Administration’s Drug Pricing Proposal

By now you have probably heard about the President’s new drug pricing proposal which was announced on May 11. The President had campaigned on the issue of lowering prescription drug costs to consumers and this represents an attempt to deliver on his campaign promises. The proposal is complex and includes actions the administration can take on its own, those that require regulatory changes, and some that require legislation. Many of the possible changes are actions that are being studied and may or may not be implemented.

How might the proposals impact allergy patients? One action under consideration is moving some Medicare Part B drugs to Part D, although the proposal does not indicate which drugs would be moved. Patient out-of-pocket costs are often higher in Part D plans which could affect patient access and compliance. Also under consideration is a competitive bidding program for Part B drugs which could lower costs. These proposals could impact cost and patient access to certain biologics and specific brands of IVIG; however, without more specifics it is difficult to predict the impact on patients.

The administration also indicates it will eliminate the “gag clause” that allows Part D contracts to prohibit pharmacists from telling patients when they could pay less out-of-pocket by not using insurance. Another idea being floated is allowing Part D plans to pay different amounts for the same drug depending on the illness involved and experimenting with “value-based purchasing” in which drug makers would refund money if a medication did not work as expected.

Two things that are not in the proposal are 1) direct negotiation by Medicare with pharmaceutical companies and 2) importation of drugs from Canada.

Significantly, the administration’s blueprint met with favorable reviews by The Pharmaceutical Research and Manufacturers of America (PhRMA). The provider community, including the AMA, expressed cautious optimism that the administration’s plan could help reduce drug costs to both consumers and the government.

Advocacy Issue: 
Billing, Coding & Payments