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Your Thoughts on Medicare Negotiating the Price of Drugs as a Health care cost containment method
Let get back to facts. There is a law that stops Medicare from negotiating drug prices period. Formulary has nothing to do with that period. Get rid of the law and let it happen and you will see all drug prices drop.
Once that happens you will see formularies come in to use to further cut drug costs.
There is no link between the two subjects. FACT.
Don't know what else to say to either of you -
Maybe this will help -
A series that examines policies to manage drug spending
from the link: 1st two paragraph - you can read the rest
What problem is this policy meant to address?
Medicare Part D plans (PDPs) are required to cover at least two drugs in each therapeutic class, defined as a group of drugs used to treat the same disease or condition. However, for six therapeutic classes PDPs are required to cover “all or substantially all” drugs.1 These are known as the protected classes, and include antiretrovirals (used to treat HIV), immunosuppressants (when used to prevent organ rejection), antidepressants, antipsychotics, anticonvulsant agents (used to treat epilepsy), and antineoplastics (used to treat cancer). While this requirement is intended to ensure a beneficiary’s broad access to all drugs in these protected classes, it may reduce the PDP’s ability to negotiate discounts for these drugs, leading to higher costs for Medicare and its beneficiaries.
Rescinding the protected class designation for certain therapeutic classes could improve a PDP’s ability to secure larger rebates from drug manufacturers, as it would allow a PDP to exclude a drug from its formulary. Medicare has previously projected savings from reducing coverage requirements in certain classes, as discussed below. However, given the current high rates of generic use within the protected classes, there may be limited potential for savings from changes to this policy. Moreover, because PDPs already have some ability to restrict coverage within protected classes, and because other Medicare requirements may prevent PDPs from generally excluding a drug,2 the magnitude of any savings from changing the protected classes requirement remains unclear.
It does not help as it has nothing to do with drug prices being negotiated by Medi Care. Every Insurance Co. and Drug Store Chain negotiates drug prices now. Nothing changes in Part D when this is done. When putting together the list of drugs the Carrier follows the regs only the drug is cheaper. It is very simple lower prices for all drugs first then even lower prices can happen when they create the drugs that will be in it.
@GailL1Don't know what else to say to you -
Maybe this will help -
This does not sound like a true drug negotiation proposal - like the VA does.
The KFF link says
The proposal under consideration amends the non-interference clause by adding an exception that would allow the government to negotiate prices with drug companies for a relatively small number of high-cost drugs, with an excise tax levied on drug companies that do not agree to participate in the negotiation process or comply with the negotiated price.
the proposed drug price negotiation program does not authorize the federal government to decide which medications people on Medicare can and cannot get and does not establish or require a particular prescription drug formulary. Insurers that offer Medicare prescription drug plans would continue to make decisions about which drugs to cover, or not, subject to protections provided under current law and regulations. The legislation under consideration leaves in place the non-interference clause and its specific restrictions with the exception of the proposed drug price negotiation program. Under this program, the negotiation process would not apply to most prescription drugs, instead focusing on a relatively small number with the highest spending and lacking generic or biosimilar competitors.
. . . . There are trade-offs involved in the proposal to negotiate drug prices, . . . .
So what are the trade-offs with this proposal?
This is beyond infuriating. Seriously, we are still talking about this like it is a topic that needs discussion? The fact that Medicare cannot negotiate drug prices is criminal. The examples of the American people being fleeced by the Pharmaceutical industry are legion. Why should an American be required to pay hundreds and sometimes thousands of dollars more for a Rx that is available in every other country in the world for far far less - not to mention that many of these drugs were developed using taxpayer funds. Why is big Pharma allowed to engage in shenanigans to delay and sometime prevent generic drugs from coming to market? How many years are we going to just settle for nothing being done. AARP needs to really take the gloves off on this one. It's not going to raise taxes on anybody - in fact, it will greatly lower costs. Enough already.
