Last week the Trump administration made a policy change designed specifically to boost Big Pharma. What was needed was a president who would use the regulatory powers of the government to protect the patients and small pharmacies nationwide. Instead, he dealt them a harsh blow.
The Centers for Medicare and Medicaid Services (CMS) finalized a rule, that cuts Medicare Part B drug reimbursement to some hospitals serving poorer patients by about 30 percent.
On November 1, 2017, the Centers for Medicare & Medicaid Services (CMS) finalized the Hospital Outpatient Prospective Payment System (HOPPS) Final Rule for 2018. The Final Rule retains a controversial proposal to cut Medicare Part B drug reimbursement for products purchased under the 340B Program and billed through the HOPPS.
The rule change has been a big lobbying priority for Big Pharma. They benefit from a law allowing them to sell drugs at a discount, in exchange for Big Pharma companies getting access to entitlement monies.
Big Pharma believes that program, whose existence and previous expansion is written into law, is reducing its profit margins. It wants nothing more than to stick it to these hospitals.
Ironically, this will end up badly harming Trump voters, and the areas in which they live. A personal anecdote serves well to illustrate the problem.
A sad thing happened to one of our contributors recently. Upon leaving work, he decided to stop and buy a soft drink, as he has done five days a week for twenty-two years, at a downtown pharmacy nearby. When he went inside, the girl behind the counter broke into tears at the sight of him, gave him a big hug, and told him how much she was going to miss him.
The little store, which has been open since the 1950’s, will be shuttering its doors at the end of the year.
After more than 60 years, the drugstore has become the latest casualty in a three-decade decimation of independent drugstores by chain drugstores.
Doug Hoey, president of the National Community Pharmacists Association, says that the scenario our contributor experienced is repeating itself with increasing regularity across the country.
The problem for independent pharmacies is the reimbursement system. Reimbursement is the amount the insurer pays for the drug. Depending on the type and cost of the drug, the insurer pays either the physician directly, the drug manufacturer or an intermediary known as a pharmacy benefit manager, or PBM.
Pricing and reimbursement are directly entangled. When drugs get released onto the market, they will ultimately have several different prices, but the first one is the list price, which comes from the manufacturer. The list price serves as the basis for future calculations.
Being independent meant that PBMs had an incentive to pass those savings back to their health plan sponsors, and thus, ultimately, to patients.
That’s why, when drug-makers began acquiring PBMs in the 1990s, the Federal Trade Commission acted swiftly to undo the deals. The FTC believed that combining PBMs with pharmaceutical companies created obvious and dangerous conflicts of interest.
It would have enabled drug-makers to coordinate pricing policies, gain access to the sensitive information of their competitors, and favor their own drugs. Today, though, it’s big pharmacies instead of big drug-makers that are merging with PBMs. And the deals are creating similar conflicts of interest.
Regardless of whether the PBM’s owner is the big drug companies or the big pharmacies, the problem is the same. When the company owns the industry that sets prices, it becomes possible for a savage like Martin Shkreli to do things like jack the prices of crucial AIDS drugs up to 5,000% versus their usual rates.
One technique they use is to simply pay generic makers to keep their products out of drugstores. The schemes are referred to as a “pay to delay” deal. Another, known as product-hopping, involves getting around patent term limits by reformulating drugs slightly and marketing them as something new altogether.
The strategy often involves embroiling up some kind of legal dispute, designed to hang the new pill up in court as long as possible, while the brand names make a killing. Drugs like the antipsychotic Abilify, which in its generic form costs 30 bucks for 20 pills, cost consumers and pharmacies $1, 234 for the same exact thing.
Anyone who knows that is sure to choose the generic, and this is what the big brand names are afraid of. This was the impetus behind their most underhanded ruse, preventing generic drug makers from getting access to doses of branded drugs they need to run tests.
Generic makers need roughly 5,000 doses of branded drugs to show that their products are truly equivalent. Big manufacturers have been narrowing their lists of approved pharmacies, again to box small companies in and consume them.
Wharton professor Patricia Danzon explains that a PBM combined with a drugstore has both the incentive and the power to steer plan members to the pharmacies it chooses, rather than contracting with as many drugstores as possible on the basis of location, convenience, and well-being of its patients. The bottom line is money, and the well-being of humans falls by the wayside.
Drug prices in the U.S. are higher than anywhere else in the world. In the midst of the world’s strongest economy, one in six American adults go without their prescriptions, because they can’t afford to get them filled. Two-thirds of drug research is funded by the government using taxpayer money. The research done to create the drugs were all paid for by American taxpayers. Big Pharma still gouges us nonetheless.
The U. S. really needs to develop price control strategies. Other countries use price ceilings. They simply tell Big Pharma what they are willing to pay for the pills, and the company is then free to decide whether or not they wish to accept the deal. But in America, the large companies are able to use their money and influence through lobbying to prevent regulatory measures of that kind. They gouge the U.S. simply because they can.
Our healthcare system, the Affordable Care Act, is a great start, but we’ve still got a long way to go. We spend twice as much per capita for our system as compared to other countries with public health care. Now that Trump has sabotaged the Affordable Care Act by defaulting on the federal payments that provided those reimbursements, it’s just going to keep getting worse.
On Tuesday night, the Democratic Party began taking back our country. People have hope again. Democratic victories provided some much-needed vigor and relief to some people who have really deserved it. It’s huge.
The Democrats need to get back into power before we can start to do anything about drug prices or anything else. We’re the only ones who’ve got the plans and skills. We have also got the momentum. Tuesday night, we got the jolt in the arm we’ve been needing. The #BlueWave is now very real.
Moving forward, we’re going to be doing all we can to emphasize the fact that we have got an excellent plan for dealing with these kinds of problems. It’s right there in the 2016 Democratic Presidential Platform. Bernie Sanders was living on a prayer with his Medicare for All plan, and Donald Trump can’t even spell the word “plan”.
We’ve been waiting for years to get around the GOP obstruction that made our plans impossible under President Obama. Now that America has had a chance to see how badly the Republicans have fumbled it, they’ve already started giving us back all the power they can. We are prepared to show them we are worthy of the task.
Trying to draw order from chaos is not easy, but that was our goal in tacking the Big Pharma python head on. There is much we could not cover. It was like wading through thick jungle with a machete, and that is the crux of the problem. It is so complex that even top specialists differ as to what to do about it.
What we’re trying to do with this article is threefold. To get people to realize how complex the problem is, to bring public awareness that the GOP will NEVER be able to handle it, and to get them to realize that the only ones with a plan are us Democrats.
Healthcare has been one of the single most polarizing issues in America for nearly thirty years. It’s past time we fixed that. For our small businesses, and for our people. America is the greatest country in the world. We can do better than this.