Senate (Special Committee on) Aging Committee Hearing
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Chairman Nelson, Ranking Member Collins, and Members of the Committee, thank you for inviting me to testify on the
PhRMA represents the country's leading innovative biopharmaceutical research companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier, and more productive lives. The
This investment in the discovery and development of new medicines has produced numerous medical advances that have changed the course of disease and the face of medical care. The breadth and scope of these advances is far too great to comprehensively describe. A few examples follow of the dramatic impact medicines have made in the fight against cancer, cardiovascular disease, HIV/AIDs, and hepatitis C:
. Since 1988, life expectancy for cancer patients has increased about 4 years, with roughly 80% of those gains attributable to new treatments, including medicines. n4 Increases in life expectancy for cancer patients between 1988 and 2000 yielded 23 million additional life years and roughly
. Cardiovascular disease represents a significant disease burden today; an estimated 82.6 million adults are living with one or more types of cardiovascular disease, and the prevalence of heart disease is nearly three times higher in seniors compared to other age groups. n8 However, due to the benefits of biomedical innovation, the death rate for cardiovascular disease fell 33% just between 1999 and 2009. n9 In the words of researchers at
. In today's world, an HIV/AIDs diagnosis is no longer considered a death sentence. Since the approval of antiretroviral treatments in 1995, the HIV/AIDS death rate has dropped by 85%. n12 According to leading HIV researchers, "In stark contrast to the early and mid-1980s, if a person aged 20 years is newly infected with HIV today and guideline recommended therapy is initiated, researchers can predict by using mathematical modeling that this person will live at least an additional 50 years -- that is, a close-to-normal life expectancy." n13
. The treatment of hepatitis C is another important example of how new medicines can profoundly change the course of a disease that affects several million Americans and tens of millions around the globe. The chance that a patient would reach the goal of sustained virologic response (undetectable virus for 24 weeks after treatment) was about 10% in the 1990s and, with new medicines, improved to about 40% in the early- to mid-2000s. Two years ago, the introduction of protease inhibitors and triple therapy regimens revolutionized treatment for hepatitis C, increasing sustained virologic response to about 75%, depending on prior treatment experience. n14 n15 These treatment advances are expected to halt the progression to end stage liver disease, reduce the need for liver transplantation, and prevent complications such as hepatocellular cancer, which will likely result in fewer deaths from the virus and avoided health care costs. Continuing innovation in hepatitis C treatments include new therapies on the horizon that have the potential to be even more efficacious, have improved safety profiles and be more convenient for patient use.
The U. S. Biopharmaceutical Research Sector and the Economy
The U.S. biopharmaceutical research sector leads the world in the development of new medicines, with more than 3,200 medicines in development or
These jobs encompass the research-based occupations that will help sustain future U.S. economic growth, often requiring specialized science, technology, engineering, and math (STEM) skills. The U.S. biopharmaceutical sector directly provides more than 650,000 jobs, but supports a total of 4 million jobs across the economy. In 2009, the biopharmaceutical sector contributed
These economic impacts are driven by the R&D enterprise, in which PhRMA member companies alone invested an estimated
The President's
This sector, which drives science, medical advances and high quality jobs (with its R&D intensity driving its high multiplier effect on jobs throughout the economy), was not always centered in the U.S. Thirty years ago,
The U.S. is recognized as the global leader in biopharmaceutical R&D.
Trends in Spending for Prescription Medicines; Opportunities for Savings
At the same time that medicines have been making extraordinary progress against disease, they account for a small share of health spending. For instance, an analysis by
In addition to medicines' low share of overall health spending, growth in spending on medicines has slowed dramatically over the last decade. Recently,
Historical data from the
The trends in prescription medicine spending are the result of many factors, including several that are unique to the biopharmaceutical sector. Medicines are mostly purchased in a national market by very large, powerful, sophisticated purchasers who specialize in buying medicines and making aggressive use of various tools to achieve savings, driving utilization to the medicines for which they can negotiate the lowest prices.
