Feds should negotiate Medicare prices with drugmakers, seniors say

The federal government should negotiate drug prices for Medicare and force drugmakers to explain how they set drug prices, according to a survey out Tuesday of people 50 and older by AARP, the nation’s largest organization of people this age.

The survey showed more than 93% of adults 50 and older said they favored the Medicare price negotiations, a policy advocated by presidential candidates Hillary Clinton, Bernie Sanders and Donald Trump. President Obama included such price negotiation authority for drugs known as biologics and "high-cost drugs" in his recent budget proposals .

The percentage of respondents supporting government negotiations was up from 87% in 2007, which was the last time AARP asked the question. The group has not done a drug price survey since 2008.

"Medicare has a louder voice and would be a better negotiator," said Leigh Purvis, director of health services research in AARP's Public Policy Institute.

There was high support overall for more transparency on the part of pharmaceutical companies. Nearly all — 98% — said they should be able to compare the price and effectiveness of prescription drugs, a concept that's been gaining traction. Insurance companies are increasingly using claims data to come up with "clinical pathways" they recommend to doctors for cancer treatment. The Memorial Sloan Kettering Cancer Center has a "drug abacus" to help weigh the effectiveness of drugs against the costs.

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Patient groups funded by drugmakers are largely mum on high drug prices

AARP has long advocated that the Centers for Medicare and Medicaid Services negotiate directly with drugmakers, rather than leaving it to the pharmacy benefit managers (PBMs) that handle the Medicare Part D drug plans. That approach wouldn't likely bring prices down much unless there was one national formulary that everyone was on, experts say however.

Formularies are the lists of approved drugs an insurer will cover, sometimes under different levels of cost-sharing tiers to encourage use of particular medicines.

Former Congressional Budget Office director Peter Orszag responded to questions about federal drug price negotiation from Sen. Ron Wyden, D-Ore., in 2007 by saying there could be limited cost savings if prices for a few drugs or drug types  were negotiated, but it would have little effect on Medicare costs overall. He noted, however, that if the Department of Health and Human Services Secretary had "authority to establish a formulary, set prices administratively, or take other regulatory actions" it could lead to "significant discounts."

Former House Energy and Commerce Committee chairman Henry Waxman, D-Calif., said negotiators would need to use a "value-based" approach to pricing to get more of a benefit.

"I think negotiation is imperative, but it's only a piece of the puzzle," he said. "You still have the question, 'What's a drug worth?' and 'Is it worth it for the health system?'"

Conservative health policy experts, drugmakers and PBMs say seniors will be most unhappy if they can’t get the drugs others can and are unable to choose among all the Part D plans available now.

"Many don't know that price controls require a one-size-fits-all, national drug list that's built and run by the government," said Mark Merritt, CEO of the Pharmaceutical Care Management Association, which represents PBMs. "That would completely disrupt Medicare Part D and restrict choices for seniors."

Health care economist John Goodman, CEO of the Goodman Institute, notes "Nothing is gained unless you are willing to take certain expensive drugs off the table — certain life saving drugs."

"You can't win in an negotiation...if the other side knows there's no way you can live without a drug." said Goodman, author of Priceless: Curing America’s Healthcare Crisis.

The Department of Veterans Affairs hospitals use one national formulary and it's possible — but hardly easy — to get a drug that's not on the formulary, said Kavita Patel, a primary care physician at Johns Hopkins Medicine and senior fellow at the Brookings Institution.

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When it comes to rising prices, Patel said the new PCSK9 cholesterol drugs and possible new drugs that come along to fight Alzheimer's disease, dementia and obesity will have a bigger effect than the well-publicized, exorbitantly priced cancer and Hepatitis C drugs.

"That speaks to the need to make changes in Medicare for the long term," said Patel, a former policy director in the White House under Obama. "I want a Medicare program that my children can still have."