Government Buying of Medications for Medicare

President Trump announced recently a new proposal that would allow the government o buy medications for Medicare participants, bringing the prices down and saving billions of dollars in taxpayer money and for Medicare participants.

Trump Reforming Medicare

Previously, government intervention in pharmaceuticals has been avoided, even during Medicare reform. President Trump used a provision from the Democratic-approved Obamacare that gives the government permission to try new payment methods to write this proposal.

The US government has traditionally laid off of the pharmaceutical industry, and the big pharma companies have been concerned about too much government control over the industry. However, due to the government’s lax stance on pharma prices, Medicare pays almost twice the price for medications as many other advanced countries, such as Canada and the UK.

Critics note the irony here, that a Republican president is using a provision in the denigrated Obamacare, otherwise known as the Patient Protection and Affordable Care Act, and copying the socialized European model.

What the proposal covers

Trump’s proposal covers medications prescribed in doctors offices and outpatient setting under Medicare Part B. The goal is that over the next five years, the government would buy medications at a price based on an international price index, bringing the US buy price down and more in line with what other countries pay.

Between the years 2011 and 2016, Medicare Part B drug spending surged from $17 billion to $28 billion. Research from the US Department of Health and Human services shows that in the current system, the US pays about 1.8 times more for medications than sixteen other similar countries.

How the system would work

The proposal seeks to experiment in certain parts of the country over the course of the next five years. The HSS Department says that it will save $17 billion in taxpayers money and $3.4 billion in Medicare copays. Observers say that if it takes off in the government arena, it will probably spread to private insurance as well. The bar will be set lower, and this will bring down the price of medications for everyone, a win-win situation for everyone  – except perhaps big pharma. Not only can this save a lot of money for taxpayers and the elderly, but it can create a new revolution in the way people spend on medications in the United States.

Critical feedback

President Trump does not need Congress’s approval for this proposal, which will be run by the Center for Medicare and Medicaid Innovation, a body created through Obamacare.

Pharmaceutical lobbies are already planning their opposition to the proposal, claiming it will intimidate market research creativity. They say they want to bring down the prices internally, without the force of the government. However, senior organizations such as AARP are lauding the proposal and pushing it to come to fruition.

The pilot project is set to start in the Spring of 2020, and it’s a stance usually attributed to a democratic leaning; so going into the 2020 elections, trump can use this as an opportunity to show that he’s empathetic and looking to satisfy the needs of the elderly.

Medicare participants will be anxiously awaiting the results of the pilot project and looking forward to benefiting from the lower prices of the medications.

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