The Trump administration has been promising since its early campaign days that it will formulate a drug plan to lower prescription drug prices by giving Medicare the authority to negotiate prices with drug companies. But is this vision a possibility? In short: not really, and it could even make some drugs more expensive. Here’s why.
American Patients First
In a 44-page paper titled “American Patients First,” the Trump administration delivered a drug plan “blueprint” for lowering prices of prescription drugs. However, analysts at The Commonwealth Fund state that the paper only contains about 3 pages of conditional recommendations as opposed to actionable changes. Furthermore, the points addressed in the paper identify problems faced by the commercial market but not Medicare.
Medicare drug plan spending
Of the 60 million Americans who receive Medicare benefits, about two-thirds of them have some sort of Medicare prescription drug plan coverage. Sixty percent of them have a stand-alone prescription drug plan while 40 percent have coverage through their Medicare Advantage plan.
Most Medicare enrollees pay very little for prescription drugs, especially generic versions. But there is a small portion of enrollees that shoulder a huge cost burden for their brand-name or specialty drugs with no cheaper alternatives. Analysts at Avalere Health estimated that about 800,000 Medicare enrollees spent more than $5,000 on out-of-pocket prescription drug costs, including discounts and charitable assistance. Even more alarming, the number of enrollees who reached catastrophic coverage more than doubled between 2013 and 2016.
Medicare negotiating drug prices
Despite the Trump administration’s promise to allow Medicare to negotiate drug prices, that doesn’t seem to be happening. The administration appears to be making an attempt to work around the system rather than changing the system itself to help Medicare enrollees.
For example, many newer chemotherapy medications administered by IV are covered by Part B, not Part D. Instead of giving Medicare the authority to negotiate drug prices, the Trump administration’s blueprint suggests shifting coverage of these IV drugs to be covered by Part D instead of Part B. Since Part D is administered by private insurance companies, they would in theory be able to negotiate lower drug prices.
However, not all drugs are covered by a Part D drug plan, including many of these new chemotherapy drugs. Even when they are covered, they are more expensive under Part D as opposed to Part B. Additionally, coverage of these drugs would be dependent on many factors: price of the drugs, mix of medications, income level of the patient, and whether the patient has Part D coverage or Original Medicare (Part A and Part B) with Medigap.
Increasing premiums
Another downfall of this blueprint can be found in Medicare premiums. While the blueprint would lower Part B premiums, Part D premiums would increase more than Part B premiums would be lowered, effectively sending beneficiaries’ net premiums up, not down.
Although the administration is aware of the problem of high prescription drug prices, it seems like they have more work to do before the problem is fixed and Medicare enrollees pay a lower price for their prescription drugs. For more information on how the Trump administration plans to tackle high drug prices with their drug plan, stay turned to Medicare World for the latest updates.
