Gutting tools used for negotiating lower drug prices could increase Part D premiums 25% and cost taxpayers $400 billion.
Gutting tools used for negotiating lower drug prices could increase Part D premiums 25% and cost taxpayers $400 billion.
Why now, in the middle of a pandemic and economic downturn and right before an election, is the Administration increasing prescription drug costs for seniors and adding hundreds of billions to taxpayer costs?
The pandemic is having a devastating impact on America’s seniors. The Medicare Part D prescription drug program provides our nation’s seniors with affordable drug coverage, which is more important now than ever. However, a recent proposal by the Administration threatens to destabilize the program by increasing premiums on the vast majority of Part D enrollees.
What’s more, the proposal will add as much as $400 billion in taxpayers costs, at a time when the economy is mired in record-high unemployment and small businesses are closing across the country. Adding hundreds of billions in federal spending right now is a bad idea.
The proposal by the U.S. Department of Health and Human Services Office of Inspector General recommends removing "the long-standing safe harbor protection for drug manufacturer rebates to PBMs," which would essentially eliminate rebates that are used to lower premiums negotiated by pharmacy benefit managers, or PBMs. This is not a well-considered option - in fact, last year the Administration withdrew this proposal after recognizing it would significantly increase Medicare premiums.
In the aftermath of the Administration’s decision to withdraw the proposed regulation last year, HHS Secretary Alex Azar framed the decision to kill the rebate rule as a “simple” decision that he supported. “The president is deeply committed to protecting America’s seniors,” Azar said. “He does not want any risk that any action could cause seniors' premiums to increase.”
PBMs are advocates for reducing consumer prescription drug costs. On average, PBMs reduce drug prices by 30%, or approximately $962 dollars per patient. Much of these savings come from PBM-negotiated rebates.
Medicare's prescription drug benefit has succeeded in providing affordable access to medications for Medicare beneficiaries in large part because of the rebates PBMs negotiate with drugmakers. These rebates are used to enhance benefits and reduce beneficiary cost-sharing and premiums. Part D premiums have remained lower than initially projected since the program began and enrollees are highly satisfied with their prescription drug coverage.
According to a poll from North Star Research, senior registered voters enrolled in Medicare Part D will be less likely to support the reelection of their members of Congress and presidential candidates if those elected officials back proposals eliminating prescription drug negotiations and price concessions that would result in Part D premium increases.
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