Monday, February 19, 2018




Trump aims to reduce Medicare drug costs

By RICARDO ALONSO-ZALDIVAR and MATTHEW PERRONE
Feb. 8, 2018 at 11:41 p.m.

President Donald Trump speaks Thursday during the National Prayer Breakfast in Washington.

WASHINGTON — President Donald Trump will propose lowering prescription drug costs for Medicare beneficiaries by allowing them to share in rebates that drug companies pay to insurers and middlemen, an administration official said Thursday.

A senior administration official outlined the plan on condition of anonymity ahead of the release of Trump's 2019 budget plan next week.

Pharmaceutical companies now pay rebates to insurers and pharmacy benefit managers to help their medications gain a bigger slice of the market.

Insurers apply savings from rebates to keep premiums more manageable.

Under Trump's proposal, seniors covered by Medicare's popular "Part D" prescription benefit would be able to share in the rebates for individual drugs that they purchase at the pharmacy.

Trump's budget would also expand Medicare's "catastrophic" drug benefit so that many seniors with very high costs would not face copayments. Seniors with high drug bills are still responsible for 5 percent of the cost of their medications. With some new drugs costing $100,000 a year or more, patient costs add up quickly.

The White House proposal would put Trump in the middle of a tug-of-war between drug companies on one side and insurers and pharmacy benefit managers on the other, with billions of dollars at stake.

Insurers and pharmacy benefit managers say the reason drug costs are so high is that drug companies are free to charge what the market will bear.

The pharmaceutical industry says middlemen are the problem, because they keep rebates paid by drug makers instead of passing them on to patients. Insurers counter that rebates are passed on in the form of lower monthly premiums for everybody.

The drug industry lobbying group, Pharmaceutical Research and Manufacturers of America, had no immediate reaction.

Lawmakers would shift a greater share of Medicare drug costs to the pharmaceutical industry. They also want to eliminate the drug coverage gap known as the "doughnut hole" one year earlier than scheduled, in 2019 instead of 2020.

"On the whole, I think this is a good bill for people with Medicare," said Joe Baker, president of the Medicare Rights Center, said of the congressional legislation. "This tilts toward getting a lot of good things done."

But his group opposes a provision that would raise premiums paid by the wealthiest retirees for coverage of outpatient services and prescription drugs.

Here's a look at some of the major Medicare provisions in the budget deal that Republican leaders are trying to push through Congress:

PRESCRIPTION DRUGS: Originally, beneficiaries in the "doughnut hole" coverage gap were responsible for the full cost of their medications, but the Affordable Care Act passed under former President Barack Obama gradually closes the gap. The budget deal accelerates the timetable by one year, to 2019.

Drug makers already are required to provide discounts to close the coverage gap, but the budget deal raises the level of company discounts, which in turn lowers the government's costs. That should act as a brake on the monthly premiums paid by beneficiaries.

The coverage gap starts when beneficiaries hit $3,750 in total drug costs.

CAPS REPEALED ON REHAB: The budget deal permanently repeals limits on therapy services commonly used by stroke patients and people recovering from major surgeries. Those services include physical therapy, occupational therapy and speech therapy.

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