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Medicare Costs for Seniors Lowered in Senate Drug-Price Bill

Medicare Costs for Seniors Lowered in Senate Drug-Price Bill

(Bloomberg) -- Seniors would pay a smaller portion of their drugs’ cost and be shielded from huge one-time expenses under a new version of a Senate drug-pricing bill.

The second draft of the Senate Finance Committee’s Prescription Drug Pricing Reduction Act lowers what Medicare beneficiaries are responsible for paying in the initial phase of their prescription plans from 25% to 20% after they’ve paid their deductibles.

The measure also gives seniors the option to more evenly distribute what they pay each month for their medications, which would be capped at $3,100 a year.

Part D plans and drug middlemen would also have to include price concessions and fees they negotiate with pharmacies at the point of sale. Those concessions could include rebates to drug companies, the fees pharmacies pay to participate in a plan’s network, the contracted rate the plan pays a pharmacy for a medication, or a fee a pharmacy pays for failing to meet certain quality measures.

Drugmakers also have to pay new discounts for certain drugs in the initial phase of Medicare prescription plans that can range from 7% to 14%.

Health-care stocks remained higher on the day after release of the new bill details, with a basket of S&P 500 health-care stocks up 0.6% at 3:11 p.m. in New York.

The senators responsible for the bill, Iowa Republican Chuck Grassley and Oregon Democrat Ron Wyden, didn’t shy away from the previous bill’s most controversial element: mandating pharmaceutical companies pay rebates to the federal government if they raise the prices of their products beyond the rate of overall inflation.

That’s the portion of the bill that could save the government the most money. The Congressional Budget Office said in July that the bill would save taxpayers $85 billion and save beneficiaries $27 billion over a decade. The CBO hasn’t crunched the numbers on the revised bill and the Senate Finance Committee didn’t provide any new savings estimates.

President Donald Trump appears willing to sign Grassley and Wyden’s bill into law, according to a Dec. 6 Fox Business op-ed by White House advisers Joe Grogan and Tom Philipson.

However, it’s not clear enough Republicans are willing to get on board to pass the measure. In July, nine of 15 Republicans in the Senate Finance Committee voted against the first version. Senate Majority Leader Mitch McConnell said earlier this year that the path forward on this issue is “under discussion” and he is “looking at doing something on drug pricing,” but his office wouldn’t comment beyond that.

Grassley said last month that he wouldn’t back off the rebate provision because “as a practical matter, if we back off that to get Republican support we lose Democrat support,” he said.

To contact the reporter on this story: Jacquie Lee in Arlington at jlee2343@bloomberg.net

To contact the editors responsible for this story: Fawn Johnson at fjohnson36@bloomberg.net, Timothy Annett, Mark Schoifet

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