Restore Part D funding splits
The May 8 Economy & Business article “Democrats seize on drug prices as GOP struggles with issue” stated that the issue of high drug prices is difficult to solve “because of both the power of the drug lobby and the complexity of the byzantine system.”
Four group purchasing organizations (GPOs) control about 70 percent of supplies to hospitals, clinics and nursing homes and use only three “authorized distributors.” Congress has explicitly allowed these cartels to elicit kickbacks and other antitrust-type behavior (labeled “safe harbor”) resulting in higher drug prices. Interestingly, Sen. Charles E. Schumer (D-N.Y.) vigorously defended GPOs during a 2016 hearing.
In the March budget deal, Congress again interfered in the drug marketplace by changing how the Medicare Part D program works. Since implemented, payment had been split 50-25-25 between drug companies, insurance companies, and enrollees, respectively. This split resulted from intense debate and negotiation. The budget deal, without any debate, changed the split to 70-5-25. The consequences of increasing drug companies’ share and decreasing insurance companies’ share is unknown. Congress should repeal the safe-harbor policy and restore Part D funding to the 50-25-25 split.
John A. Sullivan, Arlington