Three reasons why repealing the Part D non-interference clause is a bad idea

Tom Wilbur
Tom Wilbur October 1, 2020

Three reasons why repealing the Part D non-interference clause is a bad idea.

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For more than a decade, Medicare Part D has provided seniors affordable and comprehensive prescription drug coverage. Its unique, market-based structure has kept overall Part D program costs far below initial projections, coming in at nearly $350 billion less than the Congressional Budget Office’s initial 10-year estimate.

From the beginning, the law that created Medicare Part D included a provision called the non-interference clause, which prohibits the Secretary of Health and Human Services (HHS) from interfering in the private negotiations between Part D plans, drug manufacturers and pharmacies in the program. The current structure of negotiations in Medicare has helped to keep costs down and ensure that seniors can access the medicines they need based on what their doctor prescribes.

Let’s take a closer look at why proposals to repeal the Part D non-interference clause are a bad idea:

  1. There is broad agreement the Secretary of HHS could not negotiate lower prices. The Congressional Budget Office (CBO) has repeatedly found that “the Secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by (Prescription Drug Plans (PDPs)) under current law.” The Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) has come to the same conclusion.

  2. The Secretary’s negotiations could risk beneficiaries’ access to needed treatment options. In a report examining such proposals, the Kaiser Family Foundation noted “CBO has said that in order to obtain price discounts, the Secretary would need authority to establish a formulary that included some drugs and excluded others and imposed other utilization management restrictions…” 

  3. Government negotiation would disrupt effective negotiation and competition that already takes place in Part D. The Medicare Trustees have consistently stated that rebates negotiated for brand medicines in Part D are substantial and have increased considerably over the past decade. In fact, drug rebates today amount to, on average, 26 to 30 percent of a drug’s list price. Interfering in existing Part D negotiations would undermine the success of the program.

Rather than improving affordability and predictability for seniors, repealing the non-interference clause could limit access to medicines, reduce choice and restrict coverage for more than 45 million seniors. Preserving successful competition and negotiation in the Part D program is critical.

Learn more about the success of Part D here.

Topics: Part D, Medicare