With all the talk of slashing federal budget deficits, guess what the Obama Fiscal Commission wants to put on the table? As the headline indicates, yes, Medicare Part D rebates paid by drugmakers, according to the draft proposal, which which also suggests lowering payments to doctors and lawyers, among other things. Rebates would be required as a condition of participating in Medicare Part D (see page 32here).
Another suggestion is to strengthen the Independent Payment Advisory Board, which was created to control Medicare costs if Congress fails to act on its own. The panel is supposed to get started in 2015, but drugmakers are fighting to eliminate it before that happens. Not surprisingly, the pharmaceutical industry, which negotiated a health care reform deal with the White House, is angry.
"Unfortunately, the commission’s proposals would impose government price controls in Medicare Part D and expand the powers of the Independent Payment Advisory Board, which would inhibit seniors’ access to needed care and the ability of innovative sectors to invest in the next generation of medical advances," says Wes Metheny,a senior vp with the PhRMA trade group. "We expect that many of the proposals included in this initial draft, such as increasing seniors' cost-sharing in Medicare by more than $100 billion, will receive much scrutiny in the coming weeks and months."
The proposal is certainly going to become contentious, especially after PhRMA agreed to contribute $80 billion over a decade in health care savings, in part by cutting prices of some drugs to close a coverage gap for seniors on Medicare. The added business is forecast to compensate for that decision. But the commission wants to change the overall equation. This will now, no doubt, raise a debate about pricing policies, R&D investments and the greater good. There is that yawning budget deficit. But what do you think?
Should Medicare Part D Rebates Be Raised?
- No (59%, 53 Votes)
- Yes (41%, 38 Votes)
Total Voters: 90
10 Comments
"Not surprisingly, the pharmaceutical industry, which negotiated a health care reform deal with the White House, is angry."
This statement puts the entire pharma industry into perspective. They use their lobbying arm to push for ObamaCare, thinking that the U.S. govt will stop at the boundaries agreed upon. When the U.S. govt (taxpayers) already pay for ~ 40%+ of pharma products, did the industry really think the Govt would stop asking for more and more rebates, concessions etc?
I remain unimpressed by most pharma "leadership".
[Way back in January of 2010, I predicted this: that the final price tag for pharma would be closer to $120 billion -- and that looks to be about right. On to the substance, then:]
Wait -- I've forgotten, here: when did we ordain, within US pharma, an inalienable right to overcharge the government for medicines it literally cannot allow patients to die without?
The whole tone of "the governement (or President Obama) is going back on its/his word" strikes me as wrong-footed. As in "goofy footed" surfing or snow-boarding.
We the people should expect fair pricing -- that is, affordable pricing -- on life saving medicines. The monopoly we grant with the US patent law schema should entitle us to such a demand.
Full-stop. Pharma -- as an industry -- is among the most highly profitable in the world, behind (perhaps) only big oil. This is part of the LONG TERM cost of charging 70%- to 85%-gross-margins on ones' products. Eventually the consumer awakens, and asks -- where is it written that pharma must be among the most profitable industries on the planet?
Just as (pre-Deepwater Horizon) where was it written that Big Oil should be so profitable?
Juat a little. . . Food for (continued) thought.
Namaste, all. . .
I voted that pharma should kick in more, as in additional rebates under Medicare Part D, lest anyone miss my meaning.
Namaste
In reality, the bigger issue in not how much rebates should be paid. The greater question is what value do we get for the treatments purchased.
Lots of seniors were treated with an innovative compound marketed as two different brands. Problem was, ezetimibe didn't really offer any useful benefit for the folks who took it. They would have been better off taking generic simvastatin or pravastatin.
Until Medicare and other health plans reconcile the "value" portion of the pharmacy benefit we will continue to argue over the costs, and who should pay them.
I'm in the process of reviewing a ~900 member plan that is on track to spend $800,000 - $850,000 on drugs next year. Reasonable and clinically sound modifications to their pharmacy benefit will save them ~25% of their expected costs. This is acheived by basing coverage determinations on national treatment guidelines. Another plan I'm reviewing has about 400 members, but spends ~$600,000 on meds. I expect there are very simple coverage policy recommendations I can make which can reduce their costs by 30%, while increasing the use of medications shown to provide important patient benefits, and decreasing the risks of inappropriate/ill-advised medication use.
If the priciples I developed (and rarely have borrowed from other bright folks) were applied to the Part D benefit as I apply them to self-insured plans, this entitlement would be 20-30% less costly. Moreover, our seniors would benefit from treatment patterns that were more consistent with "evidence-based" and guideline-supported medical care. In short, better care at lower, and more sustainable cost is easily acheivable, however, it requires willingness to move away from the drug coverage policies (closed formularies and tiers focused on consumer out-of-pocket costs) and tools (rebates, prior authorization, step-therapy, etc.) of the past two decades.
If pharma pays more in Medicare Part D rebates, I am concerned that other policyholders...employees and individuals will wind up paying more to compensate for increased rebate amounts to Medicare D.
Increase the rebates – No-No-No, rebates are nothing more than a tax on the user, just by another name. Who pays the rebates? Not Pharma, but the insurers do on behalf of the member under the prescription drug benefits program for part D. Rebates go up, drug costs go up, co-pay go up, the cycle continues.
Tom Kaye -- I think you are mistaken.
The rebates under discussion are in fact to be paid by pharma, on purchases of pharma products made by the government -- not any private insurer. You conflate two separate programs.
The rest of yours -- after this factual correction -- makes no sense.
OTOH, Anne does have a point -- insofar as IN THEORY -- pharma could conceivably increase prices to private insurers or pharmacies, to offset the amount of the rebate it will be required to give under the (as revised) Medicare Part D program.
The likely reality differs from that THEORETICAL scenario, though -- in this market environment. Under current economic conditions, pharma is less possessed of the requisite bargaining leverage to force price increases on private insurers. In fact, the general trend is headed the other direction, of late: insurers have been roundly and regularly reducing the amounts they will pay for certain classes of drugs (see Matt Helms, MD's fine analysis, above, in this regard).
Namaste, just the same.
Rebates, fines for unethical behavior, etc are all paid for ultimately by patients in the form of increased prices - passed on.
The day of pharma's fat profit margins are coming to an end, they will have to become significantly more efficient as other businesses.
Pharma co's struck this bargain with the President a year & a half ago, when he was the most popular person in the world & they were just hoping to get the best deal they could. Now that the winds have shifted, they'll probably be only too happy to be given a rationale to say the WH broke their end of the bargain, pull out & then throw their 2012 support behind the GOP, which is a more natural partner anyway.
No judgments. Just a prediction.
Condor, "We the people" comes from the United States Constitution, from which Big Pharma has been granted a permanent exemption.