AcuPartD

Keeping you updated on the latest Medicare and Part D news


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Medicare may be permitted to negotiate prescription drug prices under Trump administration

There has been much confusion about the Trump administration’s vision for heath care in America.  Repeated calls to replace the Affordable Care Act and promises to not dismantle Medicare on the campaign trail are still fresh in American’s minds though Trump has provided few details or proposals. President Trump proposed often that Medicare should be able to leverage its buying power to negotiate better drug prices.  Trump presented this idea often on the campaign trail and recently said the following during a January 11 news conference:

I think a lot of industries are going to be coming back. We have to get our drug industry coming back. Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don’t make them here. To a large extent. And the other thing we have to do is create new bidding procedures for the drug industry because they’re getting away with murder.
Pharma, pharma has a lot of lobbies, a lot of lobbyists and a lot of power. And there’s very little bidding on drugs. We’re the largest buyer of drugs in the world, and yet we don’t bid properly. And were going to start bidding and were going to save billions of dollars over a period of time.

Medicare is currently not permitted to participate in the negotiation of drug prices between pharmaceutical companies and insurance companies that provide Part D prescription drug plans.  Many experts believe negotiating the prices of prescription drugs could save Medicare billions though the only government report on the subject, completed in 2007 by the Congressional Budget Office, found the effects would be insignificant.

Trump has seemed to walk back some of his previous campaign rhetoric on this subject and recently told a group of pharmaceutical executives that he would “…oppose anything that makes it harder for smaller, younger companies to take the risk of bringing a product to a vibrantly competitive market.  That includes price fixing by the biggest dog in the market – Medicare – which is what’s happening.”  White House spokesman Sean Spicer has since clarified that Trump does support Medicare negotiating prescription drug prices.

NPR story by Allison Kodjak

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CMS reports that Medicare Part D rebates to insurers not passed onto government, beneficiaries

CMS reported this week that despite pharmacies and drug companies paying higher rebates to insurers over time, the savings are infrequently passed on to government health programs and beneficiaries.  The growth in rebates from drug makers to insurers has far outpaced the growth in Medicare Part D drug costs since 2010, the CMS report shows. This has helped private insurers in Part D keep costs down, but it is not translating to lower costs for consumers. In some cases, it has resulted in more drug costs being shifted to the government.

The full report can be found here.


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CMS Medicare Drug Spending Dashboard Updated with CY2015 Data

This week, CMS updated their interactive Medicare Drug Spending Dashboard with data from 2015.  The online tool provides users with Part B and Part D spending information for drugs with high spending on a per user basis, drugs with high overall spending, and drugs with large per unit cost increases.  The tool returns relevant spending, utilization, and trend data as well as drug information, manufacturer, and uses in a user-friendly format.

Detailed methodology and the underlying data set are also available for download.

Part D Total Spending, Top 5 Drugs CY2015

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Part D Dashboard Summary for CY2014 and CY2015

# of Drug Products* Total Program Spending Percent of Program Spending
2014 2015 2014 2015 2014 2015
All Drugs 3,761 3,812 $121.5B $137.4B 100% 100%
All Drugs with Total Program Spending >$250M 115 119 $76.7B $88.0B 63% 64%
Top 15 Total Program 15 15 $29.1B $35.6B 24% 26%
Spending Drugs
All Drugs with Annual Per-User Spending >$10K 267 335 $26.2B $37.9B 22% 28%
Top 15 Drugs with Annual Per-User Spending >$10K 15 15 $9.3B $9.2B 8% 7%
All Drugs with Unit Cost Increases >25% 540 538 $13.7B $8.7B 11% 6%
Top 10 Drugs with Unit Cost Increases >25% 10 10 $1.3B $1.4B 1% 1%
All Drugs Included in Dashboard 40 40 $39.7B $46.2B 33% 34%
* Drug Products defined by distinct Brand Name and Generic Name (First Databank), excluding over the counter drugs.


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Many Questions About Trump’s Health Care Policy Remain

For seniors in the midst of Medicare open enrollment, which lasts this year from October 15 to December 7, questions remain about how a Trump presidency will affect Medicare.  The president-elect made clear his intention to repeal the Affordable Care Act throughout his campaign and has since established a page on his website dedicated to his plans to reshape the nation’s healthcare system.  He includes steps to “modernize Medicare” and increase state flexibility with regard to Medicaid.  Trump promised throughout his campaign to leave Medicare untouched, though his campaign seems to be leaving the door open to some reforms.