Related to all of these factors is the prescription medicine lifecycle. In this lifecycle, innovator pharmaceutical companies produce medical advances through pioneering scientific work and large-scale investments, leading over time to generic copies that patients use at low cost for many years. Savings from generics are possible only because the medicine was previously invented by an innovator company, and the marketplace is quick to take up use of generics when they become available. This process provides built-in cost containment not available in other health sectors by continuously freeing up resources and reallocating spending from older to newer medicines. Although savings from the market's aggressive leveraging of the prescription medicine lifecycle are often ignored in policy debates discussing cost savings, the lifecycle is a central characteristic of the market for prescription medicines. Today, generic drugs account for 84% of all prescriptions filled in the U.S. n29.
While prescription medicines are typically singled out and treated as a line-item in cost containment efforts, there is an extremely robust academic literature finding that use of medicines can help save money on other health care services, especially hospitalizations and emergency department care. For instance:
. Every additional dollar spent on medicines for adherent patients with congestive heart failure, high blood pressure, diabetes or high cholesterol generates
. Improving adherence to diabetes medicines could prevent 341,000 hospitalizations and 699,000 emergency department visits each year, resulting in annual savings of almost
. Greater adherence to statins could reduce total health care spending by more than
The opportunity for better health and savings on chronic illnesses through appropriate use of medicines is described by
[P]atients frequently are not prescribed essential chronic medications and frequently fail to adhere to them when they are prescribed; both of these issues have major consequences for public health. A national chart-based review of the quality of care in
Creation of
While medicines play a central role in today's health care system, prior to 2006 there was no outpatient prescription drug benefit through
The Part D program at the heart of MMA was structured to provide
Part D Plan Participation
A guiding principle in designing Part D was that beneficiaries should have choice among plans, to find one that meets their individual cost and coverage needs. Initial concerns that private plans would not serve some or even perhaps any areas of the country led policymakers to incorporate in the law government-run fallback drug plans that would be established if an insufficient number of plans stepped forward. However, plan participation has been robust and the government fallback plans have never been implemented. Today over 35 million people have drug benefits through
Beneficiary Experience with Part D
From the beneficiary perspective, Part D has made premiums and medicines affordable, and has improved access and utilization, leading to better health outcomes. Given this, it is not surprising that 94% of Part D enrollees report that they are satisfied with their drug coverage and 95% are confident that the level of coverage meets their needs. n38
By the end of 2006, over half of previously uninsured beneficiaries enrolled in Part D. n39 While not all eligible beneficiaries enrolled, the take-up rate was high and well-above that typically experienced in voluntary programs. Those who did enroll had greater health needs than those who did not. n40
Beneficiaries who previously did not have drug coverage realized a large reduction in out-of-pocket (OOP) spending on medicines, because they gained access to insurance plus plan-negotiated discounts. This reduction in beneficiary OOP cost improved access to and utilization of recommended medicines among beneficiaries, particularly the newly insured. For example, a study supported by PhRMA found that the share of beneficiaries reporting difficulty paying for prescriptions dropped by two-thirds among low-income subsidy (LIS) beneficiaries -- from almost 29.7% reporting difficulty in 2005 to 9.5% in 2007. Similarly, among non-LIS beneficiaries who were previously uninsured, such difficulty dropped by about half (21.3% to 10%). n41 This data predates the establishment of coverage gap discounts.
Average beneficiary premiums have been lower than projected in each year of the program and have remained virtually flat over the last three years at
There is still much room to improve utilization patterns, which would yield better health outcomes and additional savings - but Part D has been a large step forward.
Part D Cost Containment
Part D has far lower total costs than originally projected and there have been continuing large reductions in projected costs up to the present. According to the latest CBO data, Part D is on a track to cost
While it has been widely reported that actual costs for the Part D program today are far below initial forecasts, less well known but equally important is the fact that Part D spending forecasts have continued to fall up to the present as the program has gained a longer track record. For example, CBO data shows that actual spending for 2012 was 20% lower than the forecast made just two years prior, in 2010, when significant legislative changes were made to the program. n46 Notably, CBO has reduced its 10-year projection for Part D spending by over
The size of the reduction in predicted spending for
Better Use of Medicines Leads to Savings on other Medicare Costs
At the time Part D was being developed, CBO expressly rejected calculating any savings in other parts of
As the evidence of cost offsets from medicines has mounted and as more seniors and disabled Americans have gained better access to prescription coverage through Part D, in November of 2012 CBO announced a change to its cost estimating methodology to reflect "a substantial body of evidence" showing that increases in prescription drug use lead to offsetting reductions in spending for other
Just as the evidence has developed over time to support the consensus view that that medicines yield offsetting savings on other health care services, further development of the evidence will likely yield recognition of even larger savings than credited today. In its November report, CBO acknowledges that literature specific to a range of conditions shows medicines yielding larger offsetting savings than now built into CBO rules. n56 Preliminary findings from research in development supported by PhRMA suggests that the magnitude of offsetting savings for patients suffering from congestive heart failure, diabetes and several other conditions may be three to six times higher than the population average reported by CBO. It will be important to closely monitor the development of the evidence base in this area.
