A Congressional Budget Office analysis of the Trump administration’s FY19 budget proposal concludes that authorizing the HHS secretary to shift drugs from Medicare Part B to D would not produce any budget savings. Part B, which reimburses for drugs administered under a physician’s supervision, pays the average sales price (ASP) plus a 6% administration fee for drugs, while Part D relies on private plans to negotiate drug prices. HHS Secretary Alex Azar has expressed confidence that the policy would produce substantial savings for taxpayers (see BioCentury, May 18).
CBO estimated a $43.4 billion increase in spending over a decade if Congress enacts the administration’s proposal to require Medicare Part D plans to return a substantial portion of rebates to beneficiaries at the point of sale. It also calculated that an administration proposal to eliminate of cost-sharing on generic drugs for low-income Medicare Part D beneficiaries has a price tag of $18.7 billion over a decade.
CBO estimates that some of the other proposed changes to Medicare the administration has proposed would save taxpayer money. It found that excluding manufacturer discounts from the calculation of beneficiary out-of-pocket costs in the Medicare Part D coverage gap would save $58.5 billion over a decade. This policy would keep beneficiaries in the coverage gap, or donut hole, longer. This proposal would impose large costs on drug companies which pay 50% of drug costs for beneficiaries in the donut hole. Drug company donut hole discounts are set to increase to 70% in 2019 (see BioCentury, April 6).
CBO scored an administration proposal to increase Medicare Part D formulary flexibility as producing $6.3 billion in savings to the taxpayers over 10 years.
Proposals to limit Part B drug price increases to the rate of inflation and to establish a beneficiary out-of-pocket maximum in the Medicare Part D catastrophic phase would each save $1.5 billion over a decade.