than 1,000 phone calls to 261 pharmacies in Broward County in August of 2006. Every pharmacy licensed by the Florida Department of Health in Broward County was surveyed, with the exception of pharmacies that do not fill prescriptions for members of the The medications and dosages surveyed in this report are 30-day supplies (30 pills) of: 1) Lipitor 10mg, 2) Toprol XL 50mg, 3) Synthroid 100mcg, 4) Norvasc 10mg, 5) Zoloft 100mg, and 6) Hydrocodone APAP 10-325mg. The first five are the five most-often prescribed brand-name drugs in the U.S.; Hydrocodone APAP is the most-often prescribed generic drug in the U.S. 28 The particular dosages selected are the doses that appear as the default option for searching through www.medicare.gov, which also correspond to the most-prescribed dosages for that particular medication through Medicare. A 30-day supply (30 pills) is also the default option on www.medicare.gov. Medicare Part D full-cost prices are from the CMS Web site, at www.medicare.gov, using the General Plan Search in August 2006. Only

Not Low Enough: Medicare Part D Donut Hole Prices Compared with Retail and VA Prices Page 9 stand-alone prescription drug plans under Part D were examined. The general plan search function does list costs by local pharmacies. 29 Prices and availabilities vary substantially by pharmacy. As such, the plan prices reported do not reflect prices at individual pharmacies; they are prices reported to CMS by the Part D plans. Consumers Union notes that throughout the year, there have been problems in CMS receiving and/or posting accurate price data, a problem confirmed by our own discussions with CMS. 30 VA prices refer to the prices that the Department of Veterans Affairs (VA) pays for the particular medications and dosages. The prices themselves were obtained from the Department of Veterans Affairs. Broward County, Fla., is a relatively large county with a relatively large senior population. It has approximately 1.7 million residents, of whom about 250,000 are over the age of 65. 31 Recommendations for Congress Congress should require the Center for Medicare and Medicaid Services (CMS), the agency that administers Medicare, to offer a Medicare-run Part D plan that negotiates its own prices with drug companies as an option for Medicare enrollees. S. 2342 and H.R. 752 are, respectively, Senate- and House-introduced legislation that would amend Part D in this general manner. There are other proposed bills that would achieve similar changes. The MMA was partly justified by claims that private plans would lower prices below levels that a Medicare-run plan could generate. It is not at all clear that plans have been able to do this. The fact that an uninsured individual can purchase prescription drugs at a lower price at a retail outlet than can enrollees through many Part D plans while in the plan s coverage gap suggests that Part D is not delivering the lowest prices possible. Congress should give Medicare-eligible individuals a choice: They should be able to enroll in a Medicareadministered Part D plan that will negotiate its own drug prices or enroll in a privatelyrun Part D plan. Congress should give Medicare-eligible individuals a choice: They should be able to enroll in a Medicare-administered Part D plan that will negotiate its own drug prices or enroll in a privately-run Part D plan. Seniors and other individuals can vote with their feet: If private plans can improve on a Medicare-administered plan, then the private plans will be more likely to prosper. If a Medicare-administered plan is superior, enrollment is more likely to adjust accordingly. Consumers Union believes that price negotiation and increased efficiency would allow Medicare to offer a much more robust benefit with the same funding levels. A Medicare-administered plan would not take profits or need marketing expenditures, and would likely require a relatively smaller bureaucracy with lower administrative costs than all the various private plans. Part D s donut hole, which limits coverage, along with co-pays and deductibles could be eliminated or significantly reduced with the resulting savings. Congress should enact S. 2342 and H.R. 752 or equivalent legislation.