Competition Has Played a Central Role in Part D's Success
Competitive forces at work within Part D's structure have played a key role in achieving the program's favorable outcomes, including incentives for plans seeking to obtain enrollment in a consumer choice environment, negotiated drug prices, and beneficiary choice among plans. The result has been a strong record of affordability outlined above and, on average, broader beneficiary access to medicines as compared to other public programs. For instance, Part D does not have arbitrary limits on the number of prescriptions covered per month, a feature that can be found in a number of state
Many outside observers have also recognized the positive impact of competition within Part D. Former CBO Director
The competitive features of the Part D market clearly drive savings along with access. In fact, Part D plans provide more robust access than in programs like the VA or that would be provided under alternative approaches. CMS' standards set under the legislation creating Part D play a role in striking a balance between access and affordability, which will always be a dynamic issue within the program. CMS must remain diligent in monitoring the program to help sustain that balance.
Negotiated Prices within Part D
Robust negotiation of drug prices is one factor driving lower spending figures in Part D. Under current law and practice, private insurers and pharmacy benefit managers negotiate significant discounts and rebates on drugs dispensed to enrollees in their Part D plans and pass these savings on to beneficiaries and the Part D program. Evidence of such savings comes from the
Some of Part D's plan sponsors and their pharmacy benefit managers (PBMs) represent total patient populations of 40-50 million individuals, and also negotiate on behalf of private employers and the Federal Employee Health Benefit Program (FEHBP). n60 Just as in the commercial sector, these Part D plans negotiate to capture the largest possible discounts and rebates by using cost sharing and utilization management tools to steer patients to preferred medicines. CBO has found that Part D plans "have secured rebates somewhat larger than the average rebates observed in commercial health plans." n61 The Medicare Trustees note that "many brand-name prescription drugs carry substantial rebates, often as much as 20-30 percent." n62 Analysis of Medicare Trustee data shows that negotiated rebates have increased in each year of the program, repeatedly exceeding projected levels. n63
Repeated increases in the reported average levels of negotiated rebates in Part D are a tangible example of competition at work. The statutory provisions concerning pass-through of these privately negotiated rebates, and the competition among part D plans to attract enrollees, translate into tangible savings for
Powerful Incentives for Cost Control Have Driven Rapid Take-up of Generics
Some observers have suggested that most of Part D's cost containment success is attributable to the "patent cliff" - an increase in generic use that happens when innovator medicines' patents expire. These observers argue that the similarity between drug spending trends inside and outside of Part D suggest no particular benefit from competition in Part D. But this argument misses several key points.
First, the timing and scale of the patent cliff has been well-known for many years, yet the 10-year cost projections for Part D continue to decline sharply - as previously mentioned, by over
Second, Part D was expressly designed to leverage the competitive tools already built into and widely used in the commercial marketplace, with plans and PBMs operating in a national market and highly sophisticated at purchasing drugs using plan design and formulary tools to negotiate discounts and rebates from brand manufacturers and drive high generic use rates among beneficiaries. Thus, Part D trends that are broadly similar to those in the commercial market reflect the competitive forces in the commercial sector and built into the Part D model.
Third, as discussed above, generics are a part of the competitive landscape in the U.S. market, representing a stage of the prescription medicine lifecycle. The U.S. market maximizes savings from use of generics, which is possible only because that drug was developed through the work and investment of an innovator company. Generic drugs now account for 84% of all prescriptions filled in the U.S., n66 a higher rate than in many other developed countries. Additionally, while the competitive U.S. market operates to maximize savings from generics the 30 most commonly prescribed generic drugs are, on average, priced 96% higher outside the U.S. n67 High rates of generic use are an inherent characteristic of the competitive market that achieves savings while allowing reallocation of resources to medical advances, not a separate, independent force.
