JustCare

Tag: Prices

  • 2021: Medicare drug price negotiation appears a long shot

    2021: Medicare drug price negotiation appears a long shot

    It has been 32 years since Senator David Pryor, then Chair of the Senate Aging Committee made the case for government negotiation of drug prices because Americans were facing a “crisis of affordability.” Today, with drug prices at much higher levels and thousands dying every year for lack of access to affordable medicines, it seems that Congress is not much closer to stopping Pharma from gouging Americans. Even Medicare drug price negotiation appears a long shot.

    Jonathan Weisman reports for the New York Times on the history of Congressional action on prescription drug prices. Senator Wyden, who chairs the Senate Finance Committee, is pushing hard for lower drug prices. Like Senator Bernie Sanders, who chairs the Senate Budget Committee, Senator Wyden does not want to let the pharmaceutical industry win the fight.

    Negotiated drug prices will allow tens of thousands more people to fill their medications. It will expand their access to drugs. As it is, health insurers restrict people’s access to drugs through formularies. Lower prices should mean greater access.

    There’s nothing complicated about this issue, as some Democrats claim. Every other wealthy nation regulates drug prices. And, opening our borders to allow drug importation would be simple. That would bring prices down in a jiffy and is not materially different from importation of food and other products. There is, however, a strong likelihood that these Democrats who are right now in the pockets of Pharma would lose large campaign contributions from the pharmaceutical industry.

    Meanwhile, some in Congress are looking to require pharmaceutical companies to pay rebates to the government on any drugs whose prices rise faster than inflation. That would at least limit drug price increases significantly.

    And, there is movement on allowing Medicare to negotiate down prices of outpatient drugs, such as chemotherapy, when they go off-patent. There is also some consensus on putting an out-of-pocket cap on the Medicare Part D benefit. The small percentage of people with high drug expenses would be better able to afford their medicines. But, depending upon how it is paid for, it could lead to higher Part D premiums for everyone with Medicare, and Pharma could be the primary beneficiary.

    One sure thing. Polling shows that Americans–Republicans and Democrats alike–desperately want to see Congress regulate drug prices and make drugs affordable. It would help the Democrats in 2022, if they succeed at getting this done.

    Here’s more from Just Care:

  • MedPac: High drug prices mean higher Medicare spending

    MedPac: High drug prices mean higher Medicare spending

    Not only are drug prices rising at the pharmacy for people with Medicare, but drug prices are rising for hospital inpatients as well. MedPac, the agency that oversees Medicare, says rising drug prices are responsible for a huge increase in Medicare Part B drug spending. It wants Congress to rein in these prices.

    During its October 7 meeting, MedPac members discussed Medicare Part B drug spending. For years, MedPac has said that Congress needs to rein in drug prices. But, the pharmaceutical industry has consistently managed to keep Congress from responding appropriately and regulating prices.

    MedPac members focused on prices for infusible and injectable drugs. Medicare pays for these drugs at the average sales price plus six percent. Members believe that Aduhelm, the new FDA-approved drug for people with Alzheimer’s disease, could literally wipe Medicare out. Yet, there is little clinical evidence that Aduhelm actually helps people with Alzheimer’s or helps them enough to warrant its launch price of $56,000.

    Prices are rising on injectable and infusible drugs that have therapeutic alternatives. So, some MedPac members are asking why Medicare should pay the high prices that these drugs command.

    And, some MedPac members believe that Congress must change its payment formula for Part B drugs. Medicare’s payment rate–average sales price plus six percent–creates an incentive for pharmaceutical companies to keep raising their rates.

    Part B drugs have seen nearly 10 percent annual Medicare spending growth over the last 12 years, which MedPac members attribute to higher drug prices. Drugs in the US have higher launch prices than in other countries and higher price increases each year. And, prices keep rising on drugs which have little or no evidence of being effective.

    Democrats in Congress are working on legislation in the reconciliation bill that should rein in these prices. Time will tell if they succeed.

