Addressing the high cost of drugs was at the top of President Obama’s list in his fiscal year 2017 budget, released last week. Many of his proposals were familiar. The President hoped to increase manufacturer contributions to prescription drug coverage under Medicare Part D and wanted to shorten the length of biologic market exclusivity from twelve to seven years. These proposals were also in the President’s fiscal year 2016 budget but were not put into place.
However, the budget also included a number of surprising, new proposals that underscore how post-market evidence might play an increasing role in controlling drug prices in coming years. Rachel Sachs has written about the role that the Centers for Medicare and Medicaid Services (CMS) can play in keeping down drug prices, and it seems like some of these ideas are gaining traction:
Modify reimbursement of Part B drugs. The White House estimates that changes to Medicare Part B payments could save the country $7.75 billion over ten years. Medicare Part B covers drugs and services dispensed in an outpatient setting. Many of the most expensive biologic drugs are currently covered under Medicare Part B. The budget proposal did not elaborate on how the White House hopes to change Part B payments, but the proposal likely refers to recommendations released by the Medicare Payment Advisory Commission (MedPAC) last June. MedPAC’s 2015 report recommended that Congress link Part B payments to clinical effectiveness evidence. For example, the government could group drugs with similar health effects and pay all drugs in each group the rate of least costly product in the group. This approach relies on having reliable clinical effectiveness data so that researchers can easily compare the relative effectiveness of two or more drugs. Continue reading