Medicare Monday: How government price setting in Part D could reduce innovation, shorten life expectancy for beneficiaries

Nicole Longo
Nicole Longo June 19, 2017


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Today, we are diving into the conversation about how government price setting proposals could impact the Medicare Part D program and beneficiaries. Imposing Veterans Administration (VA)-style pricing in the Part D program has been suggested as a way to lower costs. However, a recent study found that imposing VA-style pricing in Part D would have significant, negative long-term implications for patients.

  • To start, the study found price controls would lead to a reduced number of innovative new drug introductions by as much as 25 percent relative to the status quo, resulting in fewer needed medicines and cures for patients.
  • Access to fewer treatment options would also result in reduced life expectancy for Medicare beneficiaries, with the largest impacts on people who will enter the Medicare program in the coming decades. The study found that Americans born between 1991 and 1995 could expect to live an average of nearly 2 years less relative to current life expectancy estimates.
  • As a result of having access to fewer treatments or less effective treatments, Americans would face higher comorbidity burdens, as well as shorter lifespans overall, meaning significantly reduced lifetime health benefits for Americans born between 1949 and 2005.

PhRMA Graphic - Impact of Price Controls in Part D - June 2017-page-001.jpg

The study adds to a large body of evidence that shows patients could lose out under these short-sighted proposals. As the Congressional Budget Office and others have repeatedly indicated, direct government negotiation in Part D would not produce any savings in Medicare unless restrictions were placed on beneficiary access to needed medicines.

Additionally, the proposals threaten the marked improvements in longevity that the Medicare population has seen since the implementation of Part D in 2006. For example, a study in The American Journal of Managed Care found that nearly 200,000 Medicare beneficiaries have lived at least 1 year longer, with an average increase in longevity of 3.3 years since Part D implementation.

It’s clear these government price control proposals could only hurt patients and negatively affect the Medicare Part D program. Learn more about Medicare Part D and the importance of ensuring the program continues to provide seniors and individuals with disabilities access to affordable prescription drug coverage.

Topics: Part D, Medicare, Medicare Monday