Squeezing drug costs
Rx spending targeted in Dems’ deficit-cutting plans
Will an eventual deficit-reduction deal include savings from changes to federal prescription-drug programs? A growing number of Democrats are discussing that possibility and pushing their preferred approaches.
One of the biggest targets for drug savings is Medicare, which spent $61.7 billion on pharmaceuticals in 2010. The program also is viewed as a major future cost driver: Medicare trustees are projecting that spending will increase 9.7% in each of the next nine years.
“In 2010, the American people spent more than $300 billion on prescription drugs, and a third of that was paid for by Medicare and Medicaid,” Sen. Herb Kohl (D-Wis.), chairman of the Senate Special Committee on Aging, said at a hearing last week on Medicare drug costs. “Left unchecked, these costs threaten our country, economy and every American family.”
Kohl bolstered his case on the need for change by releasing a report Thursday that found the average price of pharmaceutical drugs in the U.S. is about 30% higher than in 33 other developed countries.
The calls by Kohl and other Democrats last week to authorize the CMS to negotiate drug
“Left unchecked, these costs threaten our country, economy and every American family.”
—Sen. Herb Kohl (D-Wis.)
prices with manufacturers—similar to the authority available to Medicaid administrators—are only the latest in a months-long drumbeat for such changes.
Last month, Democratic health policy leaders Sen. Jay Rockefeller (D-W.Va.) and Rep. Henry Waxman (D-Calif.) introduced companion bills to require Medicare drug negotiations that would garner $120 billion in savings over the coming decade.
Those bills followed President Barack Obama’s deficit-reduction framework, offered in the spring, that would provide $340 billion in Medicare and Medicaid savings. Those savings were largely unspecified, although the plan did propose limiting “excessive payments for prescription drugs by leveraging Medicare’s purchasing power.”
The administration has not specifically endorsed the Rockefeller/Waxman approach, Jonathan Blum, deputy administrator and director of the Center for Medicare at the CMS, said at the Aging Committee hearing. However, Obama is open to all savings options as part of his deficit negotiations with congressional leaders, he said.
Conservatives have warned that negotiating the same manufacturer rebates in Medicare that are required by Medicaid would simply shift drug costs to the privately funded pharmaceutical market. A study released last week by the conservative American Action Forum concluded that such negotiated price cuts would increase Medicare prescription-drug plan premiums by as much as 39% and increase patients’ out-of-