SAN DIEGO, February 17, 2013 – There is a new battle brewing over the Medicare ‘Part D’ prescription drug program that has been in existence since 2006. To date, this program has come in consistently under-budget to the tune of a savings of $435 billion below initial budget.
A Harvard study showed “Gains in comprehensive prescription drug coverage as a result of Medicare Part D were followed by a decline of more than 4 percent in the rate of hospitalizations for 8 conditions sensitive to medication use.”
According to the Medicare Trustee report, Part D prescription drug costs have cost significantly less than expected over the past decade. In 2004, the Medicare Trustees “projected that the Part D benefit would cost $131.4 billion in 2011,” while in fact the real cost was about half this amount. In fact, the prescription drugs cost only $67.4 billion in 2011, just 51.3 percent of the originally projected expense.
The reason for this decrease in actual cost has been attributed to two potential factors—private insurance and the preservation of innovation.
By exercising private insurance models and competition some believe the savings to drug costs have been worth the potential out-of-pocket increased expense to some patients.
There is a movement afoot in the government to curtail Medicare Part D—perhaps even discontinue it. Some believe that the feds should control the entire management of all prescription drugs, thus decreasing incentives for innovation for new drug research and creation.
This is especially troubling for society at large.
Despite the attempt by some to demonize the pharmaceutical industry, it is irrefutable that America’s added costs to patient care and new drugs are directly linked to our leading role in developing, testing and delivering the majority of the world’s new medicinal breakthroughs.
With decreased pharmaceutical revenues and complete government ‘price controls’ on all drugs (resulting in less risk taking and more reliance on older, less advanced drugs), future generations will lack the necessary medicines to fight rapidly mutating and deadly infectious agents, and new chemotherapeutics to win the war on cancer will not be so easily forthcoming.
Some who believe that ‘bigger’ government control is ‘better’ have sided with the pro-Obamacare crowd. They are encouraging the Secretary of Health and Human Services to dismantle Medicare Part D, thus exercising unlawful discretionary powers, without Congressional permission or oversight.
Medicare Part D originally included a provision known as the “non-interference clause,” which “prohibits the Secretary of Health and Human Services from interfering in the private price negotiations between Medicare Part D plans and drug manufacturers and pharmacies in the program.”
The nonpartisan CBO does not side with the ‘grow government power’ crowd. In fact it recently noted that private insurer Part D plans can more effectively negotiate savings on Medicare drug costs; furthermore, it notes that “striking Part D’s non-interference clause is unlikely to achieve any significant savings”unless the feds also restrict patient access to prescription drugs (or fix prices outright).
The General Accounting Office has reported that Part D plans decreased costs for beneficiaries “through their ability to negotiate prices with drug manufacturers and pharmacies.”
The Congressional Budget Office has noted that Part D plans negotiate better rates than some private insurers; per the Medicare Trustees, “many brand-name prescription drugs…carry rebates up to 20-30%.”
The average monthly Part D beneficiary premium is about $30 in 2013 and has remained unchanged for the past three years.
A recent study in the Journal of the American Medical Association found that “implementation of the Medicare prescription drug program was followed by a $1200 per year decrease” in non-drug medical spending among those who previously had limited drug coverage.
All of this adds up to a strong endorsement to keep the Medicare Part D prescription drug program intact. Keeping the government’s hands out of the pharmaceutical cookie jar will yield substantial benefits for patients, the national budget, and our peace of mind that future generations will continue to benefit from advances in new drug treatments and cures.
Doctor Adam Dorin is a private, board-certified physician in Southern California, and the Founder/President of the non-profit America’s Medical Society.
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