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HomeMedicare Dispatch → Medicare's Drug-Pricing Experiment Stirs Opposition

Medicare's Drug-Pricing Experiment Stirs Opposition Print E-mail
Written by Julie Appleby | KHN   
Monday, 30 May 2016 00:00

khn logo black A broad proposal by Medicare to change the way it pays for some drugs has drawn intense reaction and lobbying, with much of the debate centering on whether the plan gives too much power over drug prices to government regulators.
 
One of most controversial sections would set up a nationwide experiment, scheduled to start in 2017, to test a handful of ways to slow spending on drugs provided in doctor's offices, clinics, hospitals and cancer infusion centers. The proposal would not affect most prescriptions patients get through their pharmacies.
 
The aim, the government says, is to maintain quality while slowing spending in Medicare Part B by more closely tying payments to how well drugs work, using methods drugmakers, insurers and benefit managers are already trying in the private sector.
 
One of the approaches included in the proposal would allow Medicare to earmark "therapeutically similar" drugs and set a benchmark, or "reference price," that it would pay for all drugs in that category. That amount might be the cost of the drug the agency considers the most effective in the group, or some other measure. It's aimed at narrowing the wide variability - often hundreds or thousands of dollars a year - in what is paid for similar drugs.
 
Such an approach is seen by some as government price setting, a method common in Europe that draws support in the U.S. from the left but has longstanding opposition from conservatives, many economists and pharmaceutical companies.
 
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