According to data from
Reflecting the prescription drug lifecycle that starts with innovation, a study conducted by
Choice of
Part D provides beneficiaries choice among plans, which promotes plan competition for enrollment and allows beneficiaries to select a plan that meets their individual cost and coverage needs. Some have questioned whether beneficiaries can make good choices among plans. Although there will always be opportunities to improve the match between a beneficiary's needs and the plan they choose, there are strong indications that beneficiaries have done a good job at navigating the choices available to them.
At the program's inception, a study commissioned by PhRMA found that in both 2006 and 2007 a very large majority of beneficiaries chose plans that combined lower-than-average premiums, and a broad choice of medicines. n70 More recently, MedPAC reported that over 13% of Part D enrollees switched plans in 2010 and 2011, more than double the rate reported at the outset of the program. n71 Other new research finds that Part D enrollees who switched plans reduced their average annual out-of-pocket costs by almost
Effective Negotiation Takes Place Today in Part D
There is a widely held misperception that Part D bars negotiation of drug prices. That view is wrong. As already discussed, robust negotiation by large, powerful purchasers with many tools at their disposal and incentives to achieve savings is at the heart of Part D.
Claims that Part D prohibits negotiation misread the law's "noninterference" clause. n74 This language, which had origins in the
Private plans and their PBMs negotiate price concessions with manufacturers and set formularies according to standards enforced by CMS (these standards allow for a range of outcomes rather than forcing uniformity in benefits and formularies). These sponsors and PBMs have long experience and deep expertise in negotiating with manufacturers and they bring to negotiations the purchasing clout of total patient populations of 40-50 million individuals. They also have the incentives and tools to drive hard bargains, and the expertise and infrastructure needed to purchase medicines and ensure the benefit includes appropriate medicines, including Pharmacy and Therapeutics (P&T) committees and other clinical experts.
The government does not match the experience, expertise, clinical knowledge and infrastructure that an ExpressScripts or UnitedHealthcare brings to the negotiating table, n76 because these private purchasers participating in
For Secretarial negotiation to achieve larger savings than those achieved by Part D plans (with their strong record of cost containment), the Secretary would be expected to restrict access to medicines more than in today's program. The non-partisan CBO has consistently stated n77 that striking noninterference "would have a negligible effect on federal spending because ... the Secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by Part D plans under current law." To negotiate prices lower than those already achieved through negotiation between Part D plans and manufacturers, CBO states the government would need to impose additional access or coverage restrictions on Part D medicines, noting, "...the negotiating lever that's used to lower drug prices is the threat of not allowing that drug to be prescribed or putting limitations on its being prescribed within that drug plan." n78 Thus, the most likely outcome would be a one-size-fits-all formulary and benefit structure, since the Secretary would presumably be negotiating on behalf of all
VA Model Would Not be Sustainable for
Some critics of the Part D program argue that drug prices should be "negotiated" for Part D as they are for the VA drug benefit. But proposals to use the VA as a model for Part D do not account for how the VA system works, and as a result underestimate the impact that would come from such a sweeping change. First, the VA prices are based on a statutory government price control formula. As discussed below, government price controls would damage the biopharmaceutical research enterprise that patients and policymakers alike count on to produce medical advances.
Second, VA operates a single national formulary with a limited range of available medicines, rather than giving veterans a choice among plan formularies as is the case in Part D. Moreover, this single VA formulary provides much more restrictive access to medicines than is typical in Part D. In a 2011 analysis by the
Further, the VA delivers care through a closed health system, while
Finally, VA covers a relatively small population and as discussed above frequently does not serve as its enrollees' sole source of prescription drug coverage. Part D's enrollment is more than three times larger, and as a
Applying
Some policymakers have called for applying
Policymakers advocating for this new policy often base their position on the fact that dual eligibles obtained their prescription drug coverage through
First, prescription drug coverage for approximately six million dual eligible beneficiaries was intentionally transferred from
Second, these proposals would extend
Third, both the
Moreover, current rebate proposals do not account for the tens of billions of dollars in new discounts and fees that brand manufacturers pay. For example, biopharmaceutical manufacturers are now required to pay a 50% discount on all brand drugs dispensed to enrollees who are in the Part D coverage gap n88 and to pay new fees into the
To summarize, current proposals fail to account for both the many changes made by the MMA creating Part D and significant statutory changes in
Adverse Impact of Medicaid Price Controls on Part D and Beneficiaries
Part D's competitive structure already includes substantial negotiated discounts and rebates, and Part D plans have strong incentives within the current framework to reduce costs and appropriately manage drug spending. Layering market-distorting government price controls on top of a program that was designed to operate - and successfully does so - on a model employing negotiated discounts would not be a small or modest adjustment. Rather, it would undermine the program's balance of competitive forces and effectively shift to a reliance on traditional government-imposed line item price controls, despite the strong successes achieved for beneficiaries and taxpayers by the program's competitive structure.
