The US Obama Administration has outlined plans to make $320 billion healthcare savings over a decade, including requiring drugmakers to provide $135 billion worth of discounts on medicines supplied under the Medicare prescription drug benefit.
The proposals have been sent by the White House for consideration to the Joint Select Committee on Deficit Reduction (the "Supercommittee"), which is examining ways to reduce the national deficit by $1.5 trillion over 10 years. They would also ban "pay for delay" deals agreed between brand-name and generic drugmakers to delay the entry of generics onto the market and reduce the market exclusivity on biologic drugs from 12 year to seven, starting as early as 2012.
The plans, which seek to make $248 million savings alone in Medicare - the federal health programme for around 50 million seniors and certain disabled people - are set out in Living Within Our Means and Investing in the Future: The President's Plan for Economic Growth and Deficit Reduction, which was published by the White House Office of Management and Budget (OMB) this week.
The drug discount proposals are outlined in a section of the Plan which calls for Medicare drug payment policies for low-income beneficiaries to be aligned with those for Medicaid, the state/federal health programme for people on low incomes.
Under current law, drug manufacturers are required to pay specified rebates for drugs dispensed to Medicaid beneficiaries, while in contrast, plan sponsors for Medicare Part D, the programme's prescription drug benefit, negotiate with manufacturers to obtain "plan-specific rebates at unspecified levels." it says.
However, the report notes that "substantial differences" have been found in rebate amounts and net prices paid for brand-name drugs under the two programmes, with Medicare receiving significantly lower rebates and paying higher prices than Medicaid.
The President’s proposal “would allow Medicare to benefit from the same rebates that Medicaid receives for brand-name and generic drugs provided to beneficiaries who receive the Medicare Low-Income Subsidy beginning 2013," it says, and estimates that this will create savings of $135 billion over 10 years.
The President's Plan would also strengthen the Independent Payment Advisory Board (IPAB) to reduce long-term drivers of Medicare cost growth.
Measures for Medicaid included in the proposals, and aimed at saving $66 billion over the decade, include: - requiring manufacturers which improperly report items for drug coverage under the programme to fully repay states; - tracking high prescribers and utilisers of prescription drugs in Medicaid; - enforcing the programme's drug rebate agreements; - increasing penalties on drugmakers for fraudulent non-compliance with the rebate agreements; and - requiring drugs to be properly listed with the Food and Drug Administration (FDA) in order to receive Medicaid coverage.
The Plan also estimates that: - banning "pay for delay" agreements will generate $2.7 billion over 10 years in savings to federal health programmes including Medicare and Medicaid; and - reducing the exclusivity period for brand-name biologics from 12 years to seven, and banning "evergreening," will save the programmes $3.5 billion over the period.