Two in three Medicare beneficiaries live with multiple chronic diseases. A new Trump administration proposal could make it harder for them to manage their conditions.
The Department of Health and Human Services (HHS) plans to change the way Medicare pays for potent, physician-administered medicines. Officials claim they can cut costs by imposing price controls on these drugs.
In the long run, this price-capping scheme would reduce innovation and patient access to medicines. That would lead to worse patient outcomes and higher medical costs overall.
The new proposal deals with Medicare Part B, which covers advanced drugs administered in physicians’ offices and hospitals. These therapies help millions of patients with cancer, rheumatoid arthritis, multiple sclerosis and other debilitating conditions.
Physicians currently purchase these medicines up front and bill Medicare for reimbursement after treating patients. The government repays doctors the average U.S. sales price of the drugs, which cost almost twice as much in America as in other developed countries.
To bring U.S. drug prices in line with prices in Europe and Canada, HHS plans to move to a “reference pricing” system. Part B drug reimbursements would be tied to the average prices paid in over a dozen foreign countries.
Drugs are cheaper abroad for a reason. Most foreign governments impose artificially low price caps on drugs. If manufacturers refuse to meet these demands, governments refuse to cover those medicines.
These low prices discourage companies from launching drugs in these countries. As a result, chronic disease patients suffer from reduced access to the latest medicines.
Patients in the United Kingdom, Canada, France, Germany and the other countries included in HHS’ reference pricing index waited a median of 14 months to access each new drug released between 2011 and 2018. Meanwhile, roughly 90 percent of these medicines were immediately available to Americans.
If HHS’ plan takes effect, delays like this will become common in the United States. That could be a death sentence for patients with late-stage cancers and other serious diseases.
The United States leads the world in biopharmaceutical innovation, producing more than half of all new medicines created worldwide.
That research isn’t cheap. It often takes billions of dollars to create a new drug. The overwhelming majority of experimental medicines fail during clinical trials.
The administration’s Medicare overhaul would decrease the potential returns on R&D investments. Firms would scale back research into breakthrough treatments for cancer, Alzheimer’s, diabetes and other chronic conditions.
Over the next five years, 31 million Americans will be diagnosed with a chronic disease and 1.7 million will die from one. American researchers are currently working on thousands of experimental treatments. These advances could help patients live longer, healthier lives and avoid costly hospitalizations.
But these treatments may not come to fruition if HHS begins capping drug prices.
Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.