[Ip-health] Reuters: Obama administration seeks to negotiate Medicare drug prices

Thiru Balasubramaniam thiru at keionline.org
Tue Feb 3 08:07:04 PST 2015


Obama administration seeks to negotiate Medicare drug prices


WASHINGTON Mon Feb 2, 2015 5:50pm EST

(Reuters) - The Obama administration said on Monday it would seek authority
to negotiate prices for high-cost drugs under the government's Medicare
Part D program, which offers private drug coverage for senior citizens and
the disabled.

President Barack Obama's <http://bit.ly/1svQIxk> new $3.99 trillion budget
for fiscal-year 2016 proposes allowing the U.S. secretary for health and
human services to negotiate prices for biotechnology treatments and other
high-cost drugs in Part D "to ensure access to and affordability of these

But the plan would require the administration to get a green light from
Congress, where Republicans who control the House of Representatives and
Senate have openly favored market forces over government intervention as a
vehicle for containing healthcare costs.

Congress prohibited Medicare from negotiating directly with drug companies
in 2003 when it created Part D under then-President George W. Bush.

The drug industry's main lobbying group, Pharmaceutical Research and
Manufacturers of America, warned that the president's budget plan contained
"harmful proposals that fundamentally alter the structure of the Medicare
Part D program,” including one that would reduce patent protection on
brand-name biotechnology drugs.

Health and Human Services Secretary Sylvia Burwell said she hoped talks
with lawmakers would lead to a detailed plan, describing negotiations as an
important element of the administration's goal of containing costs across
the healthcare system.

"This is about us trying to find ways that we can continue with what we
have talked about as a real priority for us," she told reporters.

The budget plan projects a 30 percent rise in Part D drug benefits, from
$63.3 billion this year to $82.5 billion in 2016, partly due to the rising
cost of specialty drugs.

Biotechnology <http://bit.ly/1sw0HCO> treatments, or biologics, are
generally patented, genetically engineered drugs that can be more effective
than traditional medicine.

But they can also be more expensive because they are more complex to
manufacture. Some biologics play a role in precision medicine, which seeks
to better tailor treatments to individual patients based on their genetic
makeup and other influences. Obama last week proposed $215 billion in
government funding to support genetic-based treatments.

The proposal to allow drug price negotiations follows a campaign by private
insurers and pharmacy benefits companies against Gilead Sciences Inc's
$84,000 hepatitis C drug, Sovaldi.

U.S. payers argued that the drug, which cures nearly all patients of the
liver-wasting disease, could cost $200 billion to cover the entire
hepatitis C population, an unsustainable sum for society.

(Editing by Matthew Lewis
 and Jonathan Oatis

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