For Medicare recipients, Trump’s drug price proposal can’t come soon enough

Seventy-eight-year-old Willie Dawson is hoping President Donald Trump makes good on his promise to bring down high drug prices.

She has to juggle her bills to pay for the dozen or so medications she takes to treat conditions that include hypertension and chronic obstructed pulmonary disease.

“This month alone, it is running me close to $150. … Everything had to be filled,” Dawson said. “It’s called a very tight budget I must deal with.”

She’s put off paying her doctor bills this month and will try to stretch out some of her prescriptions by taking some every other day. But she’s worried how she’ll manage on a fixed retirement income if prices keep going up.

“One of the medications that I have been taking for a long time started out at $5, and this month it has tripled to $15,” she said. “It is very important that they go after these high prices.”

Senior administration officials say Trump on Friday will outline a multipart blueprint called American Patients First, which will aim to “create incentives for lower list prices” and get “government rules out of the way that are preventing seniors from getting better deals.”

Among the key reforms will be requiring Medicare Part D plans to pass on part of the confidential discounts or rebates that they obtain from drugmakers to all seniors, while allowing more flexibility to plans to boost negotiation power. A source familiar with the discussions says health officials have targeted passing on 33 percent of the rebate to seniors at the pharmacy counter.

“As long as it is a partial rebate … there is a trade-off to consider,” but the industry will be able to adjust, said analyst Eric Percher of Nephron Research.

The three major pharmacy benefit management firms, CVS HealthExpress Scripts and UnitedHealth Group’s Optum Rx unit, derive 16 to 18 percent of their gross profits from those rebates, according to Nephron Research. All three also offer Medicare Part D insurance plans and will likely increase premiums to account for lower rebate income.

“If we had the full rebate (pass through) they’d have concerns about the transparency of the discount, which is something that both pharma and PBMs care about fundamentally” to maintain negotiating power, said Percher.

The president will also call on Part D plans to provide low-income generics with no co-pays and limit out-of-pocket costs — proposals outlined in his budget plan earlier this year.

The administration will also aim, under Medicare Part B, to limit increases for high-cost drugs administered in doctors’ offices and hospitals to the rate of inflation. While that could control cost increases, some analysts say it could also raise costs on new drugs.

“That’s going to turn around and probably encourage manufacturers to launch their new drugs at higher prices, if they think it’s going to be harder for them to get year-over-year (increases) that are larger than inflation,” said Jack Hoadley, health policy analyst at Georgetown University’s Health Policy Institute, who has served on the Medicare Payment Advisory Commission.

“It’s like a circle — you make a fix on one side and it pops out on the other side,” Hoadley said.

Senior administration officials would not discuss the timeline for many of the proposed changes to be implemented. Medicare plan providers are in the process of drawing up rates for 2019.

For Dawson, changes to bring down prices can’t come soon enough.

“With pharmaceuticals … we need to come to a better understanding of what it is that can be done,” she said. “And how they can help the elderly to live better.”

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