CMS issues rule to empower it to negotiate drug prices, opponents immediately spin it as a negative.

[ProSense]

Last edited Sat Feb 22, 2014, 04:50 PM - Edit history (1)

Plan to Limit Some Drugs in Medicare Is Criticized

By KATIE THOMAS and ROBERT PEAR

An alliance of drug companies and patient advocates, joined by Democrats and Republicans in Congress, is fiercely opposing an Obama administration proposal that would allow insurers to limit Medicare coverage for certain classes of drugs, including those used to treat depression and schizophrenia.

Opponents warn that the proposal, if enacted, could harm patients. Federal officials say it would lower costs and reduce overuse of the drugs...Even insurers and drug benefit managers, who have previously supported added limits on drug coverage, oppose the rule.

http://www.nytimes.com/2014/02/22/business/plan-to-alter-medicare-drug-coverage-draws-strong-opposition.html

Is this how a distortion starts? I ask because the media was able to successfully spin Medicare savings from reducing overpayment to insurers in Medicare Advantage as cuts.

The current rule appears to be about implementing the process of negotiating drug prices. The NYT article quotes people from across the spectrum, but the concerns appear more rooted in fear of change than the actual effects of the policy. I mean, how will negotiating drug prices limit choice?

Is Medicare drug coverage in jeopardy?

By Elise Viebeck

Republican committee leaders are pushing the Obama administration to call off proposed changes to the Medicare prescription drug program, arguing the overhaul would jeopardize seniors' plans and raise premiums.

The charges pertain to recent regulations proposed by the Centers for Medicare and Medicaid Services (CMS). The rules would allow the agency to participate in negotiations between insurance companies and pharmacies in Medicare Part D for the first time out of concerns over cost and access.

Supporters of the change argue the CMS needs new authority to ensure the market for prescription drugs in Part D works for patients. But Republicans said the proposal will allow the agency to unnecessarily interfere with existing drug plans, potentially forcing millions of seniors out of their coverage.

"Despite the program's far-reaching success, CMS is proposing to fundamentally undermine the program and jeopardize the prescription drug plans that million [sic] of seniors rely on for their health and peace of mind," the members wrote.

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http://thehill.com/blogs/healthwatch/medicare/198800-gop-slams-proposed-changes-to-medicare-part-d

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The proposed rules would empower the agency to participate in Part D negotiations between insurance companies and pharmacies for the first time out of concerns about cost and access.

The regs would also open plans' preferred networks to a wider range of pharmacies, limit plan bids within a region and remove "protected class" designations for certain types of drugs.

The CMS argues the changes are necessary to save money, hold plans and providers to account, and enhance consumer choice within Part D.

But despite praise from some quarters of the healthcare world, most of the reaction from business groups, insurers and drug companies has been negative.

http://thehill.com/blogs/healthwatch/politics-elections/198816-gop-debuts-new-campaign-attack-line-on-medicare

PhRMA opposes proposed rule on US Medicare Advantage & Part D

Pharmaceutical Research and Manufacturers of America (PhRMA) stated yesterday that it is opposed to the proposed rule on Medicare Advantage and Part D that CMS released in early January because it could disrupt care for millions of beneficiaries.

The Part D program is already working well, making the proposed rule unnecessary and harmful. Quite simply, it is a solution in search of a problem, says PHRMA senior vice president Matthew Bennett, adding: “Since 2006, the Part D program has developed a strong track record of success. Currently, total Part D costs are 45% - or $348 billion - lower than initial projections for 2004-2013. Additionally, average beneficiary premiums are stable at $31 per month in 2014 - less than half the level originally projected. And several surveys have found that 90% or more of Part D beneficiaries are satisfied with their coverage.”

