It’s time for Congress to get Medicare drug pricing reform right

After a three-year debate and delay in delivering patients much-needed relief from high out-of-pocket prescription drug costs, Congress finally appears ready to pass drug pricing legislation. These reforms are critical. However, elected officials must avoid relying on policies that discriminate against certain groups of patients or threaten advances in research for the most challenging health care conditions. 

Let’s start with the good parts of the proposed legislation. Many older adults face excruciating decisions at the pharmacy counter, where they often are deciding between paying for their medications and other basic expenses, such as food and rent. Medicare is the only major insurer in the U.S. that lacks an out-of-pocket maximum. These challenges are not only a pocketbook issue, but research shows they can significantly impact health outcomes and mortality. Reversing these negative trends must be the key outcome of prescription drug pricing reform. 

The reconciliation bill pending in the House includes a $2,000 annual cap on beneficiary out-of-pocket expenditures in Medicare Part D, as well as the ability to pay for any costs below that amount through zero-interest payment installments. A multitude of patient groups support these reforms, which will be a game-changer for older adults. There are also key changes, such as eliminating copays for all vaccines recommended by the Centers for Disease Control and Prevention (CDC) for Medicare beneficiaries and Medicaid patients residing in non-expansion states (individuals in expansion states already benefit from this as a result of the Affordable Care Act). These changes will improve health, reduce out-of-pocket costs for beneficiaries and help prevent costly hospitalizations because of medication non-compliance or diseases that are preventable through vaccination.  

However, the bill also includes misguided proposals. Congressional leaders continue to advance direct negotiation in Medicare — in this case, a rebranding of price setting — that would establish a maximum price. If companies are unable to meet the established price, then beneficiaries will not have coverage for those drugs. While the bill would limit this to a small list of drugs in the near term, the precedent would be set to expand it later. These policies follow on the coattails of the Trump administration’s Most Favored Nation model that would have copied prices from other economically-advanced countries to use here, as well as congressional consideration of applying the Veterans Affairs pricing and formulary to Medicare and the commercial population. 

The National Council on Disability, an independent federal agency, and patient groups repeatedly flagged alarms about how these policies that rely on the quality-adjusted life year (QALY) and similar assessments would discriminate against older adults and people with disabilities. Further, a recent report released from Charles River Associates, commissioned by the Alliance for Aging Research, illustrates how use of these methodologies in the United Kingdom, Canada and Australia has exacerbated existing health disparities facing communities of color in those countries. Such inequities extend to reduced capital investment in conditions, such as colorectal cancer and Alzheimer’s disease, that disproportionately impact minority populations. In short, the end result would steer the focus of future medical research away from non-white populations.

Thankfully, Congress does not need to rely on discriminatory policies to create savings and advance meaningful change. The reconciliation bill includes a restructuring of the Medicare Part D program, which would realign payer liability and incentives to control costs, while supporting the long-term sustainability of the Medicare program. A provision not currently included in the reconciliation bill, but referenced in a reform proposal put forth by Reps. Scott Peters (D-Calif.) and Kurt Schrader (D-Ore.) would base beneficiary cost-sharing for prescription drugs — typically 25 percent of a drug’s sticker price — on the net price of a drug that reflects the amount that insurers and companies actually pay for a drug, after negotiated discounts. Congress should incorporate this provision into the final legislation.  

Congress is 90 percent of the way to addressing the challenges related to drug pricing. It is time for lawmakers to resolve to address the issue holistically, rather than in isolation, in order to ensure that patients have continued access to needed care and to put the nail in the coffin of using discriminatory value assessments in the United States.

Michael Ward is vice president of public policy for the Alliance for Aging Research in Washington, D.C.