Beware the new push for Medicare to negotiate drug prices … headlines don’t give the full story 

House Democrats have a new proposal to allow HHS to negotiate drug prices which they have discussed with President Trump. Below is a summary. 

There is no one way street in health care. Merely allowing HHS to negotiate drug prices has minimal impact so this proposal requires the government (HHS) to establish a federal formulary (Part D administrators already use formularies and negotiate prices) that will apply for all of Part D Medicare. 

In short, a single federal agency will determine which drugs are covered and which are not based in large part how big a discount can be obtained. So, if you take Drug A for your heart condition or arthritis and in the same class of drugs Drug B offers a larger discount, then Medicare will only pay for Drug B your and your doctors choice is limited. SEE HOW OFTEN YOU READ THAT IN THE HEADLINES. 

Hey, such an approach is standard practice in single-payer plans, so why not in the US. Just tell people the full story and the truth about what it takes to actually manage health care costs. YOUR CHOICES WILL BECOME FEWER AND FEWER. 


Allowing Medicare to Negotiate Lower Drug Prices

 Under current law, the Secretary of HHS is prohibited from negotiating lower drug prices on behalf of Medicare Part D beneficiaries. This is called the “non-interference clause.”

The bill would strike the non-interference clause and direct the Secretary to negotiate lower prices with drug manufacturers that participate in Medicare Part D. 

The bill also would direct the Secretary to establish a formulary to leverage the purchasing power of the government on behalf of Part D plans.

 The Congressional Budget Office (CBO) has found that merely striking the non- interference clause would have only a “negligible” effect on Medicare spending, but that setting a formulary “could give the Secretary the ability to obtain significant discounts in negotiations with drug manufacturers.”

 The bill would allow Part D plans to use additional benefit design and formulary tools to secure steeper discounts or rebates for beneficiaries.

 The bill would establish a fallback process if negotiations with drug manufacturers are unsuccessful.

 The bill would preserve critical protections for patient access by including in any formulary certain categories and classes of drugs that are protected under current law.

 The bill would also require the inclusion of at least one drug to treat each clinical condition, as identified by the Secretary, and would preserve patient appeals processes for accessing drugs that are not covered by the formulary.
Restoring Low-Income Beneficiary Rebates

 The bill would restore required drug rebates for low-income beneficiaries that were lost when Medicare Part D was created in 2006.

 CBO projects that restoring these rebates for brand-name drugs would save taxpayers $145 billion over ten years.

 Before Part D came into effect, people who were eligible for both Medicare and Medicaid received their drug benefits through Medicaid. After Part D was created, these people began receiving their drug benefits through Medicare.

 Drug manufacturers that participate in Medicaid are required to provide discounts in the form of rebates back to Medicaid, but there are no similar statutory rebates for Medicare.

 As a result of shifting the drug benefits for these dual-eligible individuals from Medicaid to Medicare, the pharmaceutical industry received a huge windfall of billions of dollars in rebates it was no longer required to pay.


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