{"id":25353,"date":"2019-07-22T13:09:42","date_gmt":"2019-07-22T17:09:42","guid":{"rendered":"http:\/\/cfif.org\/v\/freedom_line_blog\/?p=25353"},"modified":"2019-07-22T13:09:42","modified_gmt":"2019-07-22T17:09:42","slug":"budget-negotiations-cfif-opposes-use-of-drug-price-controls-via-mandatory-inflation-rebates","status":"publish","type":"post","link":"https:\/\/cfif.org\/v\/freedom_line_blog\/25353\/budget-negotiations-cfif-opposes-use-of-drug-price-controls-via-mandatory-inflation-rebates\/","title":{"rendered":"Budget Negotiations: CFIF Opposes Use of Drug Price Controls via “Mandatory Inflation Rebates”"},"content":{"rendered":"

In ongoing negotiations, it’s reported<\/a> that some are proposing to employ destructive drug price controls as a mechanism to reach a budget agreement.\u00a0 For multiple reasons that CFIF has highlighted, that poses a potentially catastrophic idea.<\/p>\n

Specifically, it appears that debt ceiling negotiations may include a destructive proposal to reduce federal spending levels by targeting $115 billion from Medicare, which would derive largely from alleged \u201cMedicare savings\u201d through instituting a government-imposed mandatory \u201cinflation rebates.\u201d\u00a0 As we’ve explained<\/a>, inflation rebate proposals work by penalizing drug innovators with higher taxes whenever their products exceed an arbitrary inflation mark.\u00a0 Currently, Medicare Part D\u2019s structure works by employing market-based competition to mitigate drug costs via privately-negotiated rebates, meaning that no specific \u201cprice\u201d reliably represents that drug\u2019s underlying price.\u00a0 Accordingly, the proposal would inherently undermine privately-negotiated Part D plan rebates, which the Congressional Budget Office (CBO) has said \u201cappear to make the net prices approach the lowest prices obtained in the private sector.\u201d\u00a0 Indeed, as the Altarum Institute has highlighted<\/a>, those Part D plans currently achieve greater brand medicine rebates than private insurers.<\/p>\n

Critically, it must also be noted that inflation rebate proposals would violate non-interference clauses that facilitate competition among Part D plans, which provide a critical part of Part D\u2019s success in mitigating costs since its inception.\u00a0 They would also arbitrarily apply to new pharmaceuticals while bypassing generic brands, which now constitute approximately 90% of Part D prescriptions.\u00a0 The proposal would also inescapably weaken incentives on the part of Part D plan sponsors to negotiate with drug manufacturers and minimize drug spending under a regime of statutorily-imposed rebates, thereby setting a negative precedent for those sponsors.\u00a0 It also bears emphasis that private-sector limits on drug cost increases already exist via \u201cprice protection rebates\u201d that Pharmacy Benefit Managers (PBMs) negotiate with manufacturers.<\/p>\n

Accordingly, imposing price controls in Medicare Part D would fundamentally undermine its entire market-based model, which would in turn reduce research and development and slow progress toward new and improved medicines.<\/p>\n

Adding insult to injury, such a proposal would constitute a raid on Medicare for the benefit of other government spending pork.\u00a0 During this era of budgetary waste, the last thing that Congress should consider doing is sacrificing Medicare, particularly when affordability and access to pharmaceutical innovations remains such a top public priority.\u00a0 Budgetary discipline and access to medicines remains a priority of the highest order, but market-oriented solutions, not destructive gimmicks, offer the optimal solution.\u00a0 Any proposal to target Medicare Part D for mandatory inflation rebates has not been subjected to full review, committee research, hearings or debate.<\/p>\n

American citizens, particularly seniors, should not be subjected to that danger.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

In ongoing negotiations, it’s reported that some are proposing to employ destructive drug price controls as a mechanism to reach a budget agreement.\u00a0 For multiple reasons that CFIF has highlighted, that poses a potentially catastrophic idea. Specifically, it appears that debt ceiling negotiations may include a destructive proposal to reduce federal spending levels by targeting […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[70,5079,5048,5078,4805,3738],"class_list":["post-25353","post","type-post","status-publish","format-standard","hentry","category-posts","tag-budget","tag-debt-cieling","tag-drug-prices","tag-inflation-rebates","tag-pharmaceuticals","tag-price-controls"],"_links":{"self":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/25353","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/comments?post=25353"}],"version-history":[{"count":1,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/25353\/revisions"}],"predecessor-version":[{"id":25354,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/posts\/25353\/revisions\/25354"}],"wp:attachment":[{"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/media?parent=25353"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/categories?post=25353"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cfif.org\/v\/freedom_line_blog\/wp-json\/wp\/v2\/tags?post=25353"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}