    Here’s more from Just Care: 

  • US is a goldmine for pharmaceutical companies

    US is a goldmine for pharmaceutical companies

    Public Citizen released a report illustrating how the US is a goldmine for pharmaceutical companies. Pharmaceutical companies earn more from Americans who buy 20 best-selling prescription drugs than they do from everyone else in the world combined. No wonder that a new Politico-Harvard poll shows that drug price negotiation is Americans’ top policy priority for Congress right now.

    Public Citizen analyzed the financial filings of the pharmaceutical companies manufacturing 20 blockbuster drugs to arrive at its findings. It made clear that higher revenues in the US has nothing to do with the number of prescription drugs we take because we don’t take more drugs than people in other countries. It’s all about drug prices in the US.

    Public Citizen’s findings speak volumes as to why Pharma is so opposed to Medicare drug price negotiation.  We’re talking $158 billion in total revenue for just 20 drugs, nearly two-thirds (64 percent) of which comes from Americans. To date, Congress has expressly forbidden Medicare from negotiating drug prices, driving up drug costs.

    Pharmaceutical company profits would fall tens of billions of dollars a year if Americans paid prices comparable to people in other wealthy countries. That’s looking less and less likely as the Democrats try to pass legislation around drug prices. Perhaps, members will agree to some Medicare drug price negotiation and drug price increases capped at inflation but that’s not at all a done deal.

    In the meantime, Americans are forced to pay too high prices for our drugs relative to people in every other country or go without them. Pharmaceutical companies profit handsomely from their monopoly pricing power for brand-name drugs. Insurers and pharmacy benefit managers also make a lot of money off of high drug prices, but pharmaceutical companies earn more.

    Here’s more from Just Care:

  • Who benefits if Congress lowers drug prices and how much?

    Who benefits if Congress lowers drug prices and how much?

    Democrats in Congress are determined to bring down prices for at least some prescription drugs as part of the budget reconciliation bill. The question is how will it do so. Will members talk the talk but then appease big Pharma and not walk the walk? Those Democrats who want to ensure that their constituents are not dying for lack of needed medicines should be doing everything in their power to ensure lower drug prices for everyone in the US.

    Rachel Cohrs reports for Stat News that Democrats in Congress are focused on lowering drug prices for people with Medicare as part of the budget reconciliation bill. If that’s all they do, the legislation will likely hurt their chances of reelection. You can be sure that Pharma will invest in a mass marketing campaign telling everyone who does not have Medicare that it plans to raise prices on their drugs to make up for lost Medicare profits. Some economists believe Pharma would not succeed, as drug companies are already getting the highest prices they can get. Regardless of whether the economists are correct, it’s the public perception that matters.

    Crazy as it sounds, the Democrats do not have a simple plan to extend the benefits of Medicare drug price negotiation to everyone else in the country. The cleanest way to ensure everyone in America has affordable drugs would be to give everyone Medicare for the purpose of benefiting from its negotiated prices. But, too many conservative Democrats would object to that tactic, and it is not clear that it would fit into a budget reconciliation bill even if all the Democrats supported it. That said, a bill that does not allow everyone to benefit from negotiated drug prices indirectly or passively will result in people foregoing life-saving medicines and dying prematurely.

    H.R.3, which passed in the House in 2019, relied on international reference pricing–benchmarking drug prices to the average of what other wealthy countries pay–as a means for Medicare to lower the price of 250 drugs over 10 years. It permitted private insurers to piggyback off those rates but did not lower drug prices for the uninsured. Rumor has it that the Dems, this go round, are not relying on international reference pricing but rather “domestic reference pricing,” basing drug prices somehow on prices already available in the US.

    Of course, drug prices for the vast majority of people in the US are super high. So, unless Congress bases drug prices on the prices the Veterans Administration pays, domestic reference pricing will not reduce drug prices in a meaningful way.

