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Trump Plans to Lower Medicare Part D Prices, Not Just Part B

Kerry Dooley Young
October 30, 2018

The Trump administration is preparing to unveil a proposal for lower prices for the Medicare Part D pharmacy benefit. This would follow last week's release of an outline for a test of a new Medicare Part B approach to paying for drugs administered by physicians.

The White House's Office of Management and Budget (OMB) on October 26 received a US Department of Health and Human Services' (HHS) draft proposed rule titled "Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out of Pocket Costs."

In a website posting, OMB classifies this proposal as being "economically significant," which generally means it might affect at least $100 million in federal or other spending. There's no deadline yet for HHS to propose this rule.

HHS is clearly seeking to keep the pressure on the drug industry about the high costs of medicines, although it's far from certain that its specific proposals will ever take effect.

The Part B outline, for example, includes a plan to use an international price index in an effort to bring down drug costs. The Pharmaceutical Manufacturers and Researchers of America already has decried this as "foreign price controls from countries with socialized health care systems," an argument that might make the HHS proposal less palatable to many congressional Republicans.

Still, there's strong bipartisan agreement about a need to rein in rising drug costs in the United States, even if the parties may still disagree about the best approach to this work.

Rep. Frank Pallone Jr (D-NJ), the top Democrat on the House Energy and Commerce Committee, said it was "refreshing" that HHS offered specific ideas for lowering Medicare Part B drug costs. In Pallone's view, though, HHS' approach could end up reducing senior citizens' access to life-saving medicines. He said he instead supports having Medicare negotiate on prices for Part D plans as a way to lower cost.

Pallone is expected to lead the Energy and Commerce Committee if the Democrats gain control of the House through the November election. In his statement on the HHS Part B plan, Pallone said he looks forward to working with congressional Republicans and the Trump administration to lower Americans' pharmacy bills.

"It's time to find workable solutions that will incentivize competition in the pharmaceutical marketplace and encourage the development of affordable and high quality drugs, while also monitoring steep prescription drug price increases when they arise," Pallone said.

Part B Plan

HHS's Part B plan, outlined last week, would test aligning the prices Medicare pays for drugs more closely with international prices and allowing private-sector vendors to negotiate prices for drugs and compete to supply them to physicians and hospitals. HHS said it might propose a rule in the spring of 2019 to allow a 2020 start for this Medicare payment test. This model might then run from 2020 to 2025.

The Trump administration's Part B proposal would rely on a program created by President Barack Obama's 2010 health law, the Center for Medicare and Medicaid Innovation (CMMI). During Obama's tenure, many House Republicans, including Speaker Paul D. Ryan (R-WI), sought to abolish this program. But some policymakers in both parties appreciate the flexibility CMMI provides for trying to change Medicare.

"Having a tool that lets you innovate in Medicare is going to be valuable, no matter who is running it, unless you want Medicare to stay exactly the same as it is now," Allan Coukell, senior director for health programs at The Pew Charitable Trusts, told Medscape Medical News.

The rapid increase in Medicare spending on Part B drugs makes it an attractive candidate for a CMMI project, Coukell said. Medicare's traditional fee-for-service program's tab for Part B drugs rose to $28 billion in 2016 from $17.6 billion in 2011 to 2016, HHS said in last week's advanced notice of proposed rulemaking. Per-capita spending rose 54%, from $532 to $818.

The Obama administration failed in its effort to use CMMI to test changes to Part B drug payment. With its advanced notice of proposed rulemaking, the Trump administration appears to be trying to sell its approach to medical groups before putting forward a more official draft mandate.

In the proposal, HHS and the Centers for Medicare and Medicaid Services noted the financial risks that physicians face in stocking some of the costly new medicines.

This concern could make the proposed competitive acquisition program (CAP) more attractive to the medical community than it was in an earlier test, which ran from 2006 to 2008.

"Many of the highest price drugs and biologicals available today were not contemplated when the CAP program was established," HHS said. "Since 2009, physicians have faced growing financial risks under the buy and bill approach, as the prices of Part B drugs have increased."

Cancer and rheumatology practices would be heavily affected by the Part B test, which HHS said it would like to apply to 50% of the United States. In a Tuesday statement, the American College of Rheumatology (ACR) said it intends to offer a detailed response to the HHS notice after further review.

"It is imperative that policymakers stay focused on the players who control drug prices and not penalize Medicare patients who depend on timely access to needed therapies," Paula Marchetta, MD, MBA, president of ACR, said in a statement.

Key members of the American Society of Hematology (ASH) discussed the Part B proposal on a Monday teleconference. ASH said it will later offer detailed comments to HHS on the proposal. In a statement to Medscape Medical News, ASH noted that drug prices "continue to be a major issue facing patients with hematologic conditions and that the group "continues to identify and advocate for ways to limit patient out-of-pocket expenses."

In a statement provided to Medscape Medical News, the American Society of Clinical Oncology (ASCO) already made clear a change that it would want to see in HHS' Part B proposal.

"We strongly believe that such a demonstration should be voluntary so that this approach can be tested and refined in a manner that best meets the needs of patients," ASCO CEO Clifford A. Hudis, MD, said.

ASCO members have for some time been stressing a need to make oncology care more affordable for patients.

"We share in the Administration's goal of achieving lower drug costs, but our first concern is always making sure that patients with cancer get the high-quality care they need," Hudis said. "The questions and requested feedback included in the proposal suggest that the Administration understands the complexity of the issue and sees some of the potential for unintended consequences that the proposed changes could trigger."

HHS is seeking comments on the Part B proposal through December 31.

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Reviewed on 10/31/2018

SOURCE: Medscape, October 30, 2018.

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