Here’s What’s Happening with Proposed Policy and Prescription Drug Costs

When 79 percent of Americans agree about something, politicians take notice. That’s the percentage of people who consider drug prices “unreasonable,” according to a 2019 KFF poll. Outrage about rising prescription drugs costs has reached a fever pitch. However, these feelings are nothing new. Early in his presidency,  the Trump administration vowed to make medication more affordable for American patients. They unveiled a new policy with the claim to reduce drug costs. So have they delivered?

Recent Prescription Drug Policy

The most significant piece of the Trump administration’s drug-pricing policy was unrolled in May 2018, when the Department of Health and Human Services (HHS) introduced the “American Patients First” blueprint. The plan was designed to lower drug prices and out-of-pocket costs for American patients. It identified four key strategies that the administration planned to implement, and laid out the immediate actions that HHS planned to take.

Improved Competition

Immediate steps included preventing manufacturers from gaming regulatory processes, promoting innovation and competition for the creation of biologic drugs, and developing proposals to limit Medicaid and ACA programs from raising prices.

Better Negotiation

Immediate steps included allowing more drug substitutions in Medicare Part D, reforming Part D to giving plan sponsors more negotiating power, and experimenting with value-based purchasing, in which healthcare providers get financial incentives for giving Medicare patients high-quality care.

Incentives for Lower List Prices

Immediate steps included making drug prices more transparent in Medicare’s interactive drug-pricing dashboard and evaluating whether manufacturers should be required to list drug prices in advertising.

Lowering Out-of-Pocket Costs

Immediate steps included allowing pharmacists to alert patients when they could pay less for drugs without using insurance, and amending the Part D Explanation of Benefits to give Medicare patients more information about drug prices and cost-saving options.

What’s Happened Since Then

Changing the healthcare system doesn’t happen quickly. Some consumers have seen their drug prices drop in the last year, but that’s largely because new generic options have entered the market rather than as a result of recent policy. (In January, the President tweeted that Americans had saved $26 billion on prescription drugs during his first 19 months in office, prompting an analysis from the Washington Post Fact Checker. According to it, the price of prescription drugs is still steadily rising, and the $26 billion represents the amount that consumers had saved strictly because of those new generic drugs.)

Although list prices for drugs are still going up, the Trump administration has made progress on some of the goals laid out in the blueprint.

  • In November 2018, the Centers for Medicare & Medicaid Services (CMS) proposed a rule that would give Medicare Part D and Medicare Advantage plans the option to not cover certain medications that are are part of categories called “protected classes.” Currently, these plans are required to cover drugs from protected classes, which include antidepressants and drugs used to treat cancer. Lifting this requirement will give plans more negotiating power with drug companies, the CMS posits. Critics have been vocal about their objections to this proposal, saying that giving plans the option to not cover these essential drugs opens the door to discrimination.
  • In January 2019, the HHS proposed a rule that would ban drug manufacturers from giving rebates to pharmacy benefits managers. According to the HHS, these rebates account for 26 to 30 percent of a drug’s list price. Banning rebates would eliminate the need for drug companies to raise their prices every year, the HHS says.
  • In March 2019, the CMS announced that its drug dashboards had been updated with pricing and spending data from 2017. Consumers and health-care providers can use searching and sorting tools to compare prices of various drugs and see how their prices have changed over time to make sure they’re getting, or prescribing, the right drug at the best price.

Moving Forward

Those are just a few of the policies that are on the table right now, but the 2020 election poses a significant challenge in predicting what policies will affect prescription drug costs going forward. One thing is certain: lowering drug prices will be the subject of a lot of discussion during this election cycle. Because it’s a top priority for the electorate, we can expect top Democratic candidates to clarify their stances on this issue in the coming months.

Some contenders have already given voters an idea of their platforms. Sen. Bernie Sanders vowed in March that he would cut prescription drug costs by 50 percent if he’s elected president. He recently introduced a Senate bill that would tie American drug prices to the median prices used in other developed nations. Meanwhile, Sen. Elizabeth Warren raised eyebrows in 2018 when she floated the idea of the federal government getting into drug manufacturing.

A lot may change over the next few years, but as a self-insured organization, the need to control costs won’t. Check back with Stop Loss Insurance as healthcare policy developments unfold to make sure you have the most appropriate coverage for your needs. Contact us with questions at any time.

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