Democrats should support Trump’s Medicare rebate proposal
By Ronald Klink
The Trump administration just proposed a Medicare reform that will be great for seniors’ prescription drug spending. It could save seniors more than $50 billion at the pharmacy counter over the next decade. Like every Democrat, I’m not a big fan of this administration. But Trump’s Medicare rebate proposal is a really good move that I hope my friends in Congress will support.
The proposed rule would affect the almost 45 million Americans who rely on the “Part D” Medicare benefit for prescription drugs. Part D plans are subsidized and regulated by the federal government but sold by private insurers. Each plan covers different treatments, and premiums, co-pays, and co-insurance vary.
Most insurance companies hire pharmacy benefit managers, or PBMs, to administer their drug plans. PBMs thus have great power to decide which drugs are available under each plan. They use that power to negotiate steep discounts.
The problem with this system is that the discounts and rebates PBMs secure, which amount to about $150 billion a year, are seldom passed on to consumers at the pharmacy counter.
That drives up pharmacy costs for customers. Say your medication has a list price of $200. The PBM might negotiate a rebate that brings the cost of that drug down to $80. But since they don’t disclose that massive discount, a patient’s co-pay is pegged to the full list price of the medicine. So if a patient has a 25 percent co-pay, he would spend $50 at the pharmacy. If insurance plans instead disclosed the actual, true cost of the prescription drug, the patient would only spend $20.
The administration’s proposed rule would classify most discounts and rebates as illegal kickbacks unless insurers and PBMs share the savings with patients.
My party has a long history of standing up to corporate interests in defense of the poor, sick, and elderly. So I’m surprised and saddened that some of my fellow Democrats have reflexively dismissed the proposed rule just because it came from the Trump administration.
Seniors’ drug spending would plummet under the proposed rule. If 90 percent of discounts and rebates were passed on, Part D beneficiaries would save $53 billion over the next decade.
By reducing co-pays and co-insurance, the rule would make it easier for Medicare enrollees to fill prescriptions. When folks take their drugs, they’re much more likely to stay healthy and avoid costly hospitalizations. Over the next decade, the rule could reduce total healthcare spending on diabetes patients alone by $20 billion.
My fellow Democrats don’t agree with the Trump administration on much. But in this case, I hope it’s different. This reform will greatly benefit Medicare enrollees, particularly the sickest who rely on multiple medications to stay healthy.
Ron Klink is a former Democratic congressman from Pennsylvania and is currently senior policy adviser at Nelson Mullins Riley & Scarborough LLP.
The viewpoints expressed above are those of the author and do not necessarily reflect those of The Independent.
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