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Senate Democrats release plan for Medicare drug negotiations

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Photo: John Baggaley/Getty Images

Senate Democrats have carved out a deal on legislation that would attempt to lower prescription drug costs for Americans by allowing Medicare to negotiate for lower drug prices.

According to details released by the Senate this week, the Department of Health and Human Services will select 10 drugs eligible for negotiation starting in 2026, with the number of drugs increasing incrementally in subsequent years – 15 in 2027 and 20 by 2029.

Selection criteria for the drugs will be based on their total spending under Medicare Parts B and D, with an exception for smaller biotech drugs, including vaccines. That exception would apply to biotech drugs from 2026 to 2028.

The proposed legislation also repeals a Trump-era Part D rebate rule that would have eliminated the safe harbor for Part D drug rebates, replacing it with a new one for point-of-sale discounts. The Biden Administration had already delayed that rebate rule from taking effect until January 2023.

The Trump rule received pushback when it was first announced, with opponents claiming the move would not lower drug prices and, instead, would increase costs for all beneficiaries, with insurers using the rebates to lower premiums. The rule was delayed by a court order in 2021 in a lawsuit by the Pharmaceutical Care Management Association against HHS, which sought to give the current administration the necessary time to review the entire rebate rule’s impact on Medicare Part D and its enrollees.

In February 2019, HHS actuaries said the rule would increase Medicare premiums for all seniors by 25% and give drugmakers another $100 billion bailout and have taxpayers foot the bill for higher costs.

The new proposed legislation from Senate Democrats would also place a cap on Medicare Part B and D rebates by manufacturers for single-source and biologic drugs with prices that are increasing faster than the rate of inflation. It would also place monthly caps on cost-sharing payments under Medicare Advantage and Part D prescription drug plans. That would start in January 2025.

WHAT’S THE IMPACT?

Democrats’ plan received pushback from pharma industry group PhRMA, with executive vice president of public affairs Debra DeShong saying via statement that Democrats “weakened protections for patient costs included in previous versions, while doubling down on sweeping government price-setting policies that will threaten patient access and future innovations.”

In a Twitter post, the Association for Accessible Medicines said the “flawed, untested scheme will reduce future savings through lower-cost generic and biosimilar medicines for America’s patients and employers.”

THE LARGER TREND

President Biden has repeatedly urged Congress to allow Medicare to negotiate drug prices. In his State of the Union address earlier this year, Biden put the spotlight on insulin, which he said costs about $10 a vial to make. But drugmakers charge 30 times that amount, said Biden, who wants to cap the cost of insulin at $35 a month.

PhRMA countered that insulins are less expensive today than in 2007. Citing data from the Bureau of Labor Statistics, the group said prescription drug prices rose just 1.3% over the last year.

A more positive reaction came from the Campaign for Sustainable Rx Pricing (CSRxP), which said it supports imposing a cap on out-of-pocket costs for Medicare Part D beneficiaries.

“CSRxP commends President Biden for continuing to recognize out-of-control prescription drug prices are a top concern facing the nation,” said CSRxP Executive Director Lauren Aronson. “Now, Congress must finally deliver on repeated promises to lower drug prices with market-based solutions that hold Big Pharma accountable and deliver relief for the American people.”

Research, funded by the Robert Wood Johnson Foundation and prepared by the Urban Institute, finds a proposal to cap out-of-pocket expenses in Medicare would lower prescription drug prices by an average of $900 for eligible Part D enrollees. A $2,000 cap on prescription drug out-of-pocket costs for Medicare Part D enrollees who do not qualify for cost-sharing protections would save more than 860,000 enrollees an average of $900 annually. The proposal would increase Medicare spending by less than 1%.

Data released in February from GoodRx found the price of prescription medications has increased at a far faster rate than inflation over the past seven years. Since 2014, all goods and services have increased in price by 19%, while prescription drugs have increased in price by 35%. Prescription drug prices have also outpaced wages, gas, food, tuition, transportation, telephone and internet services, personal care, and new and used cars prices.

Twitter: @JELagasse
Email the writer: [email protected]



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