Page 10 October 2006 Recommendations for Consumers For the many tens of millions of individuals without health insurance or prescription drug coverage, it pays to shop around. Prices vary significantly between various pharmacies and mail-order outlets. The best way to shop around is to call ahead: Look up local pharmacies and call them to get a price quote. Some states also offer Internet-based price lookup tools for pharmacies. For individuals eligible for Medicare, enrolling in Part D is an option. Unfortunately, Medicare Part D is quite complicated picking the best plan is very difficult. However, even given the difficulty of choosing a plan, because Medicare Part D will pay for a substantial proportion of drug costs, enrollment in Part D is very much in the interest of many seniors and people with disabilities. Lower income individuals who are eligible for the program have especially strong incentives: Subsidy programs pay much higher proportions of their drug costs. For the many tens of millions of individuals without health insurance or prescription drug coverage, it pays to shop around. Medicare Part D s structure is complex. Standard Part D plans start with a $250 deductible. After meeting the deductible amount, seniors and people with disabilities in a typical plan pay 25 percent of the cost of their medications until they have bought $2,250 of prescription drugs through the plan. At that point there is usually a coverage gap (or donut hole ) that requires plan participants to pay out-of-pocket for all of their drug costs until they reach $5,100 in total costs (which works out to $3,600 in out-ofpocket drug costs to that point, on top of the premium). After this coverage gap, standard plans pay about 95 percent of costs. 32 Each Part D plan covers different drugs, with its own premiums, deductibles, and co-pays for various drugs and not all plans contract with all pharmacies. Part D plans can change the cost of a drug at any time (and most do) but enrollees can only change their plans once per year. Prices charged by local pharmacies to an enrollee often vary widely. Adding to the confusion, according to the U.S. Government Accountability Office (GAO), the private plans give out accurate and complete information only 34 percent of the time over the telephone. 33 Even Medicare gives incorrect information approximately 18 percent of the time, also according to the GAO. 34 In addition, CU has found that the information either sent to CMS or posted on the CMS Web site is often in error, and does not actually reflect the price of a plan s drugs. 35 Consumers should compare prices between plans on the Internet through www.medicare.gov using the Web site s pharmacy-specific price-lookup tools to compare plans. It is very important to realize that different pharmacies have different prices: Pay attention to the fine print! A General Plan Search yields a price comparison that is only marginally useful for an individual consumer, because prices and availability will vary significantly by local pharmacy. Finally, any calculation of which plan offers the best prices requires a projection of prescription drug needs. Because a consumer s prescription drug needs often change within a year, it is difficult to project whether any given plan s drug prices and availabilities are most appropriate, even assuming the plan will not change its prices during the course of a year s enrollment period.

Not Low Enough: Medicare Part D Donut Hole Prices Compared with Retail and VA Prices Page 11 Consumers Union believes, due to the difficulty of making an informed decision, that enrollment choices made by consumers may be more influenced by marketing than by careful research. The level of sophistication required to navigate the program is very high: Experienced Consumers Union researchers themselves find plan selection to be a daunting challenge. An important point in favor of Medicare Part D enrollment is the program s coverage of what is known as catastrophic care. A standard plan will pay about 95 percent of drug costs once an enrollee s out-of-pocket costs reach $3,600 for the year, the level that triggers catastrophic care. The plan provides some measure of peace of mind: If bills go up dramatically, the government will help. Ultimately, individuals should make their own choice about whether to enroll, and if so, in which plan, based on their own health-care needs, comfort with risk, and financial situation. Nonetheless, Consumers Union believes that it is in the interests of many seniors and persons with disabilities to enroll, especially if they are lower-income individuals. Conclusion: In Medicare Part D s eighth month of operation in one large county with a large senior population Broward County, Fla. the prices charged to enrollees by Part D plans argue for a change to the status quo. The fact that retail prices for an uninsured individual are often lower than Part D plan full-cost prices raises significant questions about the effectiveness of the program. Congress should Enact S. 2342 and H.R. 752 (or equivalent legislation), which lift the prohibition on Medicare s ability to negotiate lower prices from drug companies and create a Medicare-administered optional Part D plan for seniors. Seniors should be able to choose a Medicare-administered plan as an option to privately administered plans. Congress should Enact S. 2342 and H.R. 752 (or equivalent legislation), which lift the prohibition on Medicare s ability to negotiate lower prices from drug companies and create a Medicare-administered optional Part D plan for seniors.