Pharmaceutical stocks have gained in the days since Trump’s surprise victory over Hillary Clinton last Tuesday.  President-elect Trump continues to call for a replacement to the Affordable Care Act though he has yet to offer a specific plan nor clarified how he plans to combat the rising medication and health care costs for most Americans.  Regardless, any changes have the potential to greatly impact the drug marketplace and the drug price issue is unlikely to go away in the coming years.  During the Republican primary presidential campaign, Trump indicated that he was open to having the federal government negotiate directly with pharmaceutical companies to secure lower prices, as other nations such as Canada do.  It is unclear if this remains part of Trump’s plan or was merely an idea proposed on the campaign trail.


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2016 Medicare Part D Low-Income Subsidy and Plan Performance

Wrapping up our coverage of the recently released Medicare Part D in 2016 and Trends over Time report from the Health Policy Institute at Georgetown University and the Kaiser Family Foundation are findings related to the Low-Income Subsidy (LIS) program and plan performance ratings.

The report found that nearly 3 in 10 Part D beneficiaries receive financial subsidies through the Low-Income Subsidy program.  This number has grown steadily over the past decade, reaching 12 million in 2016.  About two thirds of LIS enrollees  (roughly 8 million) are enrolled in stand-alone PDPs; others are in standard MA-PD plans, Special Needs Plans (SNPs), Medicare-Medicaid plans participating in financial alignment demonstrations, cost plans, or PACE plans.  PDP LIS enrollment has been relatively constant since the program began, but MA-PD plan enrollment has expanded greatly since 2006.

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In 2016, MA-PD plans are far more likely than PDP plans to have 4 or more stars out of a possible 5 stars for the rating factors based on their Part D performance.  The average PDP plan star rating average has fluctuated in recent years while the MA-PD plan average has been increasing steadily.  Both plan types are rated on the same Part D performance factors.

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2016 Medicare Part D Benefit Design and Cost Sharing

Last week’s Medicare Part D in 2016 and Trends over Time report from the Health Policy Institute at Georgetown University and the Kaiser Family Foundation found that most PDP and MA-PD enrollees in 2016 were in plans with tiered pharmacy networks, no additional gap coverage, enhanced benefits, 5 tier formularies, and low deductibles.  PDPs and MA-PDs differ in some significant categories though – a much larger percentage of MA-PD enrollees are in enhanced plans and more PDP enrollees are in plans with tiered pharmacy networks.

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The report also found that close to 60% of beneficiaries enrolled in PDP plans have plans that offer only the basic benefit. This is down from 83% a decade earlier.  Additionally, about half of all enrollees in 2016, in PDPs and MA-PDs, are in plans that do not charge the Part D deductible.  Tiered pharmacy networks have grown in recent years and are now the new norm in PDP plans.

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8915-exhibit-3-13.pngNext week we will conclude this exploration of the Medicare Part D in 2016 and Trends over Time report by digging deeper into the Low Income Subsidy and Plan Performance Ratings.


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Orphan Drugs Used to Treat Common Conditions May Lead to Higher Prices

Though some research indicates that concerns over rising orphan drug costs may be unwarranted, a study conducted by America’s Health Insurance Plans (AHIP) found that orphan drug prices were more likely to rise when the drug was primarily used to treat common conditions – in contradiction to the Orphan Drug Act of 1983 which grants drug manufacturers a period of exclusivity and financial incentives to produce drugs to treat diseases that affect fewer than 200,000 people. The study found that drugs with mostly non-orphan uses had greater price increases than drugs prescribed almost always for their rare disease indications.

Orphan drugs are vital for patients suffering from rare conditions and the Orphan Drug Act has greatly incentivized the development of new drugs. The AHIP study ultimately finds that “A proper balance has to be struck between ensuring that the incentives remain for those firms focused on developing these very important, and much needed orphan disease therapies; while not allowing the Act to be exploited purely for financial gain.” The FDA recently noted that they are continuing to receive increased numbers of applications for orphan drug designations from drug makers. As prescription drug costs, and health care costs across the board, continue to rise sharply, more scrutiny of the orphan drug program may be inevitable.

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