Medicare is prohibited by US law from directly negotiating drug prices with manufacturers.1 The Department of Veterans Affairs (VA) Health System, in contrast, relies on direct negotiation and closed formularies to reduce costs. A 2018 US congressional report found that Medicare would have saved $2.8 billion in 2015 if it had paid VA-negotiated prices for the 20 most commonly prescribed drugs to beneficiaries of Medicare Part D.2 A 2019 study estimated that, for the 50 costliest oral drugs, Medicare Part D would have saved $14.4 billion in 2016 with VA-negotiated prices.3 However, neither study assessed the influence of formularies in conjunction with price negotiations, and the 2019 study excluded products with nonoral routes of administration.3
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Feldman WB, Avorn J, Kesselheim AS. Potential Medicare Savings on Inhaler Prescriptions Through the Use of Negotiated Prices and a Defined Formulary. JAMA Intern Med. Published online December 02, 2019. doi:https://doi.org/10.1001/jamainternmed.2019.5337
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