{"id":926,"date":"2019-04-17T13:19:01","date_gmt":"2019-04-17T17:19:01","guid":{"rendered":"https:\/\/sites.bu.edu\/dome\/?p=926"},"modified":"2019-04-20T11:16:48","modified_gmt":"2019-04-20T15:16:48","slug":"curbing-medicare-drug-costs","status":"publish","type":"post","link":"https:\/\/sites.bu.edu\/dome\/2019\/04\/17\/curbing-medicare-drug-costs\/","title":{"rendered":"Curbing Medicare Drug Costs"},"content":{"rendered":"

Prescription drug spend in the U.S. is the highest in the world. Americans pay up to three times the amount per capita of other countries<\/a>. This is problematic for our growing aging population<\/a> since their income becomes limited. While Medicare covers prescription drug costs, there are policy gaps that make it unaffordable. One major barrier to price controls is part D of title XVIII of the Social Security Act<\/a>, in which explicitly prohibits the federal government \u201cfrom negotiating directly with pharmaceutical companies to lower drug prices<\/a>\u201d. President Donald Trump proposed several policies to reduce the cost burden of prescription drugs on consumers through free-market competition approach, focusing mainly on cost transparency and promoting use of biosimilar or generic drugs<\/a>. The policies are praised as a \u201csmall step in the right direction<\/a>\u201d. Yet, many Americans are dissatisfied<\/a> since the proposals do not include direct Medicare negotiations with drug manufacturers. Pharmaceuticals argue that price controls would strain their investments in research and development (R&D) of new drugs. After taking a closer look, that is not fully the case. Greater price control measures can be taken, but there must be political will to support it. For now, the President\u2019s policies are a small victory for seniors across America.<\/p>\n

Medicare Coverage Today<\/u><\/p>\n

Prescription drugs are covered under Medicare Part A, B, and C plans<\/a>, but to a limited capacity. Part A is hospital insurance, part B is traditional medical insurance, and part C (Medicare Advantage) is like a health maintenance organization (HMO)<\/a> or preferred provider organization (PPO)<\/a> plan type. Only drugs administered within these respective settings are covered. Because of these limitations, the Medicare Modernization Act of 2003<\/a> was enacted, creating Medicare part D drug benefit.<\/p>\n

Part D is an \u201coptional\u201d supplemental insurance that can be purchased with any of the other Medicare plans. It, however, is severely flawed. First, Congress did not commit any financing for part D<\/a>, leaving costs falling on the recipient. Second, and most notoriously, is the \u201cdonut hole\u201d coverage gap between initial enrollment and a \u201ccatastrophic coverage threshold\u201d. The entry-point coverage limit is currently $3,750. Once this amount is reached, the patient is then responsible for fully paying for their medication until the maximum amount of the out-of-pocket (OOP) costs have been paid, or the annual time period lapsed. The OOP threshold now is $5,100<\/a>, unaffordable for many seniors that suffer multiple chronic conditions.<\/p>\n

Additionally, the plan disincentivizes patients from purchasing brand name drugs by increasing patient coinsurance payments. Provisions of the Affordable Care Act attempted to close this gap by 2020 by limiting patient payments to 25% of the gap<\/a>. Under the Trump Administration, the Bipartisan Budget Act of 2018<\/a> advanced that date to 2019. Another caveat to Part D is that it is not really \u201coptional\u201d. If an individual fails to sign up once qualified and decides to enroll later, they will pay penalty fees for as long as they are on part D, with the exception of a few circumstances, such as having drug coverage from an employer.<\/p>\n

The President\u2019s Policies<\/u><\/p>\n

To mitigate the Medicare drug coverage issues, the Trump Administration released his \u201cblueprint<\/a>\u201d rules and policies, supplemental to the Bipartisan Budget Act. Provisions that went into effect include:<\/p>\n