The Trump administration is using competition to drive down drug prices for a portion of Medicare patients by giving insurers and pharmacy-benefit managers the ability to negotiate prices for more types of drugs.
The change would apply to seniors who are on Medicare Advantage, which uses private insurers to cover an estimated 20 million Medicare members, the administration announced on Aug. 7.
The move focuses Part B drugs, which are often administered at a hospital or in a doctor’s office, but applies to some outpatient drugs, as well. Part B includes some cancer therapies, infusions for rheumatoid arthritis, injections for end-stage renal failure, and immunosuppressive drugs used after a transplant, among other things.
The policy change would put Medicare Advantage plans in line with private-sector insurance companies, which regularly negotiate discounts of 15 to 20 percent— and sometimes even higher—for the same drugs.
The negotiating will be left to plan providers or pharmacy-benefit managers (PBM), who are employed to file claims and negotiate better prices with pharmacies, wholesalers, and drug manufacturers on behalf of insurance providers.
The policy change takes effect on Jan. 1, 2019.
Also starting next year, Medicare Advantage plans can require patients to try more cost-effective drugs before moving to higher-priced ones, in what is called “step therapy.”
For example, someone may be required to try a generic drug that costs less than a branded one. If, for some reason, the generic drug isn’t as effective as the branded one, the patient can switch back. However, this will only apply to people who are starting new medications in 2019, not to someone already on a medication. If the patient isn’t interested in a more cost-effective option, they can also apply for an exception.
Medicare patients also will be able to switch plans through March 31, either to another Medicare Advantage Plan or to a fee-for-service plan.
“President Trump promised better Medicare negotiation and lower drug prices for the American people. Today, we are taking an important step in delivering on that promise,” Alex Azar, secretary of Health and Human Services (HHS) said in a statement. “We look forward to seeing the results of this step toward tougher negotiation within Medicare, and will continue efforts to expand negotiation tools throughout our programs.”
Last year, Medicare Advantage plans spent $11.9 billion on Medicare Part B drugs, according to HHS estimates. It’s not yet clear how much will be saved through this policy change, but whatever savings there are, more than half must be passed on to consumers.
Starting in 2020, the savings from these policy changes could lower premiums, but because premiums for Medicare Advantage plans have already been set for 2019, members are likely see to the savings in the form of a gift card or lower co-insurance.
Azar says this is part of a broader effort to change U.S. policy around health care, in particular Medicare, but that a broader change to the program would need congressional approval, he told Bloomberg.
Reprinted with permission from - The Epoch Times - by Holly Kellum