Unlike the market-based rebates currently negotiated and passed through to beneficiaries in the form of lower premiums, deductibles, and cost sharing, mandatory government rebates in Part D would not return savings to
In a larger sense, requiring
Preserving Incentives for R&D and Continued Medical Progress
Proposals for new price controls in Part D could have a negative impact on R&D investment in the U.S. Today, the U.S. leads the world in drug discovery and development, and the potential for scientific breakthroughs in multiple disease areas has never been greater.
CBO has reported that a
Biopharma R&D can have a bright future as new scientific discoveries are opening up extraordinary possibilities for treating some of our most challenging and costly diseases. At the same time, it's important to recognize that analysts are increasingly citing falling returns on R&D in recent years, which may impact the industry's ability to bring these new medicines out of the pipeline. Notably,
The biopharma sector is working hard to evolve in this new century to achieve new efficiencies and harness the full potential of the scientific and technological advancements now available to us, so that the R&D process can be more productive. Likewise, the policies that govern how we work and how the health system works need to evolve. Part D was a part of that evolution in policy; applying government price controls would move backward. Only by evolving policy and science together will we achieve the biomedical advances that patients are counting on.
Potential Areas for Improvement in Part D
While the Part D program has been highly successful, there are opportunities to improve the program and ensure that all beneficiaries are receiving high quality care. One important opportunity for improvement relates to the Medication Therapy Management (MTM) Program, which was intended to optimize medication use among Part D beneficiaries. A recent CMS report evaluating the impact of MTM for beneficiaries with two costly chronic conditions, congestive heart failure and chronic obstructive pulmonary disease, found that the program was successful in increasing adherence and lowering hospitalization costs. n100 These findings are consistent with the research discussed above, showing that appropriate prescribing of medication therapy and better adherence improve quality and outcomes, while often reducing total costs and use of other more expensive health services. n101
Given MTM's potential to both improve outcomes and lower costs, it is important that the program reach the full range of beneficiaries who would benefit from active medication management. Part D plan sponsors tend to interpret the minimum eligibility criteria outlined by CMS in a way that misses many chronically ill beneficiaries who are at risk for underuse of medicines or poor adherence. CMS should consider specifying additional MTM eligibility criteria beyond drug costs, such as medication classes that treat chronic conditions, targeting beneficiaries that have high overall health spending rather than just high drug spending (which may require a waiver from the statutory eligibility provisions), or lowering the minimum Part D drug count threshold. We also encourage CMS to make its MTM data available to researchers, in order to determine which MTM program elements are most effective and to investigate ways to increase beneficiary participation in the program.
The MTM program also provides an opportunity to identify potential overuse, misuse or abuse within Part D and should be integrated with other efforts to identify problematic patterns of utilization, including drug-drug interactions, contraindicated medications, and medication errors. To further aid in identifying potential problems, we support CMS proposals to facilitate sharing of beneficiary-level utilization management data when beneficiaries change plans. Such data sharing could help plans identify potential safety risks and address plan shopping and doctor shopping that is driven by fraud and prescription abuse. It could also help avoid instances in which beneficiaries are required by a new plan sponsor to repeat a prior authorization process or step therapy program undergone previously, as this extra step can unnecessarily deny access to needed treatments. Separately, CMS could build on the Electronic Health Record (EHR) incentive program to encourage participating physicians to complete annual medication reviews for their patients, and work to assure that EHRs incorporate medication fill data from PBMs and health plans.
Assuring that beneficiaries are able to make well-informed choices among plans is key to the success of Part D. As discussed earlier, MedPAC has recently reported that a larger share of beneficiaries are switching plans during annual open enrollment, and other research shows that switchers save money. There may be further opportunities to provide information to beneficiaries that would encourage them to shop when appropriate and help in identifying plans that would provide the best mix of access, premiums, and out of pocket costs.
