Medicare Advisory Panel Wants to Restrain Drug Prices

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The Medicare Payment Advisory Commission (MPAC) recommended this month that insurers and pharmaceutical companies have their payments cut so that they are pressured to lower drug prices in the Medicare Part D program.  Prices have been increasing more quickly than expected in the Medicare program as well as all insurance.

Some drugs like those for hepatitis C have cost thousands of dollars and driven drug spending up 16.6% in the past year to a total of $75 billion.   These costs are higher than Medicare originally projected. While premiums have remained relatively stable over the past few years, some are predicting they will rise quickly in the years ahead, perhaps doubling to to $64 monthly, if costs for drugs are not restrained.  Drug companies, of course, are protesting that any cuts to reimbursement will restrict access to drugs for some patients- apparently they don’t understand that their high prices are already doing that.  Some insurers in their Part D plans require beneficiaries to pay 25% of the cost of a drug and that can amount to hundreds or even thousands of dollars with each prescription.

Of course, Medicare has its hands tied by the original Part D law that forbid the government from negotiating drug prices, leaving it to the Medicare Advantage and separate drug plans to do so.   The MPAC says there needs to be more pressure on drug prices which can only come if the insurers and drug companies have less reimbursement.  The Committee also suggested that beneficiaries should be shielded from the 5% of the costs they pay when the reach the catastrophic tier after having spent $7500.

As I have said before that drug companies are killing the goose that lays the golden egg with the outrageous prices they are charging to American consumers and insurance plans. I believe they have moved from their old argument that pricing reflects the high costs of research and development.  Of course that is now ridiculous since some old drugs are having their prices hiked dramatically.   They really are switching to pricing that says they should be paid the equivalent of what would be paid if the disease and illness had led to hospitalization or other high health costs.  In other words, they want the money save re-directed to them.  Jonas Salk who developed the polio vaccine never said that he and his researchers or the drug company that developed the polio vaccine should be given all the money that would have gone to continuing to treat polio patients.




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I have been a senior advocate for most of my career. I was Executive Director of the New York StateWide Senior Action Council and the New York State Alliance for Retired Americans. In 2007-2010 I was the Director of the New York State Office for the Aging

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