Page 12 October 2006 End Notes 1 The lower estimate is from testimony of Dr. Mark McClellan on behalf of the Centers for Medicare and Medicaid Services (CMS) before the Senate Aging Committee on Sept. 21, 2006; the higher estimate is from the Kaiser Family Foundation and the Actuarial Research Corporation, Estimates of Medicare Beneficiaries Out-of-Pocket Drug Spending in 2006: Modeling the Impact of the MMA, p. 8, November 2004. 2 The medications and dosages surveyed are 30-day supplies (30 pills) of: 1. Lipitor 10mg, 2. Toprol XL 50mg, 3. Synthroid 100mcg, 4. Norvasc 10mg, 5. Zoloft 100mg, and 6. Hydrocodone APAP 10-325mg. The first five are the five most-often prescribed brand-name drugs in the U.S.; Hydrocodone APAP is the most-often prescribed generic drug in the U.S. The source for the ranking by prescriptions is Verispan s VONA market research from 2005. 3 That Wal-Mart is located at 12555 West Sunrise Boulevard in Sunrise. 4 There are two different Sam s stores with that price. One is located at 950 University Drive in Coral Springs and the other is located at 1900 University Drive in Miramar. The Part D plans are: Medicare Rx Awards, Medicare Rx Awards Plus, and Medicare Awards Premier. 5 Kaiser Family Foundation, Prescription Drug Trends, fact sheet, June 2006. 6 AARP, Trends in Manufacturer Prices of Brand-Name Prescription Drugs Used by Older Americans 2005 Year-End Update, April 2006, p. 6. 7 Ibid. 8 AARP, Trends in Manufacturer Prices of Brand-Name Prescription Drugs Used by Older Americans Second Quarter 2006 Update, September 2006, p. 2. 9 Consumer Report Best Buy Drugs, The Statin Drugs: Prescription and Price Trends November 2004 to October 2005, January 2006, p. 3. 10 Verispan VONA market research service. 11 Consumer Reports Best Buy Drugs Report, Treating Elevated Cholesterol and Heart Disease: The Statins, June 2006, p. 3. 12 Congressional Budget Office, Updated Estimates of Spending for the Medicare Prescription Drug Program in form of Letter to the Honorable Joe Barton, March 4, 2005. 13 Which corresponds to a total of $5,100 in spending by the beneficiary and Medicare. These numbers will be adjusted upward each year to reflect prescription drug cost inflation. 14 The lower estimate is from testimony of Dr. Mark McClellan on behalf of the Centers for Medicare and Medicaid Services (CMS) before the Senate Aging Committee on Sept. 21, 2006; the higher estimate is from the Kaiser Family Foundation and the Actuarial Research Corporation, Estimates of Medicare Beneficiaries Out-of-Pocket Drug Spending in 2006: Modeling the Impact of the MMA, p. 8, November 2004. 15 212 of 264 combinations of 44 plans with the 6 drugs examined. 16 Lipitor 10mg 30-day supply prices surveyed were different at various individual Wal-Mart pharmacies. The Wal-Mart in question is located at 12555 West Sunrise Boulevard in Sunrise. 17 That price, meanwhile, will vary by pharmacy, depending on the pharmacy s arrangements with Silverscript Plus, so in many cases the actual price may be higher than $67.46. 1 8 Lowest retail price for Zoloft 100mg for 30 days is available at two different Sam s stores, one located at 950 University Drive in Coral Springs and the other located at 1900 University Drive in Miramar; the highest price through a Part D plan is through 3 plans: Medicare Rx Awards, Medicare Rx Awards Plus, and Medicare Awards Premier. 19 Wal-Mart corporation news release, Wal-Mart Cuts Generic Prescription Medicines to $4, Sept. 21, 2006, at http://i.walmart.com/i/if/hmp/fusion/floridapressrelease.pdf 20 Ibid. 21 Target corporation news release, Target to Remain Competitive on Pricing; Lowering Prices on Number of Generic Drugs, Sept. 21, 2006, at http://news.target.com/phoenix.zhtml?c=196187&p=irol-newsarticle&id=908159 22 Consumer Reports, Consumer Drug Reference - 2006, p.v., 2005. 23 Wal-Mart corporation news release attachment, Wal-Mart $4 Generic Medication List, Sept. 21, 2006, at http://i.walmart.com/i/if/hmp/fusion/floridagenericdruglist.pdf

Not Low Enough: Medicare Part D Donut Hole Prices Compared with Retail and VA Prices Page 13 End Notes Continued 24 Department of Veterans Affairs, Budget FY 2007 Budget Submission Summary Volume, February 2006, pp. 1-20. 25 A preferred drug list (PDL) is a list of drugs a particular plan makes more easily available relative to other covered drugs that treat the same medical condition. They are the plan s first choice of drugs within a particular category. In setting up their preferred drug list, the VA s doctors make a determination that particular drugs at a particular dosage are equivalent and safe and effective. These determinations are made after an indepth, unbiased analysis of the clinical research has been conducted. Because many drugs in a particular category can be substituted by an equivalent drug, the VA can negotiate with a drugmaker to get lower drug prices using the leverage of moving its purchasing to an equivalent drug through its preferred drug list without compromising any services to its patients. 26 Kaiser Family Foundation, Medicare Chart Book 2005, July 2005, Section 1, p. 1. 27 Kaiser Family Foundation, Data Update Medicare: Prescription Drug Coverage Among Medicare Beneficiaries, June 2006. 28 Verispan VONA market research service. 29 While it is possible to limit a search to specific pharmacies (e.g., those near a particular ZIP code), CU surveyed prices offered by the plan serving Broward County without any limits on pharmacies. 30 Consumers Union, Washington D.C. office. 31 U.S. Census Bureau, State and County QuickFacts for Broward County, Fla., 2004. 32 The enrollee is then said to have entered the catastrophic care portion of Part D. 33 General Accounting Office, Medicare: Prescription Drug Plan Call Center Responses Were Prompt, But Not Consistently Accurate and Complete, June 30, 2006. 34 General Accounting Office, Medicare: Quality of CMS Communications to Beneficiaries on the Prescription Drug Benefit Could Be Improved, May 4, 2004. 35 Extensive correspondence and communication with CMS by CU s Washington office throughout 2006.

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Lipitor 10mg CVS EGL SOUTH DEERFIELD FL, CVS EGL STIRLING LAUDER FL, CVS EGL SUNRISE COMMERCIAL FL, CVS EGL SUNRISE LAUDER FL, DEERFIELD BEACH 2 S FEDERAL HWY 954-481-8376 82.59 FORT LAUDER 2701 STIRLING RD 954-981-9670 82.59 SUNRISE 10000 W COMMERCIAL 954-748-6886 82.59 FORT LAUDER 2595 E SUNRISE 954-566-8309 82.59 CVS EGL TAFT ST FL, HOLLYWOOD 6665 TAFT ST 954-981-0300 82.59 CVS EGL UNIVERSITY FORT LAUDER FL, CVS EGL UNIVERSITY HOLLYWOOD FL, CVS EGL UNIVERSITY POMPANO FL, CVS EGL WEST BROWARD FL, CVS EGL WEST DAVIE BOULEVARD FL, CVS EGL WEST SUNRISE FL, CVS EGL WESTON ROAD FL, CVS EGL WILES CORAL SPRINGS FL, DAVIE 4610 S UNIVERSITY DRIVE 954-434-2002 82.59 PEMBROKE PINES 70 N UNIVERSITY DRIVE 954-432-5510 82.59 CORAL SPRINGS 2353 UNIVERSITY DRIVE 954-757-6330 82.59 PLANTATION 7155 W BROWARD 954-585-0935 82.59 FORT LAUDER 3501 W DAVIE 954-583-9195 82.59 PLANTATION 8341 W SUNRISE 954-473-8070 82.59 WESTON 1120 WESTON ROAD 954-384-7667 82.59 CORAL SPRINGS 8151 WILES ROAD 954-345-3590 82.59 CVS EGL WILES RD FL, HOLLYWOOD 900 SOUTH SR 7 954-962-2005 82.59 CVS MCNAB TAMARAC, TAMARAC 10004 W MCNAB ROAD 954-718-5095 82.59 DANIA DISCOUNT DRUGS DANIA BEACH 16 SOUTH FEDERAL HWY SUITE A 954-921-4661 77 DMD PHARMACY SERVICES, DEERFIELD BCH 1804 WEST Hillsboro Blvd 954-426-9899 80.39 (Village Pharmacy) DMD PHARMACY SERVICES, (Village Pharmacy) DR G'S PHARMACY PEMBROKE PINES 13460 SW 10TH STREET SUITE 102 LAUDER BY THE SEA 954-450-0212 80.39 234 COMMERCIAL 954-938-0005 94 DRUG PLACE, INC POMPANO BEACH 2201 SW SAMPLE RD BLDG 9 STE 3A ELIAS, INC (PRESCRIPTION PAD) Guardian Pharmacy of Pompano Beach, HARCOURT SERVICES INC (Herbmor Compounding Pharmacy) 800-881-6325 83.29 PLANTATION 333 NW 70TH AVE SUITE 102 954-971-2000 75.99 POMPANO BEACH 1903 West Copans Rd-Suite B 954-582-5209 84.79 PEMBROKE PINES 9111 PEMBROKE RD 954-447-1823 98 HEATHER'S PHARMACY & MEDICAL SUPPLY, INC LAUDERHILL 1478 N SR 7 954-689-8440 89.35

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