JustCare

Tag: Prices

  • When will Medicare stop letting Part D insurers drive up drug costs?

    When will Medicare stop letting Part D insurers drive up drug costs?

    The Centers for Medicare and Medicare Services, which oversees Medicare, now has authority to negotiate prescription drug prices for some Part D drugs each year. But, Christen Linke Young writes for Brookings on other Part D fixes needed to prevent insurers from driving up drug costs for their enrollees. The Trump administration just announced that it will not to make these fixes, at least for now.

    Young explains that Medicare Part D is riddled with “market failures and inefficiencies.” As a result, Medicare Part D plans promote high-priced drugs with higher copays rather than lower-cost drugs.

    Here’s the problem: Part D insurers earn more revenue when they negotiate big rebates from pharmaceutical companies offering higher-priced drugs. So, the insurers have a strong financial incentive to put drugs with the highest rebates on their formularies and keep lower-cost alternatives off their formularies. The insurers work with Pharmacy Benefit Managers, which, in the case of the largest insurers, are subsidiary companies.

    The bigger the gap between the list price of a drug and the net price (the price after rebate), the more money the PBMs can collect in rebates. As a result, many Part D on-formulary drugs have a low net price and a high list price.

    For reasons I cannot explain, Medicare pays PBMs based on a drug’s list price, not its net price. Medicare does so even if there is another lower-priced drug to treat the condition. The government also allows Part D insurers to keep lower-priced drugs off their formularies.

    Through this flawed insurance design, Part D plans can offer lower premiums and then charge high out-of-pocket costs to those enrollees needing drugs with high list prices. The $2,000 out-of-pocket cap on Part D drugs helps patients some, but not as much as it could. Part D insurers both can charge patients high copays if a drug has a high list price and can keep lower-cost alternative drugs off their formularies.

    When drug manufacturers give PBMs rebates, they often require that the PBM either keep a lower-cost alternative of that drug or another drug off the insurer’s formulary, a “rebate wall.”

    These legally permissible insurer shenanigans cause people with Part D coverage to pay a lot more for their drugs than they need to. Sometimes, it’s less expensive to go to Costco or another low-cost pharmacy for your drugs. For example, the HHS Office of the Inspector General found that Part D plans tended to keep enrollees from buying biosimilar drugs, steering them to the higher-priced biologicals at a huge cost to the Medicare program.

    Inexplicably, Congress has failed to fix these problems with Part D. CMS already has significant authority over formularies but has not exercised it to the extent needed. A Biden administration proposed rule that the Trump administration did not finalize would have required Part D plans to give enrollees “broad access to generics, biosimilars, and other lower cost drugs.” This rule could have helped prevent “rebate walls.”

    Here’s more from Just Care:

  • Will Medicare continue negotiating drug prices?

    Will Medicare continue negotiating drug prices?

    Among other things, the Biden Administration’s Inflation Reduction Act authorized the Centers for Medicare and Medicaid Services (CMS) to negotiate the prices of a number of costly prescription drugs. Back in August, CMS announced prices for the first ten drugs subject to price negotiation and, more recently, it announced the next 15. Jonathan Cohn reports for Huffington Post on the forces at work to undermine Medicare drug price negotiation.

    Medicare drug price negotiation not only lowers federal spending on prescription drugs to the tune of billions of dollars, it should also save people with Medicare money, both in premiums for Medicare Part D and in copays. But, few people with Medicare appear to be aware of these cost-saving reforms, according to a recent Kaiser Family Foundation poll. They are not yet benefiting from lower drug prices.

    People won’t see savings from the 10 drugs in the first round of Medicare drug price negotiations until 2026. And, they won’t see savings for the next 15 drugs with negotiated drug prices until 2027. Those drugs are: Ozempic; Rybelsus; Wegovy; Trelegy Ellipta; Xtandi; Pomalyst; Ibrance; Ofev; Linzess; Calquence; Austedo; Austedo XR; Breo Ellipta; Tradjenta; Xifaxan; Vraylar; Janumet; Janumet XR; and, Otezla.

