[Ip-health] The HHS press release on Trump's drug pricing announcement involving an International Pricing Index (IPI)

James Love james.love at keionline.org
Thu Oct 25 11:36:09 PDT 2018

This is going require a little bit of explanation:

"The move from current payment levels to payment levels based on
international prices would be phased in over a five-year period, would
apply to 50 percent of the country, and would cover most drugs in
Medicare Part B, which includes physician-administered medicines such
as infusions."

On Thu, Oct 25, 2018 at 2:32 PM James Love <james.love at keionline.org> wrote:

> This is it.  Jamie
> https://www.hhs.gov/about/news/2018/10/25/hhs-advances-payment-model-to-lower-drug-costs-for-patients.html
> October 25, 2018
> Contact: HHS Press Office 202-690-6343, media at hhs.gov
> HHS Advances Payment Model to Lower Drug Costs for Patients
> The International Pricing Index (IPI) Model would lower costs for
> physician-administered drugs by resetting Medicare payments based on
> international prices and introducing competition
> On Thursday, the U.S. Department of Health and Human Services, through the
> Centers for Medicare & Medicaid Services (CMS), announced and sought input
> on a new “International Pricing Index” (IPI) payment model to reduce what
> Americans pay for prescription drugs.
> Under the IPI model, described in an Advance Notice of Proposed Rulemaking
> (ANPRM), Medicare’s payments for select physician-administered drugs would
> shift to a level more closely aligned with prices in other countries.
> Overall savings for American taxpayers and patients are projected to total
> $17.2 billion over five years.
> “President Trump promised that he would bring down drug prices and put
> American patients first,” said HHS Secretary Alex Azar. “With this
> innovative approach, he is now proposing historic changes to how Medicare
> pays for some of the most expensive prescription drugs, securing for the
> American people a share of the price concessions that drug makers
> voluntarily give to other countries.”
> “In an era where the pharmaceutical industry is pricing drugs at levels
> approaching a million dollars—and jeopardizing the future of our safety net
> programs—the time has come to fix the perverse incentives in the Medicare
> program that are fueling price increases,” said CMS Administrator Seema
> Verma. “I appreciate President Trump and Secretary Azar’s bold leadership
> to lower seniors’ prescription drug costs and provide relief.”
> The move from current payment levels to payment levels based on
> international prices would be phased in over a five-year period, would
> apply to 50 percent of the country, and would cover most drugs in Medicare
> Part B, which includes physician-administered medicines such as infusions.
> The model would correct existing incentives to prescribe higher-priced
> drugs and, for the first time, address disparities in prices between the
> United States and other countries. Since patient cost sharing is calculated
> based on Medicare’s payment amount, patients would see lower costs under
> the model.
> Physicians currently purchase the drugs that they administer to patients
> and receive payment from Medicare for those drugs at an amount equal to the
> average sales price plus an “add-on” fee. The add-on is calculated as a
> percentage of the average sales price of the drug.
> This creates several problems. First, the dollar amount of the add-on
> increases with the price of the drug, which encourages prescribing
> higher-cost drugs. Second, Medicare accepts sales prices for Part B drugs,
> with no negotiation. Together, this results in higher out-of-pocket costs
> that burden American seniors.
> The pharmaceutical industry offers deep discounts abroad while taking
> advantage of the payment system in Medicare Part B which drives the cost in
> the U.S., even though Medicare is the world’s largest drug purchaser. The
> IPI model would take on this issue and pay vendors for Part B drugs at a
> level approaching international prices.
> For the first time in Medicare, the IPI model would create a system in
> which private vendors procure drugs, distribute them to physicians and
> hospitals, and take on the responsibility of billing Medicare. Vendors
> would aggregate purchasing, seek volume-based discounts, and compete for
> providers’ business, thereby creating competition where none exists today.
> Under the model, instead of the current percentage-based add-on payment,
> physicians and hospitals would receive a set payment amount for storing and
> handling drugs that would not be tied to drug prices. Therefore, the IPI
> model would remove the financial incentive to prescribe higher-cost drugs.
> The model also frees physicians from having to “buy and bill” high priced
> drugs, which creates financial risk that jeopardizes their practice and the
> ability to serve their community.
> The agency is considering a randomized approach to determine which
> geographies in the country would participate in the model.
> The IPI model would achieve several goals:
> Reduce costs for Medicare beneficiaries, and thereby increase adherence
> and access to prescription drugs.
> Introduce competition to the system of paying for physician-administered
> drugs by bringing in private-sector vendors.
> Reduce providers’ burden and the financial risk associated with managing
> drug inventories, so physicians can focus on patient care.
> Maintain financial stability for physicians while removing incentives for
> higher drug prices.
> Address the disparity in drug prices between the U.S. and other countries.
> Reduce costs to the American taxpayers and Medicare beneficiaries who fund
> these programs.
> The ANPRM ensures an open and transparent approach with opportunity for
> public input. CMS will carefully review comments and is considering issuing
> a proposed rule for the IPI in the spring of 2019, with a potential model
> start in spring 2020.
> For a policy brief on the ANPRM, please visit:
> https://www.hhs.gov/about/leadership/secretary/priorities/drug-prices/ipi-policy-brief/index.html
> For a fact sheet on the ANRPM, please visit:
> https://www.cms.gov/newsroom/fact-sheets/anprm-international-pricing-index-model-medicare-part-b-drugs
> Comments on the ANPRM will be accepted until December 24, 2018 and may be
> submitted electronically through the CMS e-Regulation website at:
> https://www.cms.gov/Regulations-and-Guidance/Regulations-and-Policies/eRulemaking/index.html?redirect=/eRulemaking
> The ANPRM can be downloaded at:
> https://www.cms.gov/sites/drupal/files/2018-10/10-25-2018%20CMS-5528-ANPRM.PDF
> ###
> Note: All HHS press releases, fact sheets and other news materials are
> available at https://www.hhs.gov/news.
> Last revised: October 25, 2018
> --
> James Love.  Knowledge Ecology International
> http://www.keionline.org <http://www.keionline.org/donate.html>
> twitter.com/jamie_love

James Love.  Knowledge Ecology International
http://www.keionline.org <http://www.keionline.org/donate.html>

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