Last Friday, the Trump administration announced two interim final rules in a last-ditch effort to fulfill the president’s campaign promises of lowering drug prices for seniors. Many of President Trump’s prior efforts were blocked by litigation or lost momentum during the rule making process. With eight weeks left in his presidency, it is unlikely that the succeeding administration will carry on the litigation that will likely follow these rules.
The first policy, called the “most favored nations” plan, links Medicare reimbursement for drugs administered by doctors in care settings. This means that Medicare reimbursements will reflect the lowest price of the drug in any of the participating OECD nations, or members of the Organization for Economic Cooperation and Development, an intergovernmental economic policy group with 37 member countries.
This plan will be mandatory for providers nationwide, and only certain hospitals and specialty practices will be excluded. Additionally, according to BioPharma Dive, this only applies to drugs reimbursed under Medicare Part B, biologic drugs that must be injected or infused at healthcare facilities. The payment will be phased in over four years, using a hybrid of the international pricing and old systems for sales prices. This rule will go into effect on January 1st, 2021.
The American Hospital Association quickly fired back at the rule, saying that this is a penalty on providers rather than manufacturers and warning this may have grave consequences for patients who require specialized care in the long run:
… Hospitals will have to absorb losses whole drug companies are free to continue their trend of charging exorbitant prices. This will put hospitals in the terrible position of having to divert resources from other patient care simply to buy the drug therapies they need for their patients.
Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma disagreed, saying that the rule would be an effective deterrent for higher drug pricing:
The current system creates incentives for drug manufacturers to price Medicare Part B drugs as high as they can in the U.S. system because the program pays doctors more when they prescribe more expensive drugs, even when a lower cost, clinically-equivalent alternative is available.
Verma also said a similar rule for Part D drugs is also in the works, but did not explain when the rule would come about.
The second rule targets pharmaceutical manufacturers directly, according to the Associated Press. It will require drugmakers to give Medicare beneficiaries rebates that currently go to pharmacy benefit managers and insurers for brand name medications. Medicare Part D participating insurers have suggested that this will raise premiums.
The Congressional Budget Office estimated that this rule will increase costs to Medicare by $177 billion over 10 years. However, Healthcare Finance reports that as drug prices increase, more seniors will suffer worsening health and medical conditions as a result of being unable to afford their medications.
In addition to potentially becoming the leading cause of premature death with up to 112,000 deaths of beneficiaries per year, the West Health Policy Center study suggested that the run up in medical expenses due to worsening health conditions will cost Medicare $177 billion over a decade.
Pharmaceutical companies quickly responded to the rule with strong language and the threat of legal action. From Pharmaceutical Care Management Association President JC Scott:
PCMA will explore all possible litigation options to stop the rule from taking effect and destabilizing the Medicare Part D program that millions of beneficiaries rely on.
CMS Fact Sheet for Interim Rules
Read more at Modern Healthcare
More info at Inside Health Policy
Leave a Reply
You must be logged in to post a comment.