PhRMA Reacts to Part D Rebates Legislation

Legislation Introduced to Impose Mandatory Price Controls

04.16.13 | By Kaelan Hollon

Today there was legislation introduced by several members of Congress that would impose mandatory government price controls in the form of rebates in Medicare Part D. We’ve talked a lot on the Catalyst about the success of Medicare Part D, both for seniors and taxpayers, and this proposed policy would unravel much of that success. I’ve included below PhRMA’s response to this legislation that we shared with media today.  

"Several members of Congress today echoed President Obama’s recycling of a flawed policy proposal: imposing mandatory government price controls in Medicare Part D, cleverly disguised as “rebates.” But unlike familiar consumer rebates that return savings to shoppers, this policy would undermine a successful and popular program, sending “rebates” to the Federal Treasury, not seniors. The reality: analysts predict that this proposal would bring higher premiums and copays, more restricted access to medicines for seniors and Americans with disabilities, and diminished research on the next generation of medicines. 

"In Medicare Part D, as in the broader market for prescription drugs, large and powerful private insurers and pharmacy benefit managers negotiate discounts and rebates. Some of these purchasers represent total patient populations equal in size to the population of some European G-8 countries, and also negotiate on behalf of private employers and the Federal Employee Health Benefit Program (FEHBP). The competition between health plans in Part D is the secret to its ability to offer beneficiaries broad choice and high enrollee satisfaction at an affordable premium. What is the result?  Prescription drug costs in Part D are hundreds of billions of dollars less than projected, while the most recent government data show that retail prescription drug spending is growing more slowly than health care overall.  Drug spending grew by just 0.4 percent in 2010 and by 2.9 percent in 2011, while overall health spending grew by 3.9 percent in both years. 

"The fact is that Part D is working for seniors and taxpayers. It has greatly improved seniors’ access to medicines, held down premiums, achieved billions of dollars of savings on other Medicare costs by improving health, and cost hundreds of billions of dollars less than projected. What’s more, biopharmaceutical companies are paying tens of billions in new fees and discounts on medicines in Medicare that were imposed after Part D was created. 

"The biopharmaceutical research sector is the most research and development-intensive sector in the entire economy. The unmatched level of investment in R&D translates into remarkable medical advances that make lives better and longer and spurs economic growth. The right path is to work toward policies that benefit patients and the economy instead of continuing to promote counterproductive proposals that would undermine both the biopharmaceutical research sector and America’s ability to achieve new medical advances, promote innovation and create jobs."

 

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