Seniors poised for $27B in drug savings under new Senate package
A top Senate committee will vote this Thursday on a sweeping package of measures intended to address the rising cost of prescription medication in the U.S. that the congressional actuary estimates will save Medicare beneficiaries $27 billion in out-of-pocket expenses.
The legislation, unveiled on Tuesday and sponsored by Senate Finance Committee Chairman Chuck Grassley of Iowa and Ron Wyden of Oregon, the panel’s top Democrat, is one of the more far-reaching attempts by lawmakers to take on the powerful pharmaceutical lobby in recent memory.
It is expected to face enormous backlash from the drug industry -- which was already shelling out record amounts of advocacy spending as treatment prices became a top talking point for politicians -- and potentially some Republicans who oppose key measures in the bill.
“This legislation shows that no industry is above accountability,” Grassley and Wyden said in a statement. “Passing these reforms, especially those that will affect some of the most entrenched interests in Washington, is never easy.”
Notably, the package includes a controversial provision to curb treatment price increases in the Medicare program, while capping the amount that enrollees are required to pay for medicine at the counter and overhauling how the federal entitlement program reimburses companies for some drugs.
Pharmaceutical manufacturers would be required to provide customer rebates for any price increases above annual inflation -- roughly anything above a 2 to 3 percent hike -- for drugs covered by Medicare, a measure pushed by Wyden that has faced resistance from some Senate Republicans who liken it to price controls.
The industry would also have to submit documentation for public consumption to justify price increases beyond a threshold established by the federal health agency.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PFE | PFIZER INC. | 25.91 | -0.81 | -3.03% |
| NVS | NOVARTIS AG | 103.94 | +0.05 | +0.05% |
| JNJ | JOHNSON & JOHNSON | 152.00 | -1.28 | -0.84% |
| GSK | GSK PLC | 34.66 | -0.45 | -1.27% |
Under the legislation, out-of-pocket expenses for Medicare enrollees would be capped and charges in the catastrophic coverage phase, when consumers pay less for drugs after reaching a certain payment threshold, would be shifted away from the federal government onto drugmakers and insurers.
Outside of direct regulatory changes, the package would require the Department of Health and Human Services to begin publishing information provided to the agencies by PBMs, including data on the number of rebates and discounts obtained by the middleman price negotiators.
The agency would also be forced to release data on how much insurers pay PBMs and how much those companies keep versus providing to retail and mail-order pharmacies.
CLICK HERE TO GET THE FOX BUSINESS APP
The Congressional Budget Office estimated the package would save the Medicare program $85 billion over 10 years while reducing premium costs by $5 billion.