Would unlawfully interfere in a competitive, market-based program that is working

He continued: “Despite Part D’s success, the proposed rule represents a fundamental shift in CMS’ administration of Part D and would erode key features at the core of the program’s competitive structure – to the detriment of beneficiaries. The proposed changes would restrict patient access to needed medications, limit beneficiary choice of affordable plan options, and unlawfully interfere in a competitive, market-based program that is already working. Not only are these changes unnecessary; they could increase costs for both beneficiaries and taxpayers.”

“In light of Part D’s track record, PhRMA urges CMS to withdraw the proposed rule which, as written, would undermine Part D and harm beneficiaries who rely on the program for affordable access to comprehensive prescription drug coverage,” Mr Bennett concluded.

http://www.thepharmaletter.com/article/phrma-opposes-proposed-rule-on-us-medicare-advantage-part-d

Here is the rule: http://www.gpo.gov/fdsys/pkg/FR-2014-01-10/pdf/2013-31497.pdf

From the PDF:

...We are concerned that requiring essentially open coverage of certain categories and classes of drugs presents both financial disadvantages and patient welfare concerns for the Part D program as a result of increased drug prices and overutilization. The principal disadvantage is that an open coverage policy substantially limits Part D sponsors’ ability to negotiate price concessions in exchange for formulary placement of drugs in these categories or classes. Since the beginning of the Part D program we have heard from stakeholders that this policy— frequently referred to as the ‘‘protected classes’’ policy—significantly reduces any leverage the sponsor has in price negotiations and results in higher Part D costs. A report by the OIG in March 2011 documented similar assertions from selected Part D sponsors, including assertions that ‘‘they received either no or minimal rebates for the drugs in these including assertions that ‘‘they received either no or minimal rebates for the drugs in these six classes,’’ that ‘‘there is little incentive for drug manufacturers to offer rebates for these six classes of drugs because they do not need to compete for formulary placement,’’ and that ‘‘if [a rebate] is provided, it’s probably at a lower percentage than [the rebate for the drugs] that had some competition.’’ (HHS Office of Inspector General, ‘‘Concerns with Rebates in the Medicare Part D Program’’, March 2011, OEI–02– 08–00050)

Interesting mention of "rebates." Medicaid has one of the best rebate drug policies.

Medicaid Drug Rebate Program

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The Medicaid Drug Rebate Program is a partnership between CMS, State Medicaid Agencies, and participating drug manufacturers that helps to offset the Federal and State costs of most outpatient prescription drugs dispensed to Medicaid patients. Approximately 600 drug manufacturers currently participate in this program. All fifty States and the District of Columbia cover prescription drugs under the Medicaid Drug Rebate Program, which is authorized by Section 1927 of the Social Security Act.

The program requires a drug manufacturer to enter into, and have in effect, a national rebate agreement with the Secretary of the Department of Health and Human Services (HHS) in exchange for State Medicaid coverage of most of the manufacturer’s drugs. When a manufacturers markets a new drug and electronically lists it with the FDA, they must also submit the drug to the Drug Data Reporting (DDR) system. This ensures that states are aware of the newly marketed drug. In addition, Section II(g) of the Rebate Agreement explains that labelers are responsible for notifying states of a new drug’s coverage. Labelers are required to report all covered outpatient drugs under their labeler code to the Medicaid Drug Rebate Program. They may not be selective in reporting their NDC's to the program. Manufacturers are then responsible for paying a rebate on those drugs each time that they are dispensed to Medicaid patients. These rebates are paid by drug manufacturers on a quarterly basis and are shared between the States and the Federal government to offset the overall cost of prescription drugs under the Medicaid Program.

http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/Medicaid-Drug-Rebate-Program.html

The ACA increased Medicaid's drug rebate percentage.
http://www.medicaid.gov/AffordableCareAct/Timeline/Timeline.html

