Medicare Monday: Why changing the structure of Part D could hurt beneficiary access

This week on Medicare Monday, we’re looking at how proposals to change the structure of Medicare Part D could actually limit – and hurt – beneficiary access.

As we’ve covered before, price negotiation already occurs effectively within the Medicare prescription drug program. Large, powerful Part D purchasers negotiate discounts and rebates directly with manufacturers, and according to the Government Accountability Office, this private negotiation helps keep costs low for both beneficiaries and taxpayers. In fact, the Medicare Trustees have reported rebates are substantial and have increased each year of the program.

Part of the success of these private negotiations is the competition among purchasers who also operate in the commercial market. These pharmacy benefit managers represent as many as 120 million covered lives (more than the nearly 40 million Part D beneficiaries) and have the leverage needed to secure large rebates and discounts that are then passed on to beneficiaries. The law that created Medicare Part D established an environment for such competition and negotiation by including a non-interference clause that prohibits the government from interfering in the private price negotiations between Medicare Part D plans, drug manufacturers and pharmacies in the program.

While some have suggested repealing the non-interference clause and allowing the government to interfere in Medicare negotiations, the result could be very harmful to seniors and people living with disabilities who benefit from the program. Even the Congressional Budget Office (CBO) has stated that there is clear evidence of effective negotiation already taking place and government interference would not result in lower prices without also restricting Part D beneficiary access and coverage.

The bottom line: Proposals to fundamentally alter the structure of Medicare Part D could jeopardize access to affordable prescription drug coverage for seniors and people living with disabilities, causing more harm than good.