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Three reasons the Senate Finance package is the wrong approach for patients

Tom Wilbur   |     August 26, 2019   |   SHARE THIS

For more than a decade, Medicare Part D has successfully provided seniors and people with disabilities comprehensive prescription drug coverage, while its unique market-based structure has kept overall program costs far below initial projections. In fact, according to a new nationwide survey, nearly nine of ten seniors are satisfied with their Part D prescription drug coverage. Even so, increasingly beneficiaries are facing high out-of-pocket costs at the pharmacy counter.

The biopharmaceutical industry has long advocated for improving affordability and predictability of cost-sharing in Part D by strengthening this vital program with the right solutions, such as establishing an out-of-pocket cap, fixing the Part D out-of-pocket cliff and sharing the savings from  rebates with patients directly at the pharmacy counter. Unfortunately, the Senate Finance Committee has pushed for changes that would upend Part D without any immediate and meaningful savings for most patients at the pharmacy counter.

Below are three reasons why the Senate Finance Committee’s approach is the wrong approach for patients:

  • The Senate Finance package fundamentally alters how parts of Medicare and Medicaid covers beneficiaries and would siphon more than $120 billion from researching and developing new medicines. Instead of using those savings to directly benefit beneficiaries, much of this money would instead go to the government, insurers and pharmacy benefit managers (PBMs). Unfortunately, the Senate Finance package would not meaningfully lower costs for beneficiaries at the pharmacy counter. For example, while the bill establishes a cap on what beneficiaries pay out of pocket, only about 2% of Part D beneficiaries face out-of-pocket costs in the catastrophic today according to MedPAC. This will leave beneficiaries with drug spending below the out-of-pocket threshold without any direct reductions in their costs at the pharmacy counter. The Senate Finance package should do more to help these patients.
  • The Senate Finance package fails to ensure the deep discounts negotiated in the Medicare prescription drug program are passed along to patients in the form of lower out-of-pocket costs. While insurance companies have said they use rebates and discounts to keep premiums low, that doesn’t address the number one problem seniors identify: out-of-pocket costs at the pharmacy counter. Research has shown that sharing negotiated rebates at the pharmacy counter could save seniors with diabetes, for example, more than $350 in out-of-pocket spending annually and reduce total health care spending by approximately $20 billion over the next 10 years. Regardless of whether PBMs pass through rebates or discounts to insurers, they are not making their way to patients at the point of sale.
  • The Senate Finance package erodes the successful, market-based structure of Medicare Part D by opening the door to government-set prices that result in money going to the Federal Treasury instead of patients. The government-administered inflation rebate as part of the package would violate the spirit of the non-interference clause and undermine Part D’s market-based structure. Part D works because it gives beneficiaries plenty of options and choices to pick the plan that fits them best. The Senate Finance package proposes inserting price controls into Part D, which could significantly change how Part D serves beneficiaries. Economists have found that the introduction of government-set prices in Medicaid caused distortionary impacts that led to higher prices in the commercial market.

We remain committed to ensuring policy reforms result in immediate and meaningful savings for patients at the pharmacy counter. However, the current Senate Finance Committee approach is the wrong approach for patients.

Tom Wilbur

Tom Wilbur Tom Wilbur is a director of public affairs at PhRMA focusing on the organization’s federal advocacy priorities including intellectual property and Medicare Part D. Prior to joining PhRMA, Tom worked in national and state politics for nearly a decade, most recently on Capitol Hill as a strategic communicator and campaign manager. Tom is a proud Michigander and in his spare time enjoys reading, live music, and spending time with friends and family cheering on Detroit sports teams.

Topics: Part D, Prescription for Medicare

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