February 16, 2018

Trump Plan is Not Enough to Lower Drug Prices

By Richard Fiesta
Executive Director
Alliance for Retired Americans

Despite promises to lower prescription drug prices, President Trump’s FY19 budget does not come close to actually protecting seniors and all consumers from skyrocketing prices. Americans still pay the highest prescription drug prices in the world and the President’s plan leaves out the most important tool at its disposal — giving Medicare the power to negotiate lower prices for seniors and taxpayers.

According to Kaiser Health News, several of the proposals are rehashes of plans the Centers for Medicare & Medicaid Services (CMS) have already said are under consideration. Overall details remain sketchy.

One promising provision would allow seniors covered by Medicare’s Part D prescription benefit to share in the rebates for individual drugs that are purchased at the pharmacy. This would be a change from current policy. Also included is a proposal to ensure that low-income seniors in Medicare don’t pay for generic medicines.

Other changes would hurt Medicare beneficiaries. The Administration would shift drugs administered in a doctor’s office and today paid for under Medicare Part B into Medicare Part D. This includes some chemotherapy and rheumatoid arthritis infusions. The Part D program allows insurers and pharmacy benefit managers to negotiate formularies. Under this change, the Medicare system would save money but beneficiaries would be subject to a higher co-pay than they are today.

Another bad idea in the proposal would create a pilot project in five states to allow state Medicaid programs to negotiate prices with manufacturers and create their own drug formularies. It is doubtful this provision would help reduce costs, as Medicaid already requires drug companies to pay rebates. Also, this pilot program is based on the “outcomes-based purchasing drug model,” which has been embraced by the pharmaceutical industry, fueling further doubts that prices would come down.

The Administration’s plan would cap out-of-pocket costs for Medicare beneficiaries who pass through the Part D “doughnut hole” gap in prescription drug coverage and hit the catastrophic stage. Beneficiaries typically pay a 5 percent coinsurance in the catastrophic phase, but under the new budget plan it would be decreased to zero.

However, this same provision would change what counts towards the doughnut hole. Instead of counting what the plan and beneficiaries pay, it would count solely what the beneficiary pays. This change would keep many beneficiaries from reaching catastrophic coverage for a longer period of time, forcing them to pay 25% of the cost versus the current 5% or the new zero co-pay.

While it is good that he President is talking about high prescription drug prices, what is needed is more action. We will continue to advocate for solutions that put the needs of patients ahead of corporate profits, and remain skeptical of “reforms” that come from Big PhRMA.

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