In an attempt to tackle skyrocketing drug prices, the Obama administration has proposed likely major changes in Medicare payments for some medications, including specialty ones used for costly diseases like cancer.
Proposed Tuesday by the Centers for Medicare and Medicaid Services, the changes would apply to Medicare Part B, covering medications such as infused cancer drugs and injectable antibiotic treatments. Medicare spent around $20 billion on Part B drugs last year.
Dr. Patrick Conway, chief medical officer of the federal agency, said the new model is a test of improving Medicare beneficiaries’ care through aligning incentives for medical providers and the best possible results for patients.
For him, the current system that pays providers the average sales price with 6 percent for handling and administration is a “perverse incentive structure” that may push doctors to choose high-priced drugs that benefit them more than patients.
“The choice of medications for beneficiaries should be driven by the best available evidence, the unique needs of the patient and what best promotes high-quality care,” he says in a telebriefing.
Medicare will test various approaches in different parts of the U.S., such as pegging reimbursements to a drug’s effectiveness for various uses. In another approach, doctors would receive a drug’s average sales prices, accompanied with 2.5 percent as well as a flat daily payment amounting to $16.80.
This, however, will not affect Medicare Part D, a much larger segment that covers prescriptions for seniors.
Drug industry representatives, namely the Pharmaceutical Research and Manufacturers of America, criticized the Medicare plan for lacking “thoughtful consideration and stakeholder input” and putting Medicare patients at risk through the sweeping changes.
The move would initially affect quite a small part of the almost $500-billion drug tab of the country, yet hoped to eventually overhaul Medicare payments through promoting high quality at greater cost-effectiveness.
U.S. healthcare is valued at almost $3.5 trillion annually, an amount that dwarfs the yearly drug tab. Yet prescription drug costs remain a pressing concern as they continue to rise rapidly, with spending climbing to over 12 percent in 2014.
Americans are getting worried, with a national survey last fall by the Kaiser Family Foundation singling out drug prices as the top healthcare issue that the next president should address. Presidential frontrunners Hillary Clinton and Donald Trump have also put forward new initiatives for drug price control.
Federal officials clarified Tuesday that they are seeking feedback on the proposals, and that Medicare will not limit doctors’ drug choices.
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