Issue Brief - Medicare Drug Negotiation and Rebates

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Best Price. A third argument is that it makes sense for Medicare to receive the best price available for prescription drugs, just like Medicaid and the VA. In Medicaid, the drug manufacturer provides the federal government discounts for drugs, which are shared with the states. The discount is either the minimum drug amount or an amount based on the best price paid by private drug purchasers, whichever is less. Current law requires drug companies to charge Medicaid 23 percent less than the average price they receive for the sale of a drug to retail pharmacies. Drug companies also must provide another discount if a drug’s price rises faster than the rate of inflation (Thomas and Pear, 2013)...Medicaid rebates, if applied to Part D, would save the federal government money. According to a 2011 study conducted by the Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services, Medicaid rebates were three times greater than the discounts negotiated by Part D for 100 brand name drugs. In 68 of these drugs, Medicaid rebates were twice as high as rebates granted by the drug companies for Medicare drugs (OIG HHS, 2011; Hulsey, 2013). Similarly, a 2008 study of drug pricing information by the U.S. House Committee on Oversight and Government Reform found that Part D paid, on average, 30 percent more for drugs than Medicaid (Hulsey, 2013).

- more -

http://www.ncpssm.org/PublicPolicy/Medicare/Documents/ArticleID/1138/Issue-Brief-Medicare-Drug-Negotiation-and-Rebates

[ProSense]

1. National Center for Policy Analysis

is against it.

Most Popular Seniors’ Medicare Drug Plans May Be Banned by CMS: 14 Million Could Lose Medicare Part D in 2015: NCPA Study
http://www.prweb.com/releases/2014/02/prweb11601939.htm

National Center for Policy Analysis
http://www.rightwingwatch.org/content/national-center-policy-analysis

Where is everybody?

[okaawhatever]

2. bottom line: This was a hard fought point when the Part D program came into effect. It's all about

the clause that prohibits the government from negotiating prices on prescription drugs. Other than the repubs, and not even all of them, no one approved of that feature at the time. It was considered a giveaway to big pharma.

After the law was passed, Bush and company said the no-negotiation rule was effective because the costs were lower than expected. The costs were lower because of fewer people participating and lower drug costs due to expiring patents.

this is an issue Obama ran on. He tried to put it in the ACA but dropped the proposal. If you google Medicare Part D and government negotiation of prices you'll find all the relevant info.

I'm surprised Obama is going for it. He's going to piss off a lot of big pharma. While I would expect it, I would have thought he'd wait until after 2014 elections so big pharma doesn't put more money in the races than they otherwise would have.

[ProSense]

3. Kick! n/t

[truedelphi]

4. Sad to think that one major way this Administration seeks to tighten up deficit spending is

related to passing costs of health care onto seniors.

Even the small concession of seeing that drug prices are not continually artificially inflated, that would have been one decent thing for President Obama, and the Democratic majority Congress of 2009, to undertake. Instead, Obama allowed his Chief of Staff, one Rahm Emanuel and Rahm's "helper" Liz Fowler the entire ability to write the ACA 2,000 pages. (For their efforts, Rahm now has a "Get As Much Money As you Will Ever Need for Any Political Office" card, which helped him secure the mayoral office in Chicago, while Fowler received and accepted a cushy job inside Big Medical Industry.)

Someone here might grumble that the ACA was not about MediCare, but it did have provisions inside those 2,000+ pages that directly addressed MediCare. So shoring up Medicare provisions so that they must provide the needed medicines for seniors cannot be considered outside the realm of what the ACA did. (The ACA also cut MediCare budget by half a trillion bucks, which means that fewer doctors will be willing to add on new MediCare patients, as their salaries will be suffering as a result of this.)

Yes, Mr President, being the puppet of Big Medicine/Big Insurers et al means never having to do anything but comply with the few people who hold the strings to your movements.

When doxycycline, a drug that used to cost about $ 30 for a month's supply, now costs a person in the USA some $ 2,000 a month, something is severely whacked about the system. But Big Pharma knows the value of having so many people diagnosed with Lyme's that are forced to each pay more than a thousand a month.