To offer a wide assortment of [negotiated price] drugs for Medicare beneficiaries would require developing a more restrictive formulary than what is currently offered - IOW, the criteria would be different than what is currently used for coverage - to get a better price, a negotiated price, some meds are not gonna make the cut.
So I am asking the same questions which I asked last May when I started this thread:
- What if your particular (expensive) drug is not included - would you switch to another one that is included or pay a higher price for the same one?
- Would you be OK with taking a generic instead of a brand name drug if available
- Would you be OK with taking a generic of a type that gives the best price to Medicare and which may change from one generic manufacturer to another periodically depending upon who gives the lowest price to Medicare?
Right now, the Medicare Med formulary covers almost all FDA approved medication in various drug classes - and in (5) classes it specifically states that they ALL have to be covered under Medicare.
When we add a negotiated price to the Federal program of Medicare Prescription Drug Coverage, the formulary will change to only those meds that give the government the best pricing for the best medication.
Your reply implies a false dichotomy.
First of all, if a generic drug is available, the name brand is excluded from the formulary. This is not unique to Medicare, it is what all major insurance plans do.
PBMs choose what drugs are in their formulary based upon price and rebates. Big Pharma gives them kickbacks to win a place in the formulary, and BTW the vast majority of the time any price savings is NOT passed on to you.
Your point about "the formulary will change to only meds that give the government the best pricing for the best medication" that is being done NOW with the PBMs.
What is happening NOW is that Medicare is being forced to pay more than the Veterans administration or private industry for drugs. That is just insane.
Why is it that you can go to Costco, Walmart or Sams Club and get some generic drugs cheaper than using your Medicare insurance?
Why is it that a 30 day supply of Daraprim in the US is approximately $50,000 but in Brazil is 75 cents?
Why is a 60 day supply of Dexilant in the US is $400, but in Brazil is $40. I could go on and on. It's beyond ridiculous and there isn't any justification except for greed.
As I mentioned above, this has been going on for far too long. AARP needs to pull out all the stops and hold lawmakers that are blocking this from happening accountable. I joined AARP for one purpose only, to protect Medicare and Social Security. Many years ago, as I was growing up, the news media always reported AARP was a political force to be reckoned with. I'm hoping that is still the case, although to be honest their connections with the health insurance industry in recent years has given me pause. I hope that they are not being unduly influenced by these connections and stay true to their mission.
Medicare Prescription Drug coverage is a different breed and is legislated as to what meds are covered and it is a lot more expansive in inclusion than normal type health insurance and a whole lot more expansive than the VA system.
All Medicare drug plans generally must cover at least 2 drugs per drug category, but plans can choose which specific drugs they cover. Plans are required to cover almost all drugs within these protected classes: antipsychotics, antidepressants, anticonvulsants, immunosuppressants, cancer drugs, and HIV/AIDS drugs.
from the link:
|Your plan may raise the copayment or coinsurance you pay for a particular drug when the manufacturer raises their price, or when a plan starts to offer a generic form of a drug, but you keep taking the brand name drug.|
The "noninterference clause" in the Medicare Moderation Act of 2003 prevents restricting the Medicare formulary.
This approach contrasts with how drug prices are determined in some other federal programs, such as mandatory drug price rebates in Medicaid, and the use of ceilings, prices and minimum discounts, in conjunction with a national formulary, in the Department of Veterans Affairs (VA).
The use of PBM's is a newer phenomenon in Medicare drug pricing schemes. Yes, the use of them, opens up a new cost either to those that are independent or those that are a subsidiary of the actual insurer.
I am not saying that negotiations would not bring down the cost of the meds shared between all the entities - the beneficiary, the insurer and the government - what I am saying is that with the process of negotiations - coverage would change to a more restrictive type. The expansive Medicare formulary would change to one that is less expansive because it would only cover the best drug for the price; not all of them.
