- Ten drugs covered by Medicare will soon be subject to price negotiations.
- Some drug policy analysts are skeptical of the Biden administration’s claims about savings.
- For patients with private health insurance, negotiating cost reductions is unlikely.
- This article is part of the Big Trends in Healthcare series, which examines the top trends shaping the future of the industry.
On August 29, the federal government issued the following statement: List of 10 drugs Covered by Medicare, but soon subject to price negotiation. This is a historic change in the way the federal government pays for drugs, and while previously the federal government had no say in drug prices, President Biden passed the Inflation Control Act, which allowed Medicare price negotiations. I’ve been promoting it. A win for consumers.
The list includes drugs such as the diabetes drug Januvia, the heart failure drug Entresto, and the blood clot treatment and prevention drug Eliquis.
“If enacted, it would reduce negotiated drug prices for up to 9 million seniors, who currently pay out-of-pocket costs of up to $6,497 per year for prescriptions. ” Biden said. stated in a statement.
However, some drug policy scholars and analysts are skeptical of the administration’s claims.
Lower drug costs benefit Medicare, but do not necessarily mean direct savings for patients
In addition to negotiating Medicare drug costs, the IRA requires drug companies to pay rebates or make partial refunds to the Centers for Medicare and Medicaid Services for drugs that increase prices above the inflation rate. After all, According to estimates from the Congressional Budget Office, Health care-related IRA provisions could save the government $237 billion over the next 10 years.
While this makes sense for federal spending, it doesn’t necessarily translate into lower costs for consumers. juliet cubanskysaid KFF’s Deputy Director of Medicare Policy Programs.
“This program is really designed to save Medicare money,” she told Insider. “It’s possible that patient out-of-pocket costs will be somewhat lower, but that’s not certain.”
Jeffrey DavisMcDermott + Consulting’s director of health policy told Insider that the focus of Congress and the Centers for Medicare and Medicaid Services is on the consumer “in terms of trying to make sure that consumers don’t pay a higher price than they have to.” . drugs. “But trying to achieve that through drug price negotiations or rebates is not an accurate one-to-one cost reduction plan.
“The idea is that the rebate will indirectly lead to lower premiums,” Davis said.
Other medical researchers argue that IRA prescription drug provisions reduce patient spending.
“The total cost of a drug is made up of two prices: the net price paid by Medicare and the out-of-pocket price paid by the patient.” Richard Frank, director of the Brookings Schaefer Initiative on Health Policy, told Insider. “If both are true,” as the IRA’s action intends, “there is no reason why it would not be in the patient’s interest.”
The Pharmaceutical Research and Manufacturers of America, a trade group for the pharmaceutical industry, thinks differently. Nicole Longo, PhRMA’s senior director of communications, said she doesn’t believe patients, especially seniors, will receive all of the promised price reductions.
Longo said the pricing provisions would drive research and investment away from treatment options for Medicare patients. He added: “The bottom line is that government pricing is bad policy that reduces patients’ access to medicines and leaves them with fewer treatment options.”
However, the effects of these provisions will be many years away, so it remains to be seen what direct benefits, if any, to consumers.
Drug price negotiations may have ‘repercussions’ for private insurance subscribers, but it’s too early to tell
Patients with private health insurance (most Americans) are not guaranteed cost reductions negotiated by the federal government.
but Robin FeldmanThe University of California Law School professor and health and medicine expert told Insider that Medicare negotiations could have a “reverberating effect” on widespread drug costs. If drug companies don’t come to the negotiating table to lower the prices paid by private insurers, those companies could remove their drugs from their list of covered drugs.
Alternatively, if private insurance companies do not negotiate lower drug prices on patients’ behalf, patients may seek alternative insurance.
Feldman’s hope is that federal efforts, combined with pressure from private companies and state programs, will eventually squeeze drug companies and force them to lower drug costs for everyone.
“There are more and more options for purchasing medicines,” Feldman said, noting that low-cost medicines are available through Mark Cuban’s Cost Plus Drugs, Costco and Amazon.
“These are not perfect solutions, but they are beginning to crack the surface of drug companies’ constant price hikes,” Feldman said.
Still, she cautions that it will be years before it becomes clear how much patients can save on prescription drugs. Pharmaceutical companies will use that time to develop their strategies.
“Whether you’re a taxpayer or a patient, you have to watch your wallet,” Feldman said.
