No matter how you structure it, government arbitration is wrong for Medicare drug coverage

Nicole Longo
Nicole Longo June 27, 2019


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Despite concerns from a broad group of stakeholders, some in Washington continue to push for imposing government arbitration on Medicare drug coverage to set the price of a medicine. Unfortunately, these proposals overlook the many ways Parts B and D have been successful over the years and better policy options that would actually be in the best interest of seniors. Take, for example, Medicare Part D. The Administration has already put forth the proposed rebate rule, which would directly benefit many seniors and lower their costs at the pharmacy counter. That’s the right way to change Medicare, not government arbitration.

While each arbitration concept varies in how it would be implemented and structured, they all would jeopardize seniors’ access to care if they were applied to Medicare. In government arbitration, the drug manufacturer is pitted against a public entity – the U.S. government – and the power to request arbitration is given to the government, not the private party. Government arbitration also gives the power of choosing the arbiters to the government, not the private party. In fact, some proposals even suggest the arbiters should come from the Government Accountability Office – the opposite of an entity that is unaffiliated with both parties. And this process could occur the minute an innovative new medicine could be made available to seniors, leaving no time to let the market and competition determine the price of the medicine. Government arbitration places the government in the middle of determining the value of a medicine.

Recently, Congress considered using binding arbitration to settle disputes between insurers and providers regarding surprise medical bills patients receive after being treated in a hospital setting. This has led some in Washington to argue that government arbitration could work for Medicare drug coverage. But that argument completely skips over the drastic differences in those situations that make government arbitration unviable for the seniors who rely on Medicare. Two clear differences: 1) In the case of surprise billing, the dispute is between two private parties – not the government; and 2) Binding arbitration as proposed for surprise billing would be entered into after the patient has received the treatment and care they needed – it wouldn’t stand between patients and their doctors. 

Regardless of whether binding arbitration is the right approach to surprise billing, it’s clear how imposing government arbitration on Medicare drug coverage is different. And no matter how you structure it, government arbitration is wrong for Medicare drug coverage.

Learn more about right and wrong ways to change Medicare at PrescriptionforMedicare.org.

Topics: Part D, Medicare, Part B, Prescription for Medicare, Government Arbitration