Sunday, October 17, 2021

Restrictions on Medicare drug prices under pressure

by Ricardo Alonso-Zaldivar

WASHINGTON (AP) — Donna Weiner looks at Medicare’s prescription drug program from two different perspectives.

As a participant, she wants to pay less for her drugs, which cost her about $6,000 a year. As a retired accountant who spent 50 years handling the books for companies, she sees a way to get there.

Weiner, who lives near Orlando, Florida, said, “You know from working in a business that it doesn’t make sense for a plan or company administrator to not be involved in what they pay for.” For Medicare “negotiating those prices would put thousands of dollars back in my pocket every year,” she said.

Negotiating Medicare drug prices is the linchpin of President Joe Biden’s ambitious health care agenda. Not only will consumers see lower costs, but the savings will be channeled into other priorities such as dental coverage for retirees and lower premiums for those with plans under the Obama-era health law.

To do so, Congress would have to change an unusual arrangement that has been written into law.

When lawmakers created Medicare’s Part D outpatient prescription drug program in 2003, they barred Medicare from negotiating prices. Republicans controlling Congress at the time wanted insurance companies to operate drug plans to get a bargain. Medicare was sidelined despite decades of experience setting prices for hospitals, doctors, and nursing homes.

Ron Wyden, who is leading efforts to draft the Democratic plan, said, “I don’t know of any other situation where the government has put an arm behind its back to deal with people like big pharma. Tied up.” Senate.

Known as the “non-interference clause”, the ban has been unbearable. The pharmaceutical industry wants to keep it that way.

Former Medicare administrator Andy Slavit recalls proposing a “modest experiment” on pricing. “You would have thought that we had pressed the nuclear button and the country was about to blow up,” he said.

When prescription benefits were implemented nearly 20 years ago, drugs costing tens of thousands of dollars a month were rare. Now they’ve become more common, and Democrats want to allow Medicare to negotiate insulin alongside high-cost brand-name drugs with little or no competition.

His law would also limit price increases for established drugs and limit annual out-of-pocket costs for Medicare recipients like Weiner. Another part will eliminate the inner workings of the nearly $100 billion annual drug program to try to reduce costs for taxpayers.

Politicians including former President Donald Trump and House Speaker Nancy Pelosi, D-Calif., have supported the Medicare talks. But it is Biden, with Pelosi doing a lot of the lifting, who is closest to accomplishing this.

And it still can’t happen.

Similar to the rest of Biden’s larger agenda, authorizing Medicare to hold on to some Democratic holdouts. Three Democrats were opposed during the committee’s deliberations in the House. In the Senate, a couple is viewed as unaffiliated.

Amid a fierce lobbying and advertising campaign, AARP, consumer groups and health insurers are pushing for Medicare talks.

Trade groups and the pharmaceutical industry are protesting. Drug companies have spent $171 million on lobbying so far this year, more than any other industry, according to watchdog group OpenSecrets.

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Industry says loosening the ban on talks will stifle investment in new ideas that could lead to life-saving treatments.

“The United States is the bio-pharmaceutical engine for the world,” said Lisa Zoldersma, a top executive at the lobbying group Pharmaceutical Research and Manufacturers of America, or PhRMA. “The investments our companies make allow things like multiple vaccines and treatments to come to market at an unprecedented time to address a global pandemic.”

PhRMA opposes constraints on launch prices for new drugs as well as limits on price increases for existing drugs. It says the government has other ways to protect Medicare recipients from higher out-of-pocket costs and blames insurers for not giving manufacturer discounts directly to patients.

Zoldersma points to research by the nonpartisan Congressional Budget Office to support the industry’s argument that fewer drugs will hit the market. The CBO found that a similar approach to legislation would result in a slight decrease in new drugs in the first 10 years, with an increase in new drugs of 8% less over time in the third decade.

PhRMA says the chilling effect will be profound.

“If you’re patient … it’s definitely not a trivial issue,” Zoldersma said.

Others say it is unlikely that drug development will shrink. Valuable drugs will advance, but those with less benefit will have a harder road ahead, said bioethicist Dr. Steven Pearson, chief of the nonprofit Institute for Clinical and Economic Review, or ICER, in Boston. The research organization recommends prices based on effectiveness.

“The big argument is that if the government keeps a finger on the process, it’s going to affect innovation in some way,” Pearson said. “We can achieve even better innovation by getting smarter in the way we pay.”

Industry executive Zoldersma replied: “I am not aware that Steve Pearson of ICER has ever been in the business of finding or bringing to market any treatment or cure.”

“The level of exaggeration we’re hearing in this current drug debate shows that the industry is deeply concerned,” says Juliette Kubanski, a Medicare expert at the nonpartisan Kaiser Family Foundation.

One of the biggest industry objections is that the House bill would use lower prices as a benchmark for Medicare in other advanced counties. The Trump administration tried a similar idea with a different set of Medicare drugs. Drugmakers say that if this happens US patients may have to wait longer than they are used to new drugs.

A recent RAND Corporation study found that linking the prices of top US drugs and insulin to prices abroad could cut spending here for those drugs by almost half.

Other countries try to balance incentives for research and development with prices that reflect value to patients and society, said study author Andrew Mulcahy.

“If we just wrote a big check to drug companies, would they do more research?” Mulcahy asked. “Maybe some. But is it the socially optimal thing to do? Probably not.”

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