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US govt will negotiate Medicare drug prices, says Obama

World News | April 15, 2011


Lynne Taylor

US govt will negotiate Medicare drug prices, says Obama

In a speech putting health care at the heart of the US budget debate, President Barack Obama has pledged to use the purchasing power of Medicare to "limit unnecessary prescription drug spending,” speed up the availability of generic drugs and ban "pay-for-delay" agreements.

These undertakings were included in a speech given by Pres Obama at George Washington University on Wednesday, in which he outlined his administration’s plans to reduce the US federal deficit by $4 trillion over the next 12 years. These proposals include reform of Medicare (the US health programme for seniors and some disabled people) and Medicaid (the programme for the nation's poorest) aimed at providing better care and lower costs and making savings of $480 billion by 2023 and a further $1 trillion at least by 2033.

This approach will build on the reforms aimed at reducing the deficit by $1 trillion which were included in last year’s health care law (the Accountable Care Act), the President told his audience. "We will reduce wasteful subsidies and erroneous payments. We will cut spending on prescription drugs by using Medicare's purchasing power to drive greater efficiency and speed generic brands of medicine onto the market," he said.

And within the Medicaid programme, "management" of high prescribers and users of prescription drugs will be implemented, according to the White House.

However, in comments made after the President's speech, the Pharmaceutical Research and Manufacturers of America (PhRMA) warned that implementing government price controls in the Medicare prescription drug programme (known as Part D) will not improve patient care, sustainably cut the deficit, foster the development of medical advances or grow the economy. "A strategy of reducing the deficit by simply cutting existing Medicare funding will adverse impact American jobs and medical innovation," added PhRMA's chief executive, John Castellani.

He pointed out that the Congressional Budget Office (CBO) has already warned that implementing price controls in Part D could reduce the funds that drugmakers invest in R&D and would lead to higher premiums for Medicare beneficiaries.

Moreover, Part D is "coming in about 40% below projected costs," added Mr Castellani. "According to the Medicare Trustees' annual report, Part D spending projections are lower in part due to a reduction in the projected growth in prescription drug spending in the US for the next 10 years," he said.

The President's speech at Georgetown University also included a pledge to "slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services that seniors need."

If Medicare costs rise faster than expected, the commission - the Independent Payment Advisory Board (IPAB) - will have the authority to make additional savings by further improving the programme, he said.

The industry has particular worries about IPAB - which was created by the Accountable Care Act and is widely dubbed "America's NICE [National Institute for Health and Clinical Excellence]" - and Mr Castellani said he was "disappointed" at the President's call to strengthen it.

PhRMA continues to have "significant concerns about the overly broad powers of the unelected IPAB, which could enact sweeping Medicare changes without congressional oversight and which would not be subject to judicial or administrative review," he said.

"We believe IPAB will result in access problems for Medicare beneficiaries. Therefore, IPAB in its current form must be repealed," he added.

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