How else could negotiations possibly work - ? There has to be some pitting between something in order for a negotiation to work.
Your inference is incorrect and misleading.
Yes, Medicare is legislated, but so is the VA, private insurance plans and those covered by the ACA.
I'm quite familiar with the formularies of both private plans and the sponsored Medicare plans. The legislative items you mention are basically a distinction without a difference.
The PBMs and VA both negotiate and that hasn't hurt their selection of drugs. If anything, Medicare is currently more restrictive. All one need to do is to look at the respective formularies. In fact, just go to one of the comparison tools on the web for Part D plans, then look at GoodRx prices. You'll see that in many cases, generic drugs are cheaper to buy without using a Part D plan. Then compare Part D formularies to private plans from Aetna, UHC or one of the Blues. You'll see the coverage of the private formularies (that use PBMs that negotiate prices) is far better.
Your other point: "The expansive Medicare formulary would change to one that is less expansive because it would only cover the best drug for the price; not all of them." is simply not true. One can simply go to a formulary of any of the Part D plans and see plenty of drugs that are not in formulary. That means, they aren't covered and you are responsible for paying the entire cost.
The VA system does not have to cover the expanded formulary as Medicare - so many drugs in specific classes and then all of them in (5) different classes.
Under the VA system, the docs MUST order from the VA formulary which is by nature strong on the generics. Any brand that is ordered that has a comparative generic is substituted for the generic because the VA system does not recognize any difference between the brand and the generic.
That is not the case in the Medicare legislation.
Legislatively speaking, Plan formularies must include drug classes covering all disease states, and a minimum of two chemically distinct drugs in each class. Part D plans are required to cover all drugs in six so-called “protected” classes: immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals, and antineoplastics.
In 2022, beneficiaries in each state will have the option to enroll in a Part D plan participating in an Innovation Center model in which enhanced drug plans cover insulin products at a monthly copayment of $35 in the deductible, initial coverage, and coverage gap phases of the Part D benefit. Participating plans do not have to cover all insulin products at the $35 monthly copayment amount, just one of each dosage form (vial, pen) and insulin type (rapid-acting, short-acting, intermediate-acting, and long-acting).
Again, negotiating for a better price pits one drug against the other if everything else is constant - so the formulary would change from the current Medicare law to one that includes the best drug for the price leaning more heavily on generics similar to the VA system.
Again, I am not against Medicare negotiating drug prices but they have to go into it from a strong stance and having to cover a very wide and legislated group of drugs in the different classes does not function well in negotiating prices. That's seem why they are only gonna be concentrating on the highest price ones or a limited number of them initially - they haven't got anything firmly nailed down yet I don't believe - If they even do at all.
You keep throwing out generalities implying restrictions that are caused by negotiation. Again, one need only go directly to the formulary and do a comparison to prove that what you are saying simply isn't true. I would encourage everyone with questions to do a direct comparison themselves. The facts speak for themselves. It's really not that complicated.
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Drug companies spend considerable money promoting "prescription only drugs" to the general public. Has AARP considered lobbying to minimize drug companies ability to spend money (such as, national TV ads) in that manner? Possibly, a change in IRS rules making that type of spending non-deductible as a business expense?
Such a restriction would go against the Commerce clause since it would not involve safety concerns. Other things have already been tried and we shot down by the courts. Like this, which I thought was a good idea at the time.
@GailL1 got this in my mailbox. Looks like something up your alley.
I am a subscriber and downloaded the eBook. Glanced through but not in depth yet.
Bark less. Wag more.
If you really want to learn about Drug Pricing go watch Cong. Katie Porter question the head of a Drug Mfg on pricing, and why his Co., raised the price of a drug. What she proved is pricing is not based on recovering total costs and profit, but to get as much as possible from the American people to enrich the drug co. It clearly spells out why the Govt. should set prices of drugs, and not allow the Cos. to set prices, as they do what Insurance Carriers did in the old days which lead to State control, and then the ACA. Katie was on MSNBC this evening and covered all of this with facts.
