Friday is the last day for the administration to issue a rule that could be finalized in the 1960s before President-elect Joe Biden takes office.
The response to the new rules, which are likely to face legal challenges, was swift. “This goes against the logic that the administration is blindly pursuing a ‘most-favored-nation’ policy that gives foreign governments the upper hand in determining the value of medicines in the United States,” PhRMA President and CEO Stephen Ubble said in a statement. .
The group is “considering all possibilities to stop this illegal attack,”
And Jay Timmons, chief executive of the National Association of Manufacturers, called the new rules “socialist policies” that would not help reduce healthcare costs.
For the first time, Trump has raised the prospect of linking prices to an international index as one of many ambitious proposals attached to his May 2018 plan to reduce drug prices. But the idea, which raised the hackers of pharmaceutical companies and divisions of civil society organizations, came to a halt amid efforts to push through other promised policies, several of which failed in court or received only scattered Republican support.
The plan will link Medicare payments for 50 expensive medicines administered in the doctor’s office – including expensive therapies for cancer and rheumatoid arthritis – on the basis of a “mixing formula” that includes the lowest adjusted international price for the product between a group of OECD countries with similar GDP with the United States. The policy does not include some providers, including children’s hospitals, cancer patients and critical care, as well as rural health clinics, federally qualified health centers and Indian health services.
The Trump administration plans for the most-favored-nation rule to be phased in over the first four years, starting this January, on a seven-year model that gradually shifts from the average selling price of the drug to much lower costs calculated by the formula.
In what appears to be trying to control pharmaceutical companies’ price spikes in response to the rule, Medicare regulators have said they will accelerate the four-year shift if US prices rise faster than inflation and most-favored-nation prices.
The plan is almost certain to pose legal challenges, as it has never been formally proposed as a draft rule. The draft of the earlier version, called the International Pricing Index, cleared a review by the White House Office of Management and Budget on November 19th, after being reviewed for more than a year.
And while the administration estimates that the new plan could save Medicare $ 85.5 billion over these even years, it notes that “some of the savings are due to beneficiaries who do not have access to their drugs through Medicare benefits, along with related this lost use “- essentially fewer people who have access to certain medicines, starting in 2023.
“PhRMA is considering all options to stop this reckless attack on companies that work around the clock to defeat COVID-19,” a spokesman said this week.
The discount rule
Trump has also announced a plan to eliminate the concessions that drug manufacturers cite when justifying high drug costs.
While the rule is a boon to drug manufacturers, it is also likely to face legal challenges from payers who oppose its issuance as a definitive rule, the Trump administration announced it on the last possible day to clear a 60-day window before the election. President Joe Biden takes office.
The administration said that “savings for patients could be close to 30 percent” under the new plan to eliminate the discounts that pharmaceutical companies pay to pharmacy managers.
But payers are ready to challenge the new plan, arguing that the original discount rule was withdrawn last year. This move effectively restarts the process, which means that the administration must draft a plan and request public comment before issuing a comprehensive reform.
While the president instructed regulators this summer to reconsider the rule so that it would no longer cost patients or the government money, the rule, published Friday, contained the same estimates as the original: That the rebate plan could cost up to $ 196 billion in government spending. decade.
Drug manufacturers have long cited discounts as the invisible costs they pay that raise drug prices. Pharmaceutical benefit managers, insurers and drug price advocates argue that eliminating discounts – which are included in the decisions of which drug plans they prefer for patients – removes their cost control lever.
Reports from the Office of State Accountability and the HHS Office of the Inspector General support the idea that rebates have helped control costs in Medicare, Part D.
But HHS Secretary Alex Hazard, who previously worked for drugmaker Eli Lily, has long been in favor of removing concessions from the system, even when White House support is hesitant.
“Any approach to drug pricing that does not address the issue of discounts, whether through our approach or otherwise, will simply not reduce prices on the list,” he said last year. The secretary also argued that premiums for the elderly would not rise – despite government forecasts that they would follow the pattern – as plans compete on the basis of low premiums.
The origin of the most favored nations
This summer, Trump ordered federal officials to work on a similar rule, tying the prices of drugs purchased from pharmacies in Medicare Part D to a basket with lower international costs, but with the clock in his administration, it is unlikely any other medicine sold to consumers will be introduced.
It is unclear how either the most-favored-nation model or the Biden administration’s discount rule, which begins in January, will cope. President-elect Joe Biden discusses setting up an independent review committee to assess drug values, another cost-cutting measure that would hit the pharmaceutical industry hard.
Trump promised for the first time to cut the high cost of drugs released during the 2016 campaign, and days before he took office, he accused pharmaceutical companies of “getting away with murder.” But while price hikes slowed during his presidency, drug spending did not ultimately fall. The rule announced on Friday could be a lasting mark on the issue, but there could be a narrow path to completion between the legal battle and the Biden administration.