From ModernHealthcare:  10/25/18

New CMS pay model targets soaring drug prices

(Updated at 3:20 p.m. ET)

The Trump administration on Thursday accelerated its efforts to bring prescription drug prices under control.

Speaking at the Hubert Humphrey building, President Donald Trump introduced an aggressive proposal from HHS to drive down prescription drug prices paid by Medicare Part B by indexing them to the much lower prices paid by other advanced countries and changing the way physicians are paid for administering those drugs.

HHS projected that the new proposal would save the government and Medicare beneficiaries more than $17.2 billion over five years.

“The U.S. will finally begin to confront one of the most unfair practices… that drives up cost,” Trump said. “It’s a revolutionary change. No one had the courage to do it, or they didn’t want to do it.”

The proposal would gradually shift Part B payment for some outpatient drugs, including cancer drugs and biologics, to international prices.

In addition, physicians would be paid a flat fee for administering Part B drugs, instead of receiving a percentage of the price of the drug. Research shows the current system leads physicians to prescribe higher-priced drugs.

The move from current payment levels to ones based on international prices would be phased in over a five-year period, would apply to 50% of the country, and would cover most drugs in Medicare Part B.

“In an era where the pharmaceutical industry is pricing drugs at levels approaching a million dollars—and jeopardizing the future of our safety-net programs—the time has come to fix the perverse incentives in the Medicare program that are fueling price increases,” CMS Administrator Seema Verma said in a statement.

The Obama administration proposed a similar reform in the physician payment system for Part B drugs but was forced to withdraw the rule in 2016 in the face of fierce opposition from physician and patient groups and the pharmaceutical industry.

Political observers expressed uncertainty about whether the environment has changed enough since then to enable the Trump administration to push its plan through. But they predict Democrats are likely to be more supportive than Republicans were in response to the Obama administration proposal.

Trump said Medicare spending for one particular eye medication, which he didn’t identify, would drop from $1 billion a year to $187 million under the administration’s proposal.

He accused other countries of free-riding on U.S. drug innovations, at the expense of U.S. taxpayers and seniors, by paying much lower prices that don’t support the cost of drug research and development. But nothing in the proposal he presented would affect the prices people in other countries pay. Instead, the U.S. would seek to pay the same, lower prices.

That proposal would depend on drug manufacturers being willing to accept the new lower Medicare Part B prices, and the CMS being willing to exclude their products if they did not. Many of the drugs that would be affected have no competition.

“That’s how other countries do it,” said John Rother, CEO of the National Coalition on Healthcare who also heads the Campaign for Sustainable Rx Pricing. “You have to be able to say no and condition market entry on a more reasonable price.”

A consumer group lobbyist who didn’t want to be identified said his group is concerned about maintaining access to drugs as well as driving down prices. But he said it would not be easy for manufacturers to walk away from the huge Medicare market.

With less than two weeks before the midterm congressional elections on Nov 6, Trump played up what he called his administration’s achievements on drug prices and health policy, including a new bill letting pharmacists talk to patients about lower-priced alternatives. He also accused Democrats of favoring “a very socialist healthcare plan that would destroy Medicare, terminate Medicare Advantage, and outlaw employer health plans for 157 million Americans.”

After blasting Democrats, he said he expected them to back his administration’s drug price reduction proposal.

“We think they’ll come along with us when they see what we’re doing,” he said. “It was a Democratic congressman who told me how important drug pricing was to his constituents.”

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