@john258 I got a chance to see Congressperson Porter on video. It was an interesting presentation. I agree that certain drug prices need to reduce especially after years and years of patent extensions. What is a reasonable cap on prices? If you leave it for the government to determine, you may see price increases rather than reductions. Remember the Federal government paying about $35.00 for a screw or the $640 toilet seats. Whether real or a myth, the Feds have been known to overpay when they need something immediately. The Humira drug that Ms. Porter addressed is probably the largest selling drug on Earth. And, the private sector where I worked, always negotiated price. If an organization was not large, using Pharmacy Benefit Managers (PBM) helped; and, that may be the approach the Feds may want to try first. I believe some Part D Plans and Medicare Advantage Plans are already using PBMs. In my opinion, Ms. Porter's approach to try to correlate increased Humira prices with stock buybacks was inept. First, the Board does not set prices for individual drugs. However, the Board does approve or disapprove stock buybacks which is decided based on many factors. What was missing from her presentation was the fact that stock buybacks support stock prices if not increase prices which all Americans benefit. The largest shareholders of Abbvie (who sells Humira) are institutions such as Vanguard, Blackrock, State Street and Fidelity. That appears to me to be significant retirement plans as well as IRAs are benefiting from stock buybacks. Moreover, why doesn't Ms. Porter target Apple who has bought back approx. $282 Billion of their stock versus Abbvie's approx.$22 Billion. Stock buybacks from all corporations have supported the stock market over the last 5 years and retirees who elect to participate in equity ownership. I believe Ms. Porter should focus her energy on addressing the issues which our Social Security systems (both OASDI and Medicare) face. If she participates in the Government Thrift Plan, she benefits from all stock buybacks. For the last 5 years, the stock market (using S&P 500) has provided average annual returns of 11.96%, 21.82%, -4.38%, 31.49% and 18.4% (during the pandemic). The nominal GDP for the same periods grew at 1.64%, 2.37%, 2.93%, 2.16% and -2.3%. .
Could not disagree with you more. Having been involved with this industry when the Red Book was the vehicle they used to set prices for all I have seen it loosen some but not much, and you have to treat it as one not parts in setting prices. If you do not they just make their money in other sectors as the Congresswomen proved.
The Govt. paid those high prices because it is a bureaucracy with a lot of rules to follow. That is how Trump got the ok from NYC to do the ice rink.
Every Insurance Carrier now negotiates drug prices and has been. They were doing that when I worked for a Carrier. If Medicare could negotiate prices it would get the biggest discount and that is why the drug Cos. made sure that would not happen. They saw the Medicare discounts with health providers were steep and wanted none of that.
You can be sure if a drug was not sold for as much as possible the board would become part of that area quickly. As I said before you look at all parts of a Co. to see if they are stealing from people, and the drug Cos. have been stealing from all of us for years and the Congresswomen proved that period. What you tell me is right out of the Drug Co playbook, and one reason their stealing is allowed to go on.
Drug Cos. return should be limited to a small profit because of the type of business they are in and how it effects all of us. If you want to make a quick buck the Drug Mfg. should be the last place one looks other wise you are making your money off of another persons misery, or death.
The Congresswomen is correct in what she said and if the American People care about others will back her 100% and drug prices will come down.