Finally, improvements could be considered to ensure that the use of a specialty tier in Part D does not undermine access to needed medicines. In our past comments to CMS, we have recommended a more patient-centered approach that would allow patients to appeal specialty tier cost sharing by demonstrating a medical need for the specialty tier drug, as the rules allow for medicines on other tiers. CMS should also assure that a therapeutic alternative in the class be available to patients in a preferred tier before a medicine may be placed in the specialty tier.
Taking these steps would ensure that patients needing specialty medicines do not face high barriers to accessing care.
Conclusion
I thank the Committee for convening this hearing to assess what we have learned in the 10 years since the Part D program was enacted. As I see it, a number of lessons have emerged.
First, the combination of private sector competition under government oversight of beneficiary protections has worked. The robust participation of plan sponsors and beneficiaries, combined with the continued reduction of Part D spending estimates and high enrollee satisfaction ratings all testify to this. Like any program, Part D could benefit from small adjustments and improvements; but on balance, the program has been high performing.
Second, beneficiaries value choice and have been able to make good decisions to address their cost and individual coverage needs. While some may need extra guidance and support to access what they need,
Third, better use of medicines has a strong track record of improving health and generating cost savings in other parts of
Fourth, Part D includes many effective cost containment features and incentives to provide good access to medicines. Government price controls and Secretarial "negotiation" are directly at odds with this system; injecting them would be a step backward that would undermine foundational aspects of the program.
Finally, we need to support continued biopharmaceutical innovation. Innovation is central to achieving widely agreed upon goals such as continuing to change the course of cancer, mental illnesses and neurodegenerative diseases, just as we've changed the course of HIV, hepatitis C and heart disease. Innovation can also support a more affordable health care system; as our society ages, Alzheimer's alone will cost
With the right policy framework underpinning the innovative biopharma research enterprise, it will continue to make the future better than the past, with scientific advances yielding remarkable progress against disease along with economic growth and hope for patients.
Thank you for allowing me to testify today. I am happy to answer any questions you may have.
n1 CBO, "Research and Development in the Pharmaceutical Industry,"
n2 PhRMA analysis of National Science Board, "Science and Engineering Indicators,"
n3 PhRMA Industry Profiles, 2001-2013.
n4 Sun E,
n5 Lakdawalla et al,
n6 HHS, CDC, NCHS. "Health,
n7 Cancer and
n8
n9
n10 ML. Weisfeldt and SJ Zieman, "Advances in the Prevention and Treatment of Cardiovascular Disease," Health Affairs, 26 (2007): 1, 25-37.
n11 Cutler DML, M.B.; Stewart, K.A. Intensive Medical Care and Cardiovascular Disease Disability Reductions. In: Cutler DMW, D.A, ed. Health at Older Ages: the Causes and Consequences of Declining Disability Among the Elderly.
n12
n13
n14
n15 Ramachandran P,
n16 Battelle Technology Partnership Practice, "The U.S. Biopharmaceuticals Sector: Economic Contribution of the Nation,"
n17 Battelle Technology Partnership Practice, "The U.S. Biopharmaceuticals Sector: Economic Contribution of the Nation,"
n18 PhRMA Profile, 2013.
n19
n20
n21 President's
n22 PhRMA analysis based on National Science Board. "Science and Engineering Indicators 2012."
n23
n24
n25
n26
n27
n28 Ibid.
n29
n30 Roebuck et al. Medication Adherence Leads To Lower Health Care Use And Costs Despite Increased Drug Spending. Health Affairs.2011;30(1):91-99.
n31 Jha et al. "Greater Adherence To Diabetes Drugs Is Linked To Less Hospital Use And Could Save Nearly
n32 Pittman el at. "Adherence to Statins, Subsequent Healthcare Costs, and Cardiovascular Hospitalizations."
n33 Shrank WH,
n34 Safran DG et al. "Prescription Drug Coverage and Seniors: Findings from a 2003
n35 See, e.g., Gibson TB, Ozminkowski RJ, Goetzel RZ. The effects of prescription drug cost sharing: a review of the evidence. Am J Manag Care 2005;11:730-740; Poisal JA, Chulis GS.
