The Plan for Drug Price Cap Nullified by White House

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Dec 16, 2016

The Obama administration has decided to quit on a plan to fight high drug prices that drew strong opposition from both parties and also from apparently all sectors of the healthcare industry. It was confirmed by a spokesperson for the agency regulating Medicare and Medicaid.

The drug pricing plan was proposed in March and would have changed how Medicare pays for drugs. The idea drew opposition immediately from pharmaceutical companies, doctors’ groups and even Democratic lawmakers on Capitol Hill. Companies that had opposed the plan publicly included Eli Lilly, Pfizer, Regeneron, Bristol-Myers Squibb, and Johnson & Johnson.

The intention of the administration was to replace a current Medicare program paying doctors the average price of a drug plus 6%. Under the current system, doctors have an incentive to prescribe higher-cost drugs, as argued by the White House. The proposed plan would have reduced the 6% add-on to 2.5%, and also a flat fee of about $16. However, opponents complained that the new system could have limited patient’s access to certain drugs if doctors’ acquisition costs rose above the Medicare reimbursement level.

Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services (CMS), said: “After considering comments, CMS will not finalize the Medicare Part B Drug Payment Model during this administration. While there was a great deal of support from some, a number of stakeholders expressed strong concerns about the model. While CMS was working to address these concerns, the complexity of the issues and the limited time available led to the decision not to finalize the rule at this time.”

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