By Mario H. Lopez
Eight in ten Americans think prescription drugs cost too much. To drive down drug costs, Health and Human Services Secretary Alex Azar proposed sweeping changes to Medicare.
The proposal isn’t the solution patients have been waiting for. The reform would lower drug costs, but only by making it harder for underserved patients to secure the best treatments.
Congress promised to protect and expand access to health care. It should honor that pledge by pressuring Sec. Azar to shelve the proposal.
The proposal would overhaul Medicare Part B, which subsidizes cancer treatments and other advanced drugs administered in outpatient settings.
Currently, doctors and hospitals purchase drugs up-front, store them on-site, and administer them to patients. This enables physicians to quickly adjust treatment doses if a patient’s weight or bloodwork changes unexpectedly. Only after dispensing the medicines do physicians bill Medicare for reimbursement.
Under the proposed system, Medicare would contract with private-sector vendors, which would purchase drugs in bulk and deliver them to doctors. Doctors would have to submit an order to the vendor whenever they need medicines.
These middlemen will almost certainly delay treatment for many patients. Sick patients might have to make repeated trips to the doctor’s office if the vendor wasn’t able to deliver a particular dose in time for an appointment.
The proposal would also change how doctors are compensated. Currently, physicians receive a fee equal to 4.3 percent of the average sales price of whatever drug they’re dispensing. This helps cover storage, shipping, and other overhead costs. Under Sec. Azar’s plan, physicians would receive a flat fee regardless of what medicine they administer.
For clinics that administer an above-average amount of cutting-edge, relatively expensive medicines, the switch essentially represents a reimbursement cut. Many doctors and clinics already lose money on Medicare patients. Further cuts could be the proverbial straw that broke the camel’s back. The last time the federal government slashed Part B reimbursements, almost half of oncologists had to turn away patients, according to the American Society of Clinical Oncology.
Clinic closings and treatment delays would particularly harm underserved communities.
For example, Hispanics are twice as likely as non-Hispanic whites to live in poverty. They suffer higher rates of chronic disease than their non-Hispanic white peers. They’re also more likely to rely on community clinics — precisely the kinds of facilities that will be hit hardest.
The proposed changes would also weaken the incentive to develop future treatments and cures.
Sec. Azar wants to tie Part B drug payments — which are currently based on drugs’ average sales prices in the United States — to prices paid in other developed countries, including the United Kingdom, France, and Canada, where drugs are less expensive. The reform is expected to cut Part B drug spending by 30 percent.
Other countries pay less for medicines because they impose strict price controls on drugs. France’s Health Products Pricing Committee has significant authority to dictate drug prices, as does Canada’s Patented Medicine Prices Review Board. British regulators won’t even approve a drug for sale unless the manufacturer drops its price below certain arbitrary thresholds.
Price controls stifle innovation. It takes $2.6 billion to bring one new drug to market. Artificial price caps make it nearly impossible for researchers to recoup this considerable investment. If Sec. Azar’s proposal were implemented, research investment would decline and fewer new treatments would reach patients.
Voters want more affordable health care — but not at the expense of vulnerable patients. It’s up to lawmakers to fulfill their promises and protect Medicare beneficiaries.
Mario H. Lopez is president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity, and prosperity for all Americans.