    To date, prices for some diabetes and cancer drugs, as well as drugs that treat blood clots, have been negotiated. In addition, as of January 1 of this year, Medicare Part D includes an out-of-pocket cap of $2,000, which was also part of the Inflation Reduction Act.

    It’s not clear yet whether Republicans in Congress will succeed at repealing these cost-savings provisions in the Inflation Reduction Act. Many of them appear to want to do so, even though it would drive up prescription drug costs for older adults and people with disabilities, as well as increase Medicare spending.

    Project 2025, the Heritage Foundation plan for the Trump Administration calls for repealing these provisions. And Senator Mike Crapo of Idaho, the new chair of the Senate Finance Committee, is fully on board. Pharmaceutical companies will continue to innovate in a world with drug price negotiations. They must. But, hundreds of thousands more Americans will die needlessly without negotiated drug prices, as they won’t fill their prescriptions. Drugs don’t work if people can’t afford them.

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  • Prices for top Medicare drugs are up a lot

    Prices for top Medicare drugs are up a lot

    The prices for brand-name drugs have been rising much faster than the rate of inflation for tens of years, reports Leigh Purvis for AARP. Older and disabled Americans with Medicare feel these price increases, especially when they take as many as four or five prescription medicines every month and generally must pay a percentage of the cost of their drugs out of pocket.

    In the first two days of this year, NPR reports that drugmakers hiked up the price of 575 drugs by around three to four percent. That price hike is lower than in past years when drug price increases could easily be 10 percent, but higher than the rate of inflation. Because of the Inflation Reduction Act (IRA), drugmakers will face government penalties for these hikes, but they likely expect to offset the cost of those penalties with greater profits from people in the commercial market.

    About 20 percent of people with Medicare say that they manage the cost of their drugs by not filling prescriptions or not taking full doses. The AARP Public Policy Institute analyzed what’s happening with the 25 brand-name drugs that Medicare Part D spends the most on and that are not subject to Medicare drug price negotiation. Medicare spent about $50 billion on these drugs in 2022. Seven million people used these drugs.

    The Public Policy Institute found that the list prices for these 25 drugs nearly doubled since they first came to market, well above the rate of inflation. More than 40 percent of the brand-name drugs’ list prices today stem from price increases since they came onto the market.

    Purvis concludes that the IRA goes a long way to stop these huge price increases. Not only does it allow Medicare drug price negotiation, but it forces pharmaceutical companies to pay stiff penalties if they raise the price of their drugs above the rate of inflation. The IRA helps to ensure that people with Medicare can afford to fill their prescriptions and to promote good health outcomes.

    As of this year, because of the IRA, you should pay no more than $2,000 out-of-pocket for drugs covered through your Medicare Part D drug plan.

    Here’s more from Just Care:

  • Medicare prices for all?

    Medicare prices for all?

    It’s as yet unclear what the Trump administration and the Republican Congress will do to Medicare. The Heritage Foundation’s Project 2025, if adopted, would appear to let traditional Medicare wither on the vine and force new Medicare enrollees into Medicare Advantage. But, that’s a politically fraught agenda that would also drive up Medicare spending significantly, as Medicare Advantage costs a lot more than traditional Medicare.

    If Republicans are looking for ways to fund their massive tax cuts, they could address the massive overpayments in Medicare Advantage, which are projected to cost more than $1.4 trillion over the next decade. Republican Senators Cassidy, Blackburn and Braun all see the need for this reform. Taking some of the savings to put an out-of-pocket cap in traditional Medicare would help level the playing field between Medicare Advantage and traditional Medicare and promote competition–but strengthening traditional Medicare is likely a bridge too far for Republicans.

    If Republicans want to lower health care costs and raise wages for Americans, without hurting industry, they might consider Phil Longman’s proposal this week in the Washington Monthly–Medicare prices for all. The idea is simply to have employer-sponsored health plans pay providers Medicare prices–not the current average of 254 percent of Medicare. And, then, Longman would require corporations to share the savings with their workers in the form of higher salaries.

