Drug Pricing Proposals

In May 2018, the Trump Administration released American Patients First, a blueprint to lower drug prices and patient out-of-pocket costs. The plan, which builds on a set of proposals released as a part of the Administration’s 2019 budget, lays out actions the Department of Health and Human Services should take and includes a request for information from various healthcare stakeholders. The blueprint includes four key strategies for reform: improved competition, better negotiation, incentives for lower list prices and lowering out-of-pocket costs for patients. The most significant proposals would:

  • Grant new authority for the HHS Secretary to move certain Part B drugs into Part D where savings could be gained through negotiation with manufacturers
  • Mandate that 340B hospitals devote a portion of their drug savings to charity care.
  • Modify the way Medicare pays for Part B drugs, including tying reimbursement to inflation, reducing Wholesale Acquisition Cost (WAC) based payment from WAC plus 6% to WAC plus 3%, and changing the way Average Sales Price (ASP) is determined.
  • Implement cost-sharing reductions for low-income beneficiaries in Medicare Part D by requiring that plans apply at least one third of the rebates they receive from manufacturers to reducing the point of sale price for consumers.
  • Exclude manufacturer discounts from counting towards beneficiary out-of-pocket costs for individuals in the “donut hole” and establish an out-of-pocket maximum for beneficiaries in the Medicare Part D catastrophic phase.
  •  Allow up to five state Medicaid programs to jointly negotiate lower prices from manufacturers.
  • Speed up the development of generic drugs by cracking down on manufacturer’s ability to “park” generic drug applications with the FDA during an exclusivity period.

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