So why is PhRMA supporting this?
First, lobbyists tell me it could take the steam out of much more punitive drug pricing ideas that take on drug makers directly, like a proposal to have Medicare negotiate prices or the Trump administration’s idea of pegging certain drug prices to what other countries pay. As one lobbyist put it: That idea could “hopefully take the wind out of the sails for drug negotiation.”
Second, PhRMA’s clearly hoping that it can use the policy change to actually reverse a huge legislative loss from last year, when drug makers were stuck with a bigger chunk of Medicare drug costs in what they call the “coverage gap” or the “donut hole.” They want insurers, or plans, to be liable for more of those costs.
“Any simplification of the Part D benefit should also seek to address the current low level of plan liability in the coverage gap. The Bipartisan Budget Act passed by Congress in February 2018 reduced plan liability in the coverage gap from 25 percent to just 5 percent for brand medicines,” PhRMA wrote in a recent comment to Congress.
Lobbyists were surprisingly candid with me that the drug industry sees this change as a way to relitigate last year’s changes, or as one lobbyist put it: “get rid of that whole donut hole debacle.”
Lobbyists keep talking about a plan from the American Action Forum that would eliminate the so-called coverage gap entirely (the portion of Medicare where drug makers pick up most of the bill that was the focus of last year’s legislative battle). It would then restructure the so-called catastrophic phase so that drug makers pay 9% of drug costs, Medicare picks up 20% and insurers would be stuck with the remaining 71%. (Lobbyists tell me, however, that there’s no consensus among drug makers as to whether that 9% number should be dialed up or down.)
AAF says that under its plan drug makers would owe $1.6 billion less to the government than under current law. Not too shabby for an industry that just a few months ago seemed to be bracing for some serious reforms ...
Second, PhRMA’s clearly hoping that it can use the policy change to actually reverse a huge legislative loss from last year, when drug makers were stuck with a bigger chunk of Medicare drug costs in what they call the “coverage gap” or the “donut hole.” They want insurers, or plans, to be liable for more of those costs.
“Any simplification of the Part D benefit should also seek to address the current low level of plan liability in the coverage gap. The Bipartisan Budget Act passed by Congress in February 2018 reduced plan liability in the coverage gap from 25 percent to just 5 percent for brand medicines,” PhRMA wrote in a recent comment to Congress.
Lobbyists were surprisingly candid with me that the drug industry sees this change as a way to relitigate last year’s changes, or as one lobbyist put it: “get rid of that whole donut hole debacle.”
Lobbyists keep talking about a plan from the American Action Forum that would eliminate the so-called coverage gap entirely (the portion of Medicare where drug makers pick up most of the bill that was the focus of last year’s legislative battle). It would then restructure the so-called catastrophic phase so that drug makers pay 9% of drug costs, Medicare picks up 20% and insurers would be stuck with the remaining 71%. (Lobbyists tell me, however, that there’s no consensus among drug makers as to whether that 9% number should be dialed up or down.)
AAF says that under its plan drug makers would owe $1.6 billion less to the government than under current law. Not too shabby for an industry that just a few months ago seemed to be bracing for some serious reforms ...
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