HHS Secretary Xavier Becerra releases proposal to lower prescription drug costs
The underlying principles behind the plan, according to HHS, are competition, innovation and transparency.
Photo: Jeff Lagasse/Healthcare Finance News
Department of Health and Human Services Secretary Xavier Becerra has released a plan intended to lower drug prices, in part by allowing the HHS head to negotiate Medicare Part B and Part D drug prices directly with pharmaceutical companies, and make those prices available to other purchasers.
The Drug Pricing Plan, as it's called, is part of a broader initiative stemming from President Joe Biden's Executive Order on Promoting Competition in the American Economy, which also created the White House Competition Council tasked with coordinating, promoting and advancing federal efforts to address overconcentration, monopolization and unfair competition in or directly affecting the American economy.
The underlying principles behind the plan, according to HHS, are competition, innovation and transparency.
WHAT'S THE IMPACT?
According to HHS data, Americans pay more than $1,500 per person for prescription drugs, far higher than other comparable nations. And prices for brand name drugs are rising faster than the rate of inflation, leading many to not take their medications as prescribed due to their cost. HHS has identified lack of competition as a key driver of these rising drug costs.
The Drug Pricing Plan responds to the request in President Biden's Executive Order for "a plan to continue the effort to combat excessive pricing of prescription drugs and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the Federal Government for such drugs, and to address the recurrent problem of price gouging."
Allowing the HHS Secretary to negotiate Medicare Part B and Part D drug prices is one of the key policies in this effort, and the approach is projected by the agency to generate reductions in patient cost-sharing as well as savings for patients, government and commercial payers.
Other proposed policies under the plan include Medicare Part D reform, including a cap on catastrophic spending to protect beneficiaries from unaffordable out-of-pocket costs. HHS is also proposing legislation to speed the entry of biosimilar and generic drugs, including shortening the period of exclusivity, and policies in Medicare Part B to increase the prescribing of biosimilars by clinicians.
The agency would also like to see a prohibition on "pay-for-delay" agreements and other anti-competitive practices by drug manufacturers.
On a more administrative level, HHS is mulling testing models using value-based payments in Medicare Part B, in which payment for drugs is directly linked to the clinical value they provide patients, and testing models providing additional cost-sharing support to Medicare Part D low-income subsidy beneficiaries for using biosimilars and generics.
The agency would also like to see data collection from insurers and Pharmacy Benefit Managers to improve transparency about prices, rebates and out-of-pocket spending on prescription medications.
THE LARGER TREND
President Biden called on Congress to pass solutions to lower prescription drug prices and hold brand name drug manufacturers accountable in his budget proposal in August. He called for Medicare to cap yearly out-of-pocket drug costs for beneficiaries, as well as backing Food and Drug Administration efforts to accelerate the development of generic medicines, which typically have far lower costs to consumers.
Biden also called for states to work on plans to import drugs from Canada, where costs are also much lower, and proposed penalizing drugmakers who raise prices out of balance with inflation.
The net cost of prescription drugs – meaning sticker price minus manufacturer discounts – rose more than three times faster than the rate of inflation over the course of a decade, according to a 2020 JAMA study.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
