Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending
Why Government Health Programs Pay Double for Generic Drugs
Episode 30 of The Fiscal Policy Podcast investigates a strange but costly inefficiency: government health programs in the US often pay far more for the exact same generic drugs than private insurers do. Lucas breaks down a 2025 Government Accountability Office report finding that Medicare Part D paid an average of 2.3 times more than commercial plans for 40 common generics in 2023 — costing taxpayers an extra $1.8 billion a year. He explains the structural reasons: opaque pharmacy benefit manager rebates, statutory pricing floors, and a reimbursement formula that was originally designed for…
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