    Of course, hospitals and specialists would push back. But, the data suggests that they would suffer little as a result, according to Longman. Most hospitals are non-profit and could manage on Medicare rates.

    Medicare prices for all would neither raise taxes nor require people to give up their private insurance. It would simply eliminate predatory health care prices to the benefit of Americans. Is there a Republican in Congress who would support it?

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  • Drug prices keep going up, some faster than inflation

    Drug prices keep going up, some faster than inflation

    Until Congress regulates drug prices in the US as every other wealthy country does, prescription drug prices will continue to go up and an increasing number of Americans will suffer or die because they can’t afford their drugs. In the week ending July 5, pharmaceutical companies raised prices for 195 drugs, reports MM+M. Price increases were greater than the rate of inflation for more than half of these drugs.

    Eli Lilly, BMS, Pfizer, AbbVie, Novartis and GSK raised prescription drug prices of certain drugs around seven percent, more than twice the rate of inflation, which was three percent. Prices rose $620, on average. Many of these drugs were cancer drugs or drugs for people with autoimmune conditions.

    The price of Revlimid, a Celgene/Bristol Myers Squibb drug, which treats myelodysplastic syndrome, multiple myeloma and mantle cell lymphoma increased seven percent. The drug price jumped from $83,322 to $89,155.

    Some drug prices rose only a small amount. But, we know that even a very small out-of-pocket cost increase for a drug means that some people will stop taking their drugs. These price hikes will not stop until Congress regulates drug prices.

    Medicare has begun negotiating the prices of ten high-priced drugs. We will know very shortly how the negotiated prices compare to what people pay in other wealthy countries for the same drugs. For reasons I cannot explain, people with Medicare will not benefit from these new prices until January 2026.

    Here’s more from Just Care:

  • Congress focuses on health care mergers and Medicare payments

    Congress focuses on health care mergers and Medicare payments

    As hospital systems and insurers continue to buy up medical practices and grow ever larger, the consequences for patients and the health care system writ large are serious. In Congress, the House Budget Committee is looking at how these mergers affect cost, access to care, and health outcomes. Republicans and Democrats agree that consolidation in the health care space must stop before health care costs escalate even more, reports Rebecca Pifer for HealthCareDive.

    To bring down Medicare spending, Republicans and Democrats appear to support ensuring that Medicare payments are the same for the same services, whether they are performed at a physician’s office or a hospital-owned outpatient facility. This fix would seem like low-hanging fruit for Congress, but Congress has failed to address this small issue for a very long time.

    Health care prices keep going up overall. Republican Congressman Ron Estes, captured the sense of the members: “We just can’t afford to have this continued increase in prices.” Substantial evidence indicates that consolidation in the healthcare marketplace is driving up costs.

    Equally substantial evidence shows that consolidation is not improving quality of care. In 2022, Rand studied the data and found hospital consolidations lead to price increases of as much as 65% percent.

    To be clear, consolidation in the health care market is not happening because physicians are asking for it. In fact, most physicians don’t want it. Physicians usually have no choice but to sell their practices to private equity firms and insurers if they want to continue to treat patients.

    The hospitals and health systems buying physician practices want more power to secure higher prices from insurance companies and Medicare. For their part, physicians need help handling all the bureaucratic obstacles insurers impose on them. Not surprisingly, between 2005 and 2022, 15 percent more community hospitals had joined a health system, up from 53 percent to 68 percent. In the 10 years between 2012 and 2022, 12 percent more physicians moved from independent practices to working at a hospital, from 29 percent to 41 percent.

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  • Will the administration step in to curb prices on drugs developed with taxpayer dollars?

    Will the administration step in to curb prices on drugs developed with taxpayer dollars?

    For more than 30 years, the federal government has failed to rely on the Bayh-Dole Act to reduce the cost of prescription drugs developed with taxpayer dollars. US Senator Elizabeth Warren, along with many advocates, is urging the Department of Commerce to finalize a policy that would specify the federal government’s right to seize prescription drug patents funded by the government on drugs with prices deemed to be “too high.” Partrick Wingrove reports for Reuters on where things stand.