    Congress could make drugs available to everyone at the Medicare-negotiated price through community health centers or Federally Qualified Health Centers (FQHCs). There are more than 14,000 of these government-administered primary health care clinics. With additional resources, these clinics could be an avenue for giving everyone access to affordable drugs.

    Even though the value of Medicare drug price negotiation is threatened if everyone does not benefit from negotiated drug prices, the Democrats are apparently struggling over whether to enable private health insurers to benefit from Medicare-negotiated prices and, if so, how? There could be challenges to getting that into the budget reconciliation bill since the case needs to be made that the reform affects the federal budget.

    Critics of a bill that brings down drug prices for everyone claim that it would be “market-wide price setting,” which it would be. That’s what we have now as well, only it’s Pharma that’s doing the price-setting. As a result, we have Pharma price-gouging in the US that doesn’t exist in any other wealthy nation.

    Another provision in the Democrats’ bill would limit the amount that drug prices could rise from one year to the next to the rate of inflation. Ideally, that policy would apply to all drugs sold in the US, not simply to Medicare-covered drugs. It’s not yet clear how Congress would hold the drug companies accountable if they failed to comply with that requirement.

    Here’s more from Just Care:

  • AbbVie gets a scolding from Congress but can keep raising prices

    AbbVie gets a scolding from Congress but can keep raising prices

    Richard Gonzalez, AbbVie’s CEO, has been hard at work raising the price of its best-selling overpriced drug, Humira, along with other drugs. But, instead of passing legislation that benchmarks drug prices in the US to prices paid in other wealthy countries, Congress gave him a scolding this morning. Odds are that any pain Gonzalez feels will be offset speedily by his ability to keep raising AbbVie’s drug prices.

    Congress has been investigating how AbbVie prevents other companies from selling drugs that compete with Humira, an anti-inflammatory drug, and Imbrivica, a cancer-fighting drug.  Humira is the biggest selling drug in the world, costing $70,000 for a year’s treatment. And, it is not available in generic form because the company keeps finding ways to buy off competitors.

    Of course, in the prescription drug world, there is no meaningful competition even when there’s no strategy to prevent competition. Put differently, if there are two brand-name drugs that treat the same condition, both almost always cost a lot.

    The U.S. House Oversight Committee report shows what we already know. AbbVie, like every other pharmaceutical company, spends relatively little on drug research. Rather, a vast amount of its money goes to stock buybacks and executive compensation. In the case of AbbVie, it also goes to suppressing competition and lobbying Congress. Indeed, AbbVie spent $3 million on lobbying in January, February and March of 2021 alone!

    Many claim that AbbVie has violated antitrust laws. But, why does that matter if Congress is not prepared to regulate drug prices? Short of that, AbbVie will continue to apply for dozens more patents and keep hiking up prices for its drugs. Fool Congress once, twice, endlessly?????? Shame on it.

    Meanwhile, Stat reports that J.P. Morgan is bullish on AbbVie. And, for good reason.

    Here’s more from Just Care:

  • What will it take for Congress to cap hospital prices?

    What will it take for Congress to cap hospital prices?

    RAND just released a new study by Jody L. Liu confirming what multiple other studies have found: If the federal government were to put a cap on hospital prices, we could save tens of billions of dollars a year in health care spending. Two other proposals to rein in hospital prices, making hospital prices publicly available and promoting competition among hospitals, would not save anywhere near that much money. What will it take for Congress to cap hospital prices?

    I bet you know that the American Hospital Association was not happy with the RAND report. It points its finger at for-profit insurers.  But, as much as insurers are responsible for not being willing or able to rein in hospital prices and driving up health care costs, it is the hospitals that set the prices.

    In 2018, the US spent $1.2 trillion on hospital costs. Forty percent of total health care spending went to hospitals. If Congress regulated hospital prices so that everyone benefited from Medicare rates, savings could be as high as $236 billion a year. With hospital prices set at 150 percent of Medicare rates, savings would be $61.9 billion a year.

    States could take on regulating hospital prices, but, in the last several decades, only one state has been willing or able to do so in a meaningful way. Only Maryland regulates hospital prices.