@john258 I suggest you take a look at operating margins and profit margins of any business before drawing conclusions such as Ms. Porter did with Abbvie. I believe presenting a more positive approach to the high cost of Humira would accomplish more rather than "putting on boxing gloves". If she or her staff would have performed basic college entry level financial analysis, it would be abundantly clear that Abbvie is not the most profitable company in the World, USA, or drug industry. In fact, you do not even need to study 10Qs, 10Ks, Income Statements, P&L Statements, or Annual Reports. It is done for us on websites such as Yahoo Finance, etc. FYI, Abbvie has an Operating Margin of 32.67% and a Profit Margin of 10.28%. Using Apple, the company with the largest amount of stock buybacks at about $282 Billion, has an Operating Margin of 27.32% and a Profit Margin of 23.45%. Although I did not find any statistics regarding the number of people who have I-Phones or who take Humira, I would conclude just by the above profit margins that Apple is significantly overcharging and getting away with it. Perhaps Ms. Porter should target Apple inasmuch as phones are a necessary utility that should be governed just like any other utility. I hope you get the point.
With regard to the government setting prices, you will be creating another large politically staffed agency that will be a waste of money. The staff will change based on which party wins the election. In my opinion, the government would be more efficient simply paying a discounted cost for the folks who cannot afford certain medications. Using the Dept. of Energy as an example, they could not affect the price of oil as compared to the Saudi's.
At any rate, I believe there are discounts happening currently with the Medicare folks. In my own case, I am using the mail order option rather than the local pharmacy that I could walk to. My last EOB informs me that my Plan paid $7.65 for a 90 day supply; and, I do not need to pay a copay. I believe the copay is waived for certain generic drugs purchased via mail order. There has to be a dispensing cost as well as postage. I am guessing the cost of the pills may be $5.00 or $0.055 per pill and dispensing and postage $1.65. How much more can the government discount? I suspect the distributor (i.e., McKesson, Cardinal, etc.), the PBM, or insurer reduce the cost to capture the business. Sort of the way General Motors reduces the cost of a Chevy and increases the cost of a Cadillac.There may be more bells and whistles on the Cadillac, but is it worth $25,000 to $35,000 more? Lastly, it is estimated by the Employee Benefit Research Institute that approx. 132 million folks are covered by employer sponsored self insured plans governed by ERISA, the federal law. So, State insurance laws are not applicable. The ACA was suppose the tax the Cadillac Plans which the majority are Union negotiated benefits. The Unions used their influence to get the Obama Administration to back down on that tax. Do you think the Biden Administration will initiate such tax; and, possibly lose the Union vote? I agree with price reductions on certain medications. However, in my opinion, the government could simply support price reductions thru company tax credits, financial incentives, and/or outright payments to the innovative drug companies rather than create another bureaucracy.
The good congresswomen presented the truth about the drug industry. Sadly we have a lot of people who do not understand what is going on in an industry, or how it works reading articles on economics and trying to apply them to where they can not be applied. What we end up with is a lot of useless information that has no bearing on the subject and leads anyone who follows it down the wrong path so the problem is never solved just made worse. The good Congresswomen does not fit into the group, and smart people will follow her as she could solve the problem.
These are the top-selling drugs in 2020 - some of them are widely used in Medicare as well as the rest of the population. Many have no generic alternative at present. They are each mildly to extremely expensive.
So if we negotiate the price of some or all of them - what will happen if the
drug companies say NO or say they will only negotiate down to a certain price?
If we negotiate the price of say, Humira, down in the Medicare coverage, the way I understand it, the price will go UP for Medicaid beneficiaries because the drug rebate which Medicaid gets will not be as great.
There are other suggestions being contemplated too at the legislative level like -
- the price we pay in the US can't be higher that 100% + (some %) of what some other defined countries pay.
- we limit the amount of what Medicare beneficiaries pay out of pocket
Easy answer. We have govt set the prices. Lets take Humira and its price. Well if you are being treated by IHS you get it free. I have a friend who used it for about 2 years for a very rare problem. He had to see the Dr. at IHS a few times a month and was given a supply to carry to the next visit. That was about 4 or 5 needles each visit. The drug did its job and he is well and has no after effects. I call it the $100,000 disease but it is in the past. Without that drug he would have been on medical treatment the rest of his life, and it would have cost the medical system even more so money was saved. Better yet lets revise the drug pricing system so there is a lot less profit for the drug cos. and save even more money for the system. Great part of drug research is not done by the drug Cos. but by Govt., Univ., Foundations etc. By the way the Dr. overseeing the treatment was located at one of the large medical intuitions in the US. They oversaw what the local Dr. and staff did. You saw how a medical system should work to cure, and save all people. That should be our National model to try for.