    In early December 2023, the Biden administration said it would issue a policy for taking patents from drug manufacturers when their drug prices were excessive. The policy would give the federal government “march-in rights.” Essentially, the government could give other manufacturers the license to manufacture drugs developed with federal dollars, which are priced too high.

    Not surprisingly, the US Chamber of Commerce is trying hard to keep the policy from people implemented. Rather than accepting that the policy would promote innovation and drive competition, it makes the tired argument that the policy will keep pharmaceutical companies from developing new drugs. As a rule, the pharmaceutical companies use their power to make new versions of the same blockbuster drugs rather than to develop new drugs to meet unique and important health care needs. Exceptions are few and far between.

    To determine whether a drug’s price is excessive, the government will look at who can afford it and whether the high price of the drug exploits a health or safety issue.

    Under the new policy, the government would consider a list of factors, including whether only a narrow set of patients can afford the drug, and whether drugmakers are exploiting a health or safety issue by hiking prices.

    Here’s more from Just Care:

  • Food prices are soaring as are profits at Walmart and other big food corporations

    Food prices are soaring as are profits at Walmart and other big food corporations

    If you spend any time at the grocery store, you can’t help but notice that prices are going up and up and up. The big corporations, like Pepsi and General Mills, say it’s all about supply chain issues, while their profits soar. Veronica Riccobene reports for the Lever on“What’s going on?”

    In four years, grocery prices are up 25 percent overall, while shareholders with interests in grocery stores have seen $77 billion in distributions.

    In 2022, people typically spent 11 percent of their disposable income on food. The price of a dozen eggs has just about doubled in four years. Food and Water Watch says that an average family of four living thriftily spends 50 percent more today than it did four years ago, $976, up from $654.

    More Americans are going hungry. Three and a half million more people are facing food insecurity since the pandemic. Today, about 28 million adults in the US do not have ongoing access to food. Some are calling on President Biden to step in and keep the food companies from driving up food prices. The marketplace is broken.

    Companies buy back their stocks to drive up their stock prices. Corporate executives and shareholders benefit. Consumers are hurt.

    Tyson Foods’ execs and shareholders are some of the big beneficiaries of stock buybacks. Tyson raised the price of meat nearly 30 percent and saw its profit margins more than double between 2021 and 2022. It’s operating costs rose, but price increases more than offset those costs—by 33 percent.

    According to the Federal Trade Commission,  Walmart, Kroger, and Amazon “used rising costs as an opportunity to further hike prices to increase their profits.” The price of food and drinks rose seven percent more than their costs.

    Walmart raised prices more than 50 percent on some of its generic food brands in the three years between 2020 and 2023. General Mills raised the price of cereal 12 percent in 2023 from the prior year. It also shrunk the amount of cereal in the box to 18.1 ounces from 19.3 ounces.

    In addition to raising prices, companies are shrinking the size of their products. They call it “shrinkflation.”

    As grocery store corporations get larger, they can engage in price fixing. Only about four companies control half the market for nearly 80 percent of groceries sold. Walmart sells nearly 30 percent of all groceries in the US. Costco sells about 7.1 percent of groceries and Kroger sells 5.6 percent. The Federal Trade Commission is now trying to stop a merger between Kroger and Albertsons on antitrust grounds.

    The consolidation is particularly stark among retailers. Just this year, the Federal Trade Commission sued to block a $24.6 billion merger between Kroger and Albertsons, alleging it violates antitrust law.

    Senator Elizabeth Warren is leading the charge in Congress to stop the grocery store price gouging through the Price Gouging Prevention Act. Her bill would make it a federal offense for corporations to price gouge.

    Here’s more from Just Care:

  • Some Democrats oppose Biden’s goal of lowering more Medicare drug prices

    Some Democrats oppose Biden’s goal of lowering more Medicare drug prices

    The Lever reports on a cadre of Democratic Congressmen committed to opposing Biden’s goal of lowering more drug prices for people with Medicare. Not surprisingly, these policymakers happen to be the beneficiaries of lots of pharmaceutical industry money. What’s going on?