    RAND does find some savings from hospital price transparency. It estimates that prices could come down by as much as $26.6 billion a year. And, it further finds that increased hospital competition–something at least as hard to achieve as federal price regulation and likely harder–could generate savings of between $6.2 and $68.9 billion a year.

    We need to keep reminding our members of Congress that health care will never be affordable if Congress does not regulate hospital and drug prices. Subsidies will never be high enough. And, pharmaceutical companies and hospitals will keep raising prices as long as they are allowed to do so.

    Yes, regulating prices might lead some hospitals to fold. But, our current free-f0r-all system has led many critical rural and other hospitals to shut their doors. Congress has the power to invest in hospitals where needed, as it has been doing throughout the pandemic, and it would be empowered to do so at any time if it regulated hospital prices.

    And, yes, regulating prices might lead drug companies to limit their research. But, a lot of their research goes to maximizing their profits, not to discovering new important treatments. If prices were regulated, Congress could use the savings to target investments to needed research.

    You can read a JustCare post explaining why competition does not bring down hospital prices here. And, this post discusses a RAND study that looks at hospital prices for corporate health insurers as compared with Medicare. One question for Congress is whether it wants to have hospitals suing patients for the cost of their care that insurance does not cover. Another question is whether it thinks that the wildly varying hospital prices even within a community should be addressed to protect Americans.

    Here’s more from Just Care:

  • Medicare for all would rationalize the cost of care

    Medicare for all would rationalize the cost of care

    In an opinion piece for the Los Angeles Times, David Lazarus explains that, if we did not rely on private health insurers, our costs for care would be half of what they are and outcomes would be better. At least, that’s the case in every other developed country. But, many members of Congress (who often get their health care from Bethesda Naval, a government hospital system) claim that relying on the government for health care coverage is a bad idea.

    Today, we spend $3.5 trillion a year for health care. But, we live shorter lives and more children die prematurely in the US than in other wealthy countries. Another compelling argument against our health care system is the bills we get from hospitals and our health insurers.

    One older man who underwent sinus surgery this past fall was billed $77,000 by his hospital, Scripps Mercy Surgery Pavillion, for his three-hour procedure, in addition to $5,000 from his surgeon and anesthesiologist. The hospital’s charge was for technical items, such as the surgical room, equipment and nurses. Because the patient had Medicare, he was told he was responsible for the 20 percent coinsurance, $1,174. Medicare paid just under $6,000.

    It’s the definition of lunacy that the hospital charged more than 12 times Medicare’s approved rate. Most do not charge that much more than Medicare. But, most do charge three to four times Medicare’s rate.

    Consequently, without Medicare–with private health insurance or without any insurance at all–people get charged astronomical bills. Medical debt is through the roof.

    As of the beginning of this year, hospitals must list their prices so people should be able to know them in advance. But, it is asking a lot of people to comparison shop. They go where their doctors are.

    Regardless of what others say, Medicare is social insurance, the government pays for care from private providers. If Medicare were socialized medicine, the hospitals and doctors it covers would be on the government payroll, not independent entities. If everyone had Medicare, a better improved Medicare without out-of-pocket costs, everyone would be better off.

    Instead, we have non-competitive health care markets. In nine out of ten markets, hospitals have monopoly pricing power. As a result, we do not have fair hospital and doctor prices.

    Medicare for all would lead to competition based on value, giving Americans market power, which we are sorely missing. It would not be socialized medicine. For that, we’d need to be able to get care at Bethesda Naval, which members of Congress happily do while expressing deep opposition to it for everyone else.

    Here’s more from Just Care:

  • Will Congress allow Medicare drug price negotiation in 2021?

    Will Congress allow Medicare drug price negotiation in 2021?

    President Joe Biden’s election, combined with Democratic control of the House and Senate, give Democrats the opportunity to help Americans and bring down the price of prescription drugs. As a starter, Congress could end the ban on Medicare drug price negotiation. Better still, it could benchmark drug prices in the US to prices in other wealthy countries. But, it’s not at all clear that the Democrats will try to pass drug price legislation or, if they do try, that they will succeed.

