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Administration proposes cutting Medicare drug coverage

Written by Diane Archer

A few months ago, the Trump administration proposed cutting the prescription drugs Medicare covers in order to rein in Medicare Part D spending. It argued that if insurers did not have to cover all drugs in protected classes they would have more leverage to negotiate lower prices. But, allowing insurance companies the discretion to decide whether to cover certain prescription drugs in protected classes is bad policy.

It is fair to assume that commercial health insurers will promote their business interests over the interests of their enrollees. For that reason alone, the Administration is proposing the wrong policy to rein in drug costs. It easily could hurt patients.

The federal government has no control over the deals the Medicare Part D insurers negotiate. In some cases, insurers steer enrollees to higher-cost drugs because it is in their financial interest to do so. And, sometimes higher-cost drugs offer less value than lower-cost drugs. Insurers care about which drugs will deliver them more profits.

The best way to ensure fair drug prices in Medicare, as well as for all Americans, is for the federal government to use its leverage to regulate prescription drug prices, as every other wealthy country does. And, Senator Sanders has introduced such a bill. It would set drug prices in the US at the same level as other wealthy countries.

Of course, Pharma opposes the administration’s proposal because it fears any possible cuts to its revenue. Kaiser Health News reports that the pharmaceutical industry is funding  half of the patient advocacy groups opposing the administration’s proposal and sponsoring ads against it. In this case, it appears that Pharma’s interests are aligned with the interests of people with Medicare.

Pharmaceutical companies support and count on patient advocacy groups to ensure that the government protects their interests–high-priced drugs covered by Medicare and Medicaid. The patient advocacy groups are consciously or unconsciously influenced by the grants they receive.

The American Cancer Society Cancer Action Network, along with 56 other groups, oppose the Administration’s proposal, claiming it’s an access issue. (NB: While it is an access issue, these disease groups rarely if ever support proposals to rein in drug prices even though high prices also undermine access.)

The Administration suggests in its proposal that if a lower-cost prescription drug doesn’t work, the Medicare Part D insurer should pay for the higher-priced prescription drug.  But, insurers could start the patient on the lower-cost drug and decide not to switch the patient over to the more expensive drug if it’s not in the insurer’s financial interest to do so. Who knows what the insurers will do with their power if the administration’s proposal goes through? Moreover, the Administration’s proposal could allow insurers to keep some super-high-priced drugs off a formulary altogether.

Rachel Sachs, a health care law professor explains that the proposal gives Part D insurers negotiating power they do not otherwise have over drug costs. That is true. But, she also recognizes that if negotiations fail, some drugs in a protected class may not be covered. And, that’s bad policy.

If you want Congress to rein in drug prices, please sign this petition.

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