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"Leverage power of Medicare, generics, for health reform/savings," say Congressmen

World News | April 24, 2013


Lynne Taylor

"Leverage power of Medicare, generics, for health reform/savings," say Congressmen

A bipartisan group of US Members of Congress has put forward proposals for "better, rather than more" health care, including greater use of generic drugs which it says would save the US budget $49 billion over 10 years.

Overall, the proposals put forward by the Bipartisan Policy Center's (BPC) Health Care Cost Containment Initiative would achieve around $560 billion in US federal deficit reduction over the next 10 years, according to the authors, who are former Senate Majority Leaders Tom Daschle and Bill Frist, former Senate Budget Committee Chairman Pete Domenici and former Congressional Budget Office (CBO) Director Dr Alice Rivlin.

"Until better care is prioritised over more health care, our nation will continue to face a problem with healthcare costs," say the authors. And while they have focused on reforms "that will incite transformation across the healthcare system, not limited to Medicare, we believe…that the power of Medicare can be leveraged to lead the way in transforming the US healthcare system," they write.

Central to the BPC recommendations are proposals to "encourage the use of high-quality, low-cost drugs in Medicare and systemwide." These include:

- adjusting the Medicare Part D (prescription drug programme) low-income subsidy (LIS) to encourage LIS beneficiaries to select generic and low-cost branded drugs, and eliminating the co-payments for beneficiaries that do so. Co-payments for non-preferred drugs should be increased slightly, subject to a ceiling of $8.00. Part D plans should also have stronger incentives to ensure that lower-cost brand and generic alternatives are available for LIS beneficiaries. These incentives would produce $44.3 billion in budget savings during FY2014-23, the report estimates;

- changing the reimbursement for Medicare Part B drugs (those administered by physicians). The current payment system incentivises them to use higher-cost medicines - they earn more from prescribing and administering more expensive Part B drugs, and this discourages the use of lower-cost drugs even when they are equally or more effective, says the report. The authors also point out that one of the consequences of the across-the-board sequestration cuts is that the entire Medicare payment for Part B drugs is being cut by 2%, and that this is making it uneconomical for some oncologists to administer certain lifesaving drugs;

- converting from average wholesaler price (AWP) to average sales price (ASP) for remaining Part B drug and vaccine reimbursements; 

- addressing pay-for-delay settlements between brand-name and generics companies. Such deals can result in higher costs for patients, health plans and federal and state governments, say the authors. The CBO has projected that addressing these issues would save around $4 billion over 10 years; and

- closing the Risk Evaluation Management Strategies (REMS) loophole that inhibits the development of generic drugs. This authority, granted to the Food and Drug Administration (FDA) in 2007, has had the unintended consequence of allowing branded drugmakers covered by REMS to use it to prevent generics firms from obtaining branded drug samples, which are essential for development and test of generics, say the authors. They estimate that action to close this loophole would produce budget savings totalling $753 million during FY 2013-22.

In addition, the Group members call for all Medicare Advantage Plans to be required to include prescription drug coverage from 2015. "In particular, this would ensure that plans have appropriate incentives to manage medication therapy and encourage drug adherence, which can lead to better outcomes and lower overall costs," they say.

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