The US Government cannot set the prices - they can use the price in authorizing the use of the medication, they can negotiate the price, if such a plan is put into effect, but they cannot set the pharma suggested retail price. They are the patented right of the creator.
You do not get Rx free under the IHS - they work their program similar to Medicaid so government pays, that's not FREE- the Medicaid rebate on meds is shared with the IHS very similar to the way the Fed gov. shares the rebates with the states. In most cases, an IHS beneficiary gets this med or any other medication at someplace other than an IHS pharmacy, they have to shoulder the price of it.
from the link ~
Q: Am I required to get my prescriptions filled through an IHS pharmacy?
A: Patients are not required to get their medications filled through the IHS pharmacy. If you wish to purchase the medication at an external pharmacy, you can request a prescription or request that the prescription be electronically transferred to the requested pharmacy.
Your prescriber will enter the medication in your medical record even if the medication is filled at another pharmacy. This keeps the your medication list up to date and prevents medication related errors. Please note that unless there are special circumstances, the patient will be expected to cover the costs of the medication filled by a non-IHS pharmacy.
IHS beneficiaries like any other people can request special access to Humira through the Abbvie Patient Assist Foundation or some illness specific foundations. Depending upon the situation and income the med is given either free of cost to the patient or at a very low cost.
When a pharma company gets research for a particular med they want to pursue from a university - the university is paid for this research AND if the drug makes it to fruition (many don't, you know) and the med is patented - the university, if they have been smart about their contract, also share in the profits of the drug by being made part of the patent filing. But not all meds begin with outside research from universities.
Sometimes the NIH helps to bolster the development of a new drug for a specific disease - again this is a joint effort - They do the same for other types of treatments.
By the numbers:
1. If you change the law and the Govt. could set the price, and that is what should happen if the Drug Cos. push it to that point.
2. Do not try and tell me what happended with the Indian Health Service. I lived it and saw it with my own eyes. The pharmacy is at the facility and you pick up all drugs prescribed by the Dr. before you leave, and there is no cost. Period and fact. THERE WAS NO COST FOR HUMIRA AND IT WAS GIVEN OUT EVERY TIME I TOOK HIM FOR A DR. APPOINTMENT FREE. Every drug they dispense is free to the user. Period and fact. Looks like your ref. article is not complete, and that is what happens when you rely on what you read rather than what takes place in the real world. In all the time I have known him he has never paid for a drug at the facility, nor has anyone else.
3. I will say it again. A lot of drug research is done by other than the Drug Cos. No one should be allowed to make a large profit on drugs as that is making money on peoples misery and death. This country is better than that.
The information I gave in my previous post and this one is what has happended period, and no article one has read can change that period.
Legislative movement is not going too well in the House -
A group of Democratic moderates have raised concerns over a drug price negotiation bill, enough to potentially doom the effort.
The legislation seems to have hit some troubled waters in the House.
At least 10 caucus moderates are signaling opposition to Democrats’ drug pricing negotiation bill — more than enough to potentially force House Speaker Nancy Pelosi into dropping the reforms from infrastructure legislation Democrats hope to pass along party lines. Pelosi can only spare two Democratic defections on partisan legislation because of the party’s slim House majority.
. . . . Eight of the 10 Democratic moderates now raising concerns over H.R. 3 voted for the bill in the previous Congress.
[ Several are ] pushing more incremental alternatives that have garnered some Republican support, like capping Medicare enrollees’ out-of-pocket drug costs — a policy included in Democrats’ broader negotiation bill.
whole article is at the POLITICO link ~
Stay tuned . . . .