    The Inflation Reduction Act includes provisions to allow Medicare to pay negotiated drug prices for ten drugs in 2026. It allows Medicare to negotiate drug prices for an additional 150 drugs through 2034. President Biden wants to expand that number to 500 drugs, which would reduce Medicare spending on high-cost drugs and should also reduce people’s copays for those drugs.

    Former President Trump, if reelected, appears interested in weakening Medicare drug-price negotiation. At one point during his presidency he said he supported drug price negotiation, but he has since backed down from that position.

    Democrats Scott Petters of California, Josh Gottheimer of New Jersey, and Wiley Nickel of North Carolina are prepared to go against their president and fight some Medicare drug price negotiation as well. The pharmaceutical industry and other medical industry groups have contributed $300,000 to them in the last year. Gottheimer is considering a run for governor of New Jersey.

    These Democrats are sponsoring legislation that claims to be defending research on orphan drugs, aping the drug industries’ common refrain that negotiated drug prices will compromise investment in research. It is interesting how negotiated drug prices around the world don’t appear to concern them or the fact that Americans are forced to pay three or four times as much as people in other wealthy countries for the same drugs.

    Experts say that pharmaceutical companies will still rake in big profits on orphan drugs with negotiated prices, just not quite as big as they do now. Moreover, the Inflation Reduction Act exempts “orphan drugs” from Medicare price negotiations if they are treating only one rare disease. If Peters, Gottheimer and Nickel get their way, orphan drugs would be excluded from Medicare price negotiations even if they treat multiple rare conditions.

    Here’s more from Just Care:

  • How can Pharma defend drug prices in US?

    How can Pharma defend drug prices in US?

    The Biden administration and Congress are concerned about drug prices, they claim. Really? It would be so easy to lower drug prices quickly, simply by opening our borders to drugs from verified pharmacies abroad. Instead, for the first time, the US is negotiating drug prices for ten drugs, and those prices will only be available to Medicare. Noah Weiland and Rebecca Robbins report for The New York Times on a recent Senate HELP Committee hearing.

    The Senate HELP Committee held a hearing on drug prices last week. The heads of three pharmaceutical companies had to defend their prices at the hearing. There was lots of talk and little action about why every other wealthy nation pays less for their prescription drugs than we do.

    CEOs at Johnson & Johnson, Merck and Bristol Myers Squibb admitted that we pay more for our drugs in the US than people in other wealthy countries. In exchange, they claim that we get new drugs sooner. Clearly some spin doctor advised that they praise this “patient choice” in the US. What was left unsaid is that “choice” is only available to the wealthy. Countless Americans cannot afford their drugs even with health insurance because the copays are so high.

    Senator Bernie Sanders, for reasons that I have never understood, is constantly comparing drug prices in the US with those in Canada and sometimes arguing that Americans should be able to import drugs from Canada. Canada has the second highest drug prices in the world. Why not France and England, which have far lower prices?

    Sanders was looking for the CEOs to voluntarily agree to lowering their prices to the same level as Canada. How could they possibly agree to reduce their revenue and profits voluntarily? In fact, they have filed lawsuits against the federal government (which they are so far losing), claiming that negotiated prices for ten drugs through the Inflation Reduction Act is unconstitutional!

    Republicans on the HELP Committee appear to believe that the pharmaceutical market is working. In fact, Congress affords pharmaceutical companies lengthy patent rights and ways to extend them. The pharmaceutical market is fixed to give pharmaceutical companies monopoly pricing power for lengthy periods.

    Senator Romney would like you to believe that the pharmaceutical market works like the automobile market. Not at all. With cars, there’s competition based on lots of known information, including the costs and benefits of the automobile. With drugs, people often don’t know their value. Moreover, the price is rigged by the manufacturers, the pharmacy benefit managers and the health insurers.

    We are paying about three times more than people in other countries for our drugs. Shame on Congress.

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