The Debate on Mandatory Prescription Drug Rebates in Medicare

Medicare prescription drug rebates

Should Medicare have a mandatory prescription drug rebate just like Medicaid? President Trump’s administration appears to believe so. According to the Washington Post, White House budget director Mick Mulvaney broached the subject at Stanford University in May, noting the goal would be to lower the price of prescription drugs. Members of the pharmaceutical industry expressed their opposition to the plan in response, saying that implementing rebates in Medicare Part D would be a bad idea.

Medicare and Prescription Drugs

Currently under Medicare’s prescription drug coverage, there are no negotiations with the companies that manufacture the drugs. Prices are based by the tier system in which the drugs are listed, and Medicare beneficiaries are responsible for paying a premium, a yearly deductible, copayments, and extra costs if they get extra help or enroll late. Those currently not on a prescription drug plan under Medicare can determine what is best for them at the Medicare Plan Finder.

Medicaid and Prescription Drugs

In Medicaid, prescription drug manufacturers are required to participate in a national rebate agreement with the Secretary of the Department of Health and Human Services as well as in a pricing agreement with the Health Resources and Services Administration and a master agreement with the Secretary of Veterans Affairs. These agreements are a form of negotiating drug prices that do not currently exist in Medicare.


Who is For and Who is Against Prescription Drug Rebates?

With the Trump administration leaning toward one plan and the pharmaceutical industry advocating against such a plan, we sought an extra opinion on the subject and spoke with Dr. Junling Wang, MS, PhD, a professor of clinical pharmacy at the University of Tennessee Health Science Center’s College of Pharmacy who studies medication therapy management.

“Quality improvement should be the main stay for lowering healthcare costs,” she said when asked if a mandatory prescription drug rebate in Medicare would be good for patients. “Even if some strategies seem to save money in the short run, we need to be thinking about long-term effects on patients. Such strategy may not be helping patients in the long run. This may kick the Medicare insolvency problem down the road even further. Policy makers should focus on more quality improvement efforts.”

If the recent drama surrounding the attempt to repeal the Affordable Care Act (ACA), aka Obamacare, is any indication, there won’t be any major changes to prescription drug benefits or coverage under Medicare anytime soon. But considering the effects that a mandatory rebate may have on costs for recipients, it remains an issue worth tracking.

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