Potential Medicare Reimbursement Demo to Lower Part B Drug Prices

Potential Medicare Reimbursement Demo to Lower Part B Drug Prices

Potential Medicare Reimbursement Demo to Lower Part B Drug Prices

The announcement, which Trump teased at a Wisconsin rally late Wednesday - "very soon, drug prices will go plunging downward" - came as the President is working to mobilize his loyal Republican base ahead of the midterms by revisiting his 2016 promises to un-rig the USA economy.

President Donald Trump's latest plan to bring USA drug prices lower could, if successfully implemented, usher in significant changes to how Medicare Part B pays for medicines. Put in perspective, the United States spent $647.6 billion on Medicare, meaning Part B spending makes up about 3% of Medicare's total spending.

These higher prices mean that Medicare pays almost TWICE as much as it would for the same or similar drugs in other countries.

Trying to cut high drug costs, the prices paid by Medicare for certain prescription drugs would be based on those in other advanced industrial nations, according to a proposal announced Thursday by the Trump administration. During his speech, Trump cited an example of a "common" cancer drug that he says is seven times more expensive for Americans than for those living outside the United States, though he didn't name the drug specifically.

"The rhetoric about finally dealing with foreign freeloading suggests that we are going to take steps to get other countries to pay their fair share for innovation", Bach added. The Medicare program, which covers 55 million elderly and disabled Americans, is responsible for 29 percent of the nation's prescription drug spending.

Currently, Medicare pays the average list price (ASP) for Part B drugs plus 6%, to compensate providers for the costs of administration and maintaining inventory - the so-called "buy and bill" model. "The mark-up on Part B drugs appears to independently influence prescribing patterns", said a May policy paper from Memorial Sloan Kettering Cancer Center's Drug Pricing Lab.

That assumes drug companies couldn't increase prices in Europe or Japan, Azar noted, and that they couldn't create efficiencies elsewhere in their budget.

HHS Secretary Alex Azar criticized a system in which other countries to pay significantly less for drugs than the US government. "Some of the ideas like introducing indexing prices to other countries would be viewed by the drug industry as outright antithetical to their interests". Since the Affordable Care Act came into effect, Republicans have been determined to strip away the law's most progressive proposals.

The ratio of average payment based on ASP versus the average global target index would shift incrementally over a 5-year period in favor of the worldwide target, until in the program's fifth year payment would be targeted at 126% of the average worldwide price, as opposed to the 180% that the U.S now pays compared to those same average prices.

It would represent a sea change for a country that has long resisted controls on drug prices. "President Trump asked us to fix this problem and here's how we plan to do it". Under the Trump administration proposal, private-sector vendors would negotiate down drug prices and supply the medicines to doctors and hospitals. It could also lower some of seniors' out-of-pocket costs, which are based on the total price paid by Medicare for a given drug.

Already, the pharmaceutical industry lobbying group came out swinging.

The report "provides troubling insight into how the current worldwide drug pricing system has put America in last place, " Azar tweeted. The proposal would also allow HHS officials to charge a flat incentive fee for doctors who prescribe certain medications; now, doctors can receive higher fees for more expensive drugs. Drugs sold at the pharmacy are covered under Medicare Part D. In 2016, Medicare paid more $17 billion for the 27 drugs, an amount that would be reduced by more than $8 billion under the new model.

President Donald Trump's plan to lower drug prices sounds a lot like what the "global freeloaders" he often criticizes do themselves to curb high prescription prices. Health care has been a major focus of Democrats in their campaigns, including high drug prices and warnings that Republicans will remove protections for people with pre-existing medical conditions. In a March Kaiser Family Foundation poll, eight in 10 respondents said drug costs are unreasonable and 92 percent said passing legislation to bring down the cost of prescription drugs should be a top or important priority.

The administration has moved twice this month to lower drug prices in other ways. This is not a change for industry or for companies or for pharma.

High drug prices have also been a source of anxiety for many Americans.

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