Recently, the White House released its 2017 Budget through the Office of Management and Budget (OMB). In the Budget, the Administration lays out some of its concerns about our current healthcare system, including drug costs as they relate to Medicare, Medicaid, and transparency.
Addressing the High Cost of Drugs
The cost of drugs continues to take center stage, with constant Congressional hearings and Congressional inquiries and probes. The saga now moves to the Executive Branch of the government, with this budget including a package of proposals that focus on Medicare, Medicaid, and drug price transparency.
Improving Quality and Lowering Drug Costs for the Medicare Program
The White House Budget includes proposals that are expected to lower drug costs, while at the same time increasing transparency and evidence development in the Medicare Part D program.
One such proposal is to increase data collection to demonstrate the effectiveness of medications in the Part D program in the Medicare population, and to inform real world clinical treatment. Additionally, the Budget allows the Secretary of Health and Human Services to continue to have the authority to negotiate drug prices for both biologics and more expensive drugs in Medicare Part D. The Budget also includes a new proposal to incentivize Part D plan sponsors to “better manage care provided to beneficiaries with high prescription drug costs.”
The Budget also proposes to accelerate discounts for brand name drugs for senior citizens who fall into Medicare’s coverage gap by increasing manufacturer rebates from 50% to 75% in 2028 and to require drug manufacturers to provide rebates that are generally consistent with Medicaid rebate levels for drugs provided to low-income Part D beneficiaries.
OMB estimates that making these changes will save $140 billion over the course of ten years.
Lowering Medicaid Drug Costs for States and the Federal Government
The Budget also includes several policies to lower drug costs for Medicaid, including providing the States with a new, voluntary tool to help negotiate lower drug prices through the creation of a Federal-State Medicaid negotiating pool for high cost drugs.
The Budget also proposes that work be done to continue supporting and building on previously-proposed reforms to the Medicaid drug rebate program, including reforms that enhance manufacturer compliance with rebate requirements, and improve patient access to certain medications.
The Budget also works to improve and correct the Affordable Care Act (ACA) Medicaid rebate formula for new drug formulations, such as by exempting abuse deterrent formulations.
These proposals are estimated to save the Federal Government $11.4 billion over the course of ten years.
Increasing Transparency of Prescription Drug Pricing and Ensuring Access to Generic Medications
The Budget gives the Secretary of Health and Human Services more latitude and responsibility by giving her the authority to require drug manufacturers to publicly disclose certain information, like their R&D costs, discounts, and other data as determined through regulation.
The Budget also includes three reforms that were previously proposed to increase access to generic drugs and biologics by preventing companies from entering into anti-competitive deals that are intended to block consumer access to safe and effective generics. One reform does this by offering brand biologic manufacturers seven years of exclusivity (instead of the twelve offered under current law), and by prohibiting additional periods of exclusivity for brand biologics who made minor changes in product formulations.
It is estimated that these proposals would save the Federal Government $21 billion over 10 years.
Other Transparency Proposals
Tucked away in the body of the text is a proposal to Allow CMS to publish the National Provider Identifier (NPI) of covered recipients on the Open Payments website to make it easier for data users to connect Open Payments records with covered recipient information.
Other Healthcare Related Topics Covered in the Budget
The Budget was not only about the cost of drugs, bust also covered topics such as: improving access to primary care providers (include
s expanding the National Health Service Corps clinicians and encourages provider participation in Medicaid); strengthening HIV and Hepatitis C services (through continued implementation of the National HIV/AIDS Strategy); expanding access to mental health care (including $500 million in new funding over two years to help engage individuals with serious mental illness in care and to expand the behavioral health system workforce); and combating prescription drug abuse and heroin use (through community-based efforts to prevent drug use, improve opioid prescribing practices, and increase access to opioid use disorder treatment services).