Obama administration proposes new effort to combat high drug prices
Noam N. Levey, Contact Reporter
March 8, 2016 - LA Times
Facing skyrocketing drug prices, the Obama administration is proposing
potentially major changes in how Medicare
pays for some medications, including high-priced specialty drugs used to treat
cancer and other costly diseases.
The proposed regulations, unveiled Tuesday, would initially affect a
relatively small share of the nationfs nearly $500-billion drug tab.
But if widely implemented, they could overhaul the way Medicare, Americafs
largest insurer, pays for drugs, by linking payments to how effective
medications are, not just how much drug makers charge.
gThese models would test how to improve Medicare beneficiariesf care by
aligning incentives to reward value and the most successful patient outcomes,h
said Dr. Patrick Conway, chief medical officer at the federal Centers for
Medicare and Medicaid
Services.
gThe choice of medications for beneficiaries should be driven by the best
available evidence, the unique needs of the patient and what best promotes
high-quality care.h
Though still a relatively small fraction of the nationfs total annual
healthcare tab — which is nearing $3.5 trillion — prescription drug
costs have been rising rapidly in recent years.
Drug spending jumped more than 12% in 2014, according to federal
analysts.
That is driving public anxiety about how much the pharmaceutical industry is
charging for its products.
In a national survey by the nonprofit Kaiser Family Foundation last fall,
Americans singled out drug prices as the most pressing healthcare issue the next
president and Congress should address.
Both presidential front-runners, Democrat Hillary
Clinton and Republican Donald
Trump, have proposed new government initiatives to control prices.
Clinton and Trump were calling for the federal Medicare program to negotiate
lower prices with drug makers, though Trump more recently appeared to switch
strategies, voicing support instead for importing lower-cost drugs from
abroad.
Clinton is also proposing new caps on how much patients can be charged for
prescription drugs and new restrictions on how drug makers advertise and how
much they must spend on research.
Pharmaceutical industry officials say the high prices are necessary to fund
research in lifesaving treatments and note that even very expensive drugs can
save money in the long run by extending patientsf lives and avoiding other
costly medical care such as hospitalizations.
gProposing sweeping changes to Medicare Part B drug reimbursement without
thoughtful consideration and stakeholder input is not the right approach and
puts Medicare patients who rely on these medicines at risk,h Pharmaceutical
Research and Manufacturers of America spokeswoman Allyson Funk said in a
statement.
But the rising costs — which came after years of relatively slow growth
in prescription drug spending — are putting intense pressure on government
health plans such as Medicare and Medicaid and on patients themselves, who are
being forced to pay more and more out of pocket for care.
The new Medicare initiative would impact only prescription drugs that are
administered by physicians through the Part B program, such as chemotherapy.
These totaled about $20 billion in 2015, according to the federal
government.
The initiative would not affect the much larger Medicare Part D drug program,
which provides insurance coverage for prescriptions that seniors fill at the
pharmacy.
But the new effort to test gvalue-basedh systems of paying for drugs could
ultimately require the federal government to make judgments about which
treatments work best for which medical conditions.
That task could be politically explosive, as it has sometimes been in other
countries with more centralized government health insurance systems such as
Great Britain.
Obama administration officials emphasized Tuesday that the federal government
is only seeking feedback on the proposals, and Medicare has no plans to limit
physiciansf choices of drugs.
gNothing c will prevent doctors from prescribing exactly the treatment they
think their patients need,h Conway told reporters.
Medicare officials also are proposing to limit how much patients must pay out
of their own pockets for these drugs.
And they are seeking to scale back incentives currently in the Medicare
program that pay doctors and hospitals higher fees for prescribing high-priced
drugs, even if they are no more effective.