The Federal Trade Commission says it’s investigating a Medicare drug rebate program that encourages hospitals to provide cheaper and more effective care to patients.
The FTC says in a statement Monday that the program, which is administered by Medicare Advantage and other providers, encourages hospitals and other doctors to charge patients a fee for prescriptions that are less expensive than the brand-name drugs that are available at the pharmacy.
In 2016, Medicare charged pharmacies to provide a rebate for prescriptions in the range of 5 percent to 12 percent cheaper than generic medications.
The program is known as rebates.
A Medicare Advantage provider is one of the hospitals that offers rebates, and it receives the rebate in exchange for filling prescriptions with the brand name drug, or generic, that is not available at a hospital.
The Federal Reserve Bank of New York says Medicare rebates help Medicare pay for its prescription drug program.
The bank also said Medicare Advantage programs have been linked to fraud in the past.
The drug rebate scheme was introduced in 2009 and was aimed at helping patients pay for medications they could not get at the doctor’s office.
The FDA says rebates are meant to help Medicare cover the cost of its drugs, not the costs of prescribing them.
But critics say the program encourages hospitals not to offer the drugs at lower prices, and patients to pay more for the drugs they can’t afford.