n36 CMS, "
n37 MedPAC, "Report to the
n38 MedPAC, "Report to the
n39 Davidoff et al., "Lessons Learned: Who Didn't Enroll In Medicare Drug Coverage In 2006, And Why?" Health Affairs, 29, no. 6,
n40
n41 Foley, K. and Johnson, B. "Medicare Part D Improves the Economic Well-Being of Low Income Seniors."
n42 CMS Press Release, "Medicare Prescription Drug Premiums to Remain Steady for Third Straight Year"
n43 Calculation based on MedPAC data in, "Report to the
n44 See CBO Medicare Baselines available at www.cbo.gov
n45 CMS, Advance Notice of Methodological Changes for Calendar Year (CY) 2014 for
n46 See CBO Medicare Baselines for 2004, 2010, and 2013, Components of Mandatory Outlays, available at www.cbo.gov
n47 See CBO, "Preliminary Analysis of the President's Budget for 2012,"
n48 See CBO Medicare Baseline,
n49 CBO, "The Budget and Economic Outlook: Fiscal Years 2013 To 2023" February, 2013, p. 57, https://www.cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf
n50 PhRMA analysis of CBO baselines,
n51 CBO Letter to the Hon. Michael Bilirakis,
n52 CBO "Offsetting Effects of Prescription Drug Use on
n53
n54 Afendulis & Chernew, "State Level Impacts of
n55
n56 CBO "Offsetting Effects of Prescription Drug Use on
n57 Orszag, as quoted in "CBO Lowers 10-Year Cost Estimate of Medicare Prescription Drug Benefit,"
n58
n59 Source: "Overview of Approaches to Control Prescription Drug Spending in Federal Programs." Statement of
n60 AIS's Pharmacy Benefit Survey Results: 3rd Quarter 2012
n61 March 12, 2007 CBO letter to the Honorable
n62 See 2012 Medicare Trustees Report, p. 166, footnote 72.
n63 2012 Medicare Trustees Report, p. 166, Table IV.B9; and Medicare Trustees Reports for 2007, 2008, 2009, 2010, and 2011.
n64 CMS Press Release, "CMS Proposes 2014 Payment and Policy Updates for
n65 See CBO Baselines for 2010 to 2013, available at www.cbo.gov.
n66
n67 Squires DA. Explaining High Health Care Spending in
n68
n69
n70 Analysis for PhRMA by
n71 MedPAC, "Report to the
n72 Ketcham, JD et al. "Sinking, Swimming, or Learning to Swim in
n73 Ibid, p. 31
n74 See Social Security Act, Section 1860D-11(i)
n75 Ibid.
n76 This raises the question of how the Secretary would even operationalize negotiation. As CBO points out, negotiation typically centers on the terms under which a medicine will be covered by a plan. Thus, the Secretary would have to make tiering and utilization management decisions for each drug about which she negotiates and then fit that into each plan. But plans differ, some may already have negotiated satisfactory terms for coverage of a particular drug or one of its competitors, and the Secretary's decision about tiering or utilization management rules may undermine those decisions, or be inconsistent with those plans benefit design. This is just one question about "negotiation" by the Secretary and suggests that allowing interference by the Secretary in existing negotiations between plans and manufacturers would profoundly change the character of Part D in a way that moves away from choice, competition and access.
n77 CBO Letter to the Hon.
n78 Remarks of CBO Director Dr.
n79
n80 "2011 Survey of
n81 Statement of Dr.
n82 "2011 Survey of
n83
n84 See "The Six Million Medicare Beneficiaries Excluded From Prescription Drug Benefits Under the Senate Bill are Disproportionately Minority,"
n85
n86 Statement of Dr.
n87 See 2012 Medicare Trustees Report, p. 164, Table IV.B8.
n88 Section 3301 of the Patient Protection and Affordable Care Act (PL 111-148), as amended by Section 1101 of the Health Care Education and Reconciliation Act (PL 111-152).
n89 Ibid.
n90 PricewaterhouseCoopers, "Implications of the
n91 CBO, Budget Options Volume I Health Care,
n92 Antos & King, "Tampering with Part D Will Not Solve Our Debt Crisis," American Enterprise Institute Health Studies Working Paper,
n93 CBO, "Pharmaceutical R&D and the Evolving Market for Prescription Drugs"
n94
n95
n96
n97
n98
n99 Ibid.
n100
n101 Examples include, but are not limited to: W.H. Shrank, et al. "A Blueprint for Pharmacy Benefit Managers to Increase Value."
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