    At the end of 2019, the House passed legislation that would allow Medicare to negotiate the price of 350 drugs over 10 years. HR3 also extended Medicare’s negotiated prices to all private insurers. Strangely, however, HR3 does not allow uninsured Americans to benefit from the negotiated prices.

    Nicholas Storko reports for StatNews that it will be a heavy lift for the Senate to repeal the ban on Medicare drug price negotiation. Even if every Democrat agreed–and that should not be taken as a given–passing the legislation might require 60 votes. Moreover, Republicans and Pharma will put up a big fight.

    Usually, Senator Joe Manchin of West Virginia, arguably the most conservative of the Democratic House members, resists joining with his party over progressive policies. With drugs, he might join with them; he co-sponsored legislation in 2019 to allow Medicare to negotiate drug prices. This time around, Senators Bob Menendez of New Jersey and Kirsten Sinema of Arizona might keep the Senate from repealing the ban, even if only a majority of Senators are needed to pass the legislation. Sinema appears to be closely tied to Pharma.

    Menendez openly voted against allowing Medicare to negotiate drug prices in 2019. He has said privately that he opposed the 2019 legislation because he didn’t think it would benefit individuals adequately. His spokesperson reports that Menendez does not think repealing the ban would save people money, a misleading claim that the Congressional Budget Office made when the conservative Douglas Holz-Eakin headed it. If the legislation benchmarks drug prices to the average of what other wealthy nations pay, it probably would cut drug prices in half.

    Some Republicans might support repeal of the Medicare ban on negotiating drug prices. But, that’s a long shot. No Senate Republicans are co-sponsoring bills to lower Medicare drug prices.

    In addition, this year, the Democrats hold a much slimmer majority in the House than in 2019. So, HR3 would not likely pass in the House as currently drafted. If a new version were to pass, it is likely to be even less comprehensive than HR3.

    Here’s more from Just Care:

  • Are hospitals posting their prices, as required?

    Are hospitals posting their prices, as required?

    Beginning this year, hospitals are required to be transparent about the prices they charge different insurers for their services. But, Samantha Liss reports for HealthcareDive that hospitals are not being transparent about their negotiated prices. Why would they post their prices when the potential penalty is a mere $300 a day or a corrective action plan, a flick on the wrist?

    As of January 1, all hospitals across the country must make their negotiated prices public, online. Until this year, virtually all hospitals claimed this information was proprietary, a business trade secret. There was no requirement for price transparency.

    Hospitals that are complying with the transparency policy are burying information about their rates on their web sites or are not providing complete information. Researchers cannot find it. There is no single designated place for this information.

    The Centers for Medicare and Medicaid Services (CMS) is overseeing this effort. But, CMS does not post the information. It is not even collecting it; hospitals are not required to send CMS the information. There is no simple way to know which hospitals are complying and which are not.

    When the hospital price information is available, it is not likely to help individuals compare prices right now. Over time, if you’re shopping for insurance, you might be able to see which insurers are able to negotiate the best rates from the hospitals you want to use. Of course, that does not tell you whether the insurer has inappropriately high denial or mortality rates, two other factors that people should be able to consider when choosing a health plan but for which there is no information.

    The hospital price information currently available reveals what we already know. The prices vary tremendously for the same service. According to Niall Brennan, head of the Health Care Cost Institute, one insurer might pay $5,000 for a C-section and another $55,000. Neither Congress nor president-elect Joe Biden is even talking about fixing this huge problem that drives up insurance premiums and out-of-pocket costs and jeopardizes access to care.

    The American Hospital Association fought hard against hospital price transparency. But, it ultimately failed. A federal appeals court wouldn’t intervene to block the policy from going into effect. The American Hospital Association tried to say that some prices are unknowable. Really? Do the hospitals make them up as they go along?

    Here’s more from Just Care: