GAO Reports: Medicare Part D: CMS Should Monitor Effects of Rebates on Plan Formularies and Beneficiary Spending

Medicare beneficiaries can have prescription drugs covered via private insurance plans participating in the Medicare Part D program. Premiums and drug costs vary by plan, as do plans’ lists of covered drugs—known as “formularies.”

Drug makers may give plans rebates in exchange for preferred placement over competitors on formularies. The rebates may lower plan premiums, but they don’t reduce beneficiaries’ payments for the drugs.

We found rebates largely went to a small number of drugs, and plans paid less for highly rebated drugs than beneficiaries did.

We recommended that Medicare monitor how rebates affect formularies, beneficiaries, and more.