Drug Companies Fear Trump Actions to Lower Costs and a Possible Alliance with Democratic House

As he campaigns in Congressional races, President Trump has ramped up his rhetoric and his plans to lower prescription costs, a position he took during his presidential campaign but has yet to deliver on in a big way.   Now, he and the Health and Human Services  Secretary for the first time are proposing using prices from other countries as a basis for determining costs for drugs in Medicare.   However, this plan only relates to drugs under Medicare Part B given in doctors’ offices rather than the broader Part D drug program for medicine received at a pharmacy.

Trump is also proposing that drug companies be forced to advertise the cost of their drugs publicly.  The pharmaceutical industry is pushing back saying listed prices are not paid by most consumers since rebates are given to insurance plans which then charge co-pays to customers to pay part of the costs.  Another bill that has passed both houses ends the gag rule imposed by pharmacy benefits managers which forbids pharmacists from telling patients they can get lower prices at the pharmacy counter by paying cash and not using their insurance for some low cost drugs.  This bill does not cover prices for generic drugs though.

Democrats have been pushing for years for Medicare to negotiate systemwide on the price of drugs.  The Trump Administration and Republicans in Congress have rejected that approach as hurting pharmaceutical companies research and developments costs.  Trump’s  fixation on international trade deals has made drug prices a target because he sees the US footing the entire bill for development costs and not getting the cost break that other countries do through negotiated  prices by their national health plans.

It is really unclear if Trump will work hard to push these new pricing and advertising plans beyond the election.  He seems to be offering many different ideas like a new tax cut, this drug plan and others just to get attention for voters during the campaign.  However, even if he doesn’t push his own plans,  the pharmaceutical industry is  worried that Trump will team up with Democrats if they take control of the House of Representatives and agree on a broad plan to lower prices related to other countries or allow negotiation on drug prices for Medicare.

I have said for a long time that the pharmaceutical industry only has itself to blame for this predicament as it has engaged in setting exorbitant prices for insurance plans and customers by charging whatever they can get away.   Politicians have been literally paid off by huge campaign contributions and they have refused to intervene to protect the public.  There are too many sweetheart deals and loopholes that allow higher profits to be shared by pharmacy benefits managers and drug companies.   Some in Congress say that government should not interfere in the pricing of drugs but they forget that the government is one of the biggest payers of health care in the country and it already negotiates prices for the Veterans Administration and other programs.

Surprise, Surprise: GOP Leaders in Congress Say Cuts in Social Security, Medicare Needed as Deficits Grow

Here we go again.  Less than a year after passing a huge tax cut that primarily benefits businesses and the wealthy, Republican Congressional leaders are saying again that the cause of the quickly growing  federal deficit is spending on Social Security and Medicare.  It’s just amazing they have the gall to target these programs again just before the midterm elections.   They are giving Democrats all the ammunition they need to urge voters to elect them to prevent cuts in the programs.   Democrats are planning campaign advertising  to highlight statements made by Senate Majority Leader Mitch McConnell calling for budget cuts to reduce the deficit.

Some Republicans claimed the tax cuts would generate so much economic growth and tax income that they would practically pay for themselves.  The Congressional Republicans have another problem:  Donald Trump doesn’t agree with their desire to cut the programs and has not mentioned support during the fall campaigns.

Medicare and Social Security are needed more than ever now and provide a middle class retirement for many older persons.  Some might not have had significant other savings for retirement.  After years of paying into Social Security, workers are pleased when they finally have a guaranteed retirement income that averages about $1400 monthly for those retiring at 66, currently the full retirement age.

Republican plans for Medicare include a voucher plan in the future that would require beneficiaries to pay more out of their pockets for health care.   If Democrats gain control of the House they will be able to stop any attempted cuts in the Social Security and Medicare and stop many of the other budget cuts proposed by the Trump Administration.

HHS Inspector General Says Medicare Advantage Plans Guilty of “Widespread Denial of Claims”

A new report from the Office of Inspector General at the Department of Health and Human Services says it has found “widespread and persistent problems related to denials of care and payment” in the Medicare Advantage program.   The report recommends increased oversight of the plans and more information for beneficiaries about the problem and denials.  The report says that Medicare Advantage plans, also known as Medicare managed care, deny claims in order to maximize profits.  Many Medicare beneficiaries are not really aware that the denials are inappropriate or that they could appeal.  In fact, when they do appeal, 75% of those appeals are successful to gain coverage that is denied.

About one third of Medicare beneficiaries have joined the Medicare Advantage plans with many experts predicting that half of all beneficiaries will be in Medicare Advantage in the coming year.  These plans typically provide greater benefits than regular Medicare offering those extras like gym membership or partial coverage for dental or eyeglasses which are meant to entice beneficiaries to join their plans.  However, this report from the Inspector General says they attempt to maximize their profits by controlling costs and denying claims.   They are supposed to provide all the benefits that the regular Medicare plan provides.

Beneficiaries can switch plans or go back to traditional Medicare.  The open enrollment period begins today, October 15

Here is a summary of the report findings from the Inspector General


A central concern about the capitated payment model used in Medicare Advantage is the potential incentive for MAOs to inappropriately deny access to services and payment in an attempt to increase their profits. An MAO that inappropriately denies authorization of services for beneficiaries, or payments to health care providers, may contribute to physical or financial harm and also misuses Medicare Program dollars that CMS paid for beneficiary healthcare. Because Medicare Advantage covers so many beneficiaries (more than 20 million in 2018), even low rates of inappropriately denied services or payment can create significant problems for many Medicare beneficiaries and their providers.


We collected data on denials, appeals, and appeal outcomes for 2014-16 at each level of the Medicare Advantage appeals process. We calculated the volume and rate of appeals and overturned denials at each level. To examine CMS oversight, we analyzed CMS’s 2015 audit results and the resulting enforcement actions, including Star Ratings data from 2016 to 2018.


When beneficiaries and providers appealed preauthorization and payment denials, Medicare Advantage Organizations (MAOs) overturned 75 percent of their own denials during 2014-16, overturning approximately 216,000 denials each year. During the same period, independent reviewers at higher levels of the appeals process overturned additional denials in favor of beneficiaries and providers. The high number of overturned denials raises concerns that some Medicare Advantage beneficiaries and providers were initially denied services and payments that should have been provided. This is especially concerning because beneficiaries and providers rarely used the appeals process, which is designed to ensure access to care and payment. During 2014-16, beneficiaries and providers appealed only 1 percent of denials to the first level of appeal.

Centers for Medicare & Medicaid Services (CMS) audits highlight widespread and persistent MAO performance problems related to denials of care and payment. For example, in 2015, CMS cited 56 percent of audited contracts for making inappropriate denials. CMS also cited 45 percent of contracts for sending denial letters with incomplete or incorrect information, which may inhibit beneficiaries’ and providers’ ability to file a successful appeal. In response to these audit findings, CMS took enforcement actions against MAOs, including issuing penalties and imposing sanctions. Because CMS continues to see the same types of violations in its audits of different MAOs every year, however, more action is needed to address these critical issues.


We recommend that CMS (1) enhance its oversight of MAO contracts including those with extremely high overturn rates and/or low appeal rates and take corrective action as appropriate; (2) address persistent problems related to inappropriate denials and insufficient denial letters in Medicare Advantage; and (3) provide beneficiaries with clear, easily accessible information about serious violations by MAOs. CMS concurred with all three recommendations.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.