Trump Wants ‘Revolutionary’ Changes to Medicare Drug Payments

Polls show voters are worries about healthcare costs

Polls show voters are worries about healthcare costs

President Donald Trump proposed what he called "revolutionary" changes to how his administration will approach drug pricing and reimbursement under Medicare Part B in a speech Thursday, including allowing Medicare to set prices of drugs based on what is paid in other countries.

HHS based its IPI model on an analysis comparing Medicare spending for Part B physician-administered drugs to the prices of those drugs in 16 other developed economies-Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the U.K. According to HHS, the us spent 1.8 times more for the drugs than the 16 countries studied.

"If the goal is overall out of pocket cost reduction for consumers, these proposals are promising and offer some of the boldest challenges to the medical establishment", said Patel, who worked on health policy in the Obama administration.

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While some industry watchers pointed to the announcement as a political move, Wells Fargo pharmaceutical analyst David Maris said that this is a broader effort by the president and his administration to attack the root causes of high drug prices.

"For decades, other countries have rigged the system so that American patients are charged much more", President Trump said Thursday in a speech at the U.S. Department of Health and Human Services, which administers Medicare.

"Same company. Same box". Prices in other countries are lower because governments directly negotiate with manufacturers.

Many large pharmas have limited exposure to Part B, which encompasses drugs administered in doctor's offices or hospital outpatient clinics. "The United States has a competitive marketplace that controls costs and provides patients with access to innovative medicines far earlier than in countries with price controls, and it's why we lead the world in drug discovery and development".

- Don't expect immediate rollbacks. Put in perspective, the U.S. spent $647.6 billion on Medicare, meaning Part B spending makes up about 3% of Medicare's total spending. The administration's authority to implement the rule exists under the authority of the Center for Medicare and Medicaid Innovation, which was created under the Affordable Care Act, explained Rachel Sachs, an associate professor of law at Washington University in St. Louis, in a phone interview.

At issue are drugs in the Medicare Part B insurance plan, which covers physicians' services. If you're upset about high drug prices, blame America's commitment to a relatively unrestrained free market, not, say, the policies of the United Kingdom.

But that's not how HHS Secretary Alex Azar tells the story.

Another concern: The federal government's negotiating power is more limited when it comes to Part B drugs because Medicare can not exclude medications. "The only thing standing in the way is the one special interest that has benefited from this program far out of proportion to any other actor. the pharmaceutical industry".

But PhRMA, the drug industry's main trade group, came out strongly against Thursday's proposal.

Democratic leaders on Capitol Hill were dismissive. Officials said they're seeking input on how to select the areas of the country that will take part in the new pricing system. The proposed rule could come in spring 2019, and Azar said the new model could begin in late 2019 or early 2020.

In advance of Trump's speech, HHS released a report that found USA prices for the top drugs administered in doctors' offices are almost twice as high as in foreign countries. The so-called "target price" of these drugs, which include treatments for cancer, would be 126% of the average of what other countries pay. On Thursday, the president announced a plan to bring down drug costs for Medicare.

The bottom line: The administration estimates that the new pricing index, would save American taxpayers and patients $17.2 billion over five years. Beneficiaries would save an estimated $3.4 billion through lower cost-sharing.

Changing up the incentives for doctors, so they're paid based on a flat fee rather than a percentage of the price of a drug, as a way to push them to use lowe- cost drug options.

Trump has harshly criticized the pharmaceutical industry, once asserting that the companies were "getting away with murder", a comment that sent pharmaceutical stocks tumbling. "It really changes business as usual for a lot of institutions that make money off of high prices of drugs".

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