Get the
scoop on the President's new proposal to make meds cheaper
by Walecia Konrad | November 2, 2018
Just days before the
mid-term elections, the Trump administration announced a proposal that would dramatically change the way
Medicare pays for drugs, by basing prices on the going rate in other industrialized
countries. Their claim: The plan could result in savings of 30% on many of the country’s most expensive
medicines for diseases such as cancer and multiple sclerosis—for both patients
and taxpayers.
The proposed change
faces an uphill battle as the pharmaceutical industry pushes back,
conservatives decry it as a form of price controls and socialized medicine, and
liberals contend it doesn’t go far enough. The Centers for Medicare &
Medicaid (CMS) is soliciting public comments now until the end of the year.
If the proposal does
go, though, the changes will be sweeping. How will the plan work, and when
might you feel the effects?
Here’s what you need
to know.
What drugs are
involved
The proposal centers
on the price of drugs purchased by the government via Medicare Part B. Part B
pays for drugs administered by a physician in the doctor’s office, hospital,
clinic or other therapeutic setting, and includes expensive treatments such as
chemotherapy and rheumatoid arthritis medicines.
That’s different from
the drugs that are managed under Medicare Part D, which covers the bulk of
prescription medicines, usually those purchased by individuals at the pharmacy.
The government spent
$26 billion on Part B drugs in 2015, according to the Government
Accountability Office. What’s more, Medicare accounted for 50%
of the market for the most expensive Part B drugs, according to the report.
Instead of allowing
pharmaceutical firms to set the prices for these drugs, the administration has
proposed using an international pricing index comprised of average prices other
industrialized countries pay.
The President pointed
to a government study that found Medicare pays 80% more than other
advanced industrial countries such as Canada, France and Germany for some of
the most expensive physician-administered drugs.
In addition, the
administration claims, the proposal would help eliminate a system that
incentivizes doctors to choose the highest priced drugs. Currently Medicare
reimburses health care providers for the wholesale costs of drugs plus 6% for
storage and handling (on Nov. 1, the Trump administration released a new
Medicare regulation that changes this reimbursement from 6% to 3% for
2019).
What’s in it for you?
The good news is that
if the Part B proposal is actually implemented, in the long run it could save
Medicare enrollees money. Patients are charged a 20% co-pay for Part B drugs,
so any savings the government can realize will also lower Medicare recipients
out-of-pocket costs.
And co-pays can add
up fast, when you consider just one regimen of some of the most expensive
chemotherapy drugs can cost as much as $10,000.
But don’t get too
excited yet. The Part B proposal would be rolled out over five years and only
cover 50% of the country. Alex Azar, secretary of Health and Human Services
said at a recent meeting that he expects the new model would begin late 2019 or
early 2020 but that the proposal could change because the administration was
open to alternative ideas.
What’s more, most
experts expect the administration will face a major battle from the giant
pharmaceutical industry.
“You
may be switched to the cheaper medicine whether or not it’s as effective for
you.”
David
Charles, chairman Alliance for Patient Access
And some patient
advocates worry that drug pricing changes for Part B could affect patient
access to some of the most effective drugs.
“If you’re doing well
on one medicine and the federal government negotiates a better price on another
medicine for the same illness, you may be switched to the cheaper medicine
whether or not it’s as effective for you,” says David Charles, chairman of the
Alliance for Patient Access.
While politicians,
health care experts and patient advocates debate the merits of the Part B
proposal, there are hints that more changes to Medicare Rx drug coverage may be
coming soon. Also in October, the Office of Management and Budget posted a proposed rule that would “modernize” Medicare Part D.
While the post
contained no details on the proposal or when it would be announced, it’s
potentially a big deal. Part D pharmaceutical drug coverage accounts for 15% of
total Medicare costs and for nearly a third of the amount spent on prescription
drugs nationwide, according to research from the Kaiser Family Foundation.
For now, however,
Medicare recipients can only wait and see if the new Medicare proposals turn
into real savings.
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