Re­store Part D fund­ing splits

The Washington Post Sunday - - SUNDAY OPINION -

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

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