NRLC warns that proposed changes to Medicare Part D can limit access to life-saving drugs

By Jennifer Popik, JD, Federal Legislative Director

Since its inception, the National Right to Life Committee has been equally concerned with protecting older people and people with disabilities from euthanasia as with protecting the unborn from abortion. We have recognized that involuntary denial of lifesaving medical treatment is a form of involuntary euthanasia, and therefore have opposed government rationing of health care.

While we understand the goal of reducing drug costs down for the Medicare program, we believe that the proposed rules changes to Medicare Part D can deter drug innovation and reduce access to life-saving medication.

In 1994 we opposed the Clinton Health Care Plan’s proposed insurance premium price controls because they would have forced rationing. In 1995-2003, during the congressional debate over Medicare restructuring, we successfully fought for the ability of older Americans to add their own money, if they choose, to government payments for health insurance premiums in order to obtain insurance plans that are less likely to ration care. In 2019-10 we fought against inclusion of numerous provisions in the Obama Health Care plan, and worked to see its most egregious provision, the Independent Payment Advisory Board (IPAB) repealed in 2018. IPAB’s sweeping powers could have limited not just Medicare spending, but also healthcare paid for with nongovernmental dollars.

Now, NRLC has concerns with the proposed rule changes to Medicare Part D drug coverage and its implications on limiting access to lifesaving drugs through potential use of drug price controls. According to the proposed rule, Medicare could now “exclude a protected class drug from a formulary if the price of the drug increased beyond a certain threshold over a specified look-back period.”

The bottom line concern is that drug price controls like this can limit access to life-saving drugs. The explanation begins with the fact that drug price controls have a devastating effect on the development of new lifesaving drugs. Research and development is financed by investors, and investment in pharmaceutical development is risky. Many promising leads fail to work out and never make it to market.

According to a 2018 ongoing analysis conducted by Deloitte, returns on research and development “have declined to 1.9 percent, down from 10.1 percent in 2010—the lowest level in nine years…Returns have been impacted by the growing cost of bringing a drug to market which now stands at $2,168 million—almost double the $1,188 million recorded in 2010.”2

Those who say drugs are overpriced often compare the high price of an innovative, breakthrough drug with the low cost of its production. They conclude that, even taking into account the cost of research and development for that particular drug, the patient is being “gouged” to produce “windfall” profits. This perspective fails to recognize that given the high odds against any given potential drug ever getting to the market and then actually making money, only the possibility of that high rate of return can induce investors to invest.

Further, for each new drug a company successfully brings to market there are many, many others that fail during research and development. The high research costs of the many drugs that fail to make it to market must be covered by the profit made on the few drugs that are successful, or the drug company will no longer continue to innovate.

Medicare has long-provided a prescription Part D drug benefit. The proposed Part D regulation not only will affect what drugs must be covered in the 6 protected classes, but will “exclude a protected class drug from a formulary if the price of the drug increased beyond a certain threshold over a specified look-back period.”1

The private insurers negotiate prices with the drug companies. Normally they hire “Pharmacy Benefit Managers” (PBMs) who put together groups not only of Medicare enrollees but also of those covered by employer-paid insurance. The objective is to get large numbers of patients to enable them to negotiate discounted rates with drug companies. The current Medicare law prevents the federal government from interfering in these negotiations or directly imposing prices. This is the provision the Part D proposed rule is aiming to change.

Under current law, Medicare drug prices are negotiated by competing private insurers, not simply accepted at a level set by the drug companies. However, there are checks and balances on these negotiations by private parties that help prevent them from driving prices so low as to result in rationing and harm to new drug development – – checks and balances not present when the government steps in to set prices.

It was precisely because policymakers recognized this, and feared its impact on the ability to develop new lifesaving drugs, that the 2003 Medicare bill set up the prescription benefit in a way so as to break up the negotiating process for drug prices among a variety of insurance plans, and prohibited the federal government from interfering in those negotiations.

Understandably, people focus on the larger and larger amounts they are spending for drugs and other health care expenses. In fact – – strange as it may seem – – we are spending more on drugs and health care not because we’re being forced to do so by rising drug prices, but because we’re able to and choose to spend on better drugs bringing millions an enhanced quality of life.

According to the proposal,

…effective for plan years starting on or after January 1, 2020, to permit Part D sponsors to exclude from their formularies any single-source drug or biological product that is a protected class drug whose price increases, relative to the price in a baseline month and year, beyond the rate of inflation. The rate of inflation would be calculated using the Consumer Price Index for all Urban Consumers (CPI-U). Specifically, we propose to add an exception at § 423.120(b)(2)(vi)(E) to specify that a part D sponsor can exclude from its formulary protected class single-source drug or biological products subject to our other formulary requirements in § 423.120(b)(2), that the Part D sponsor identifies, for which wholesale acquisition cost between the baseline date and any point in the applicable period has increased more than the cumulative increase in the CPI-U over the same period.

Price increases for health care have consistently outpaced the “average” rate of inflation across the economy for a variety of reasons, among which is the inherent labor intensiveness of the health care sector. It is neither realistic nor just to tie limits on health care spending, which must reflect inflation in the health care sector, to a measure of inflation that is less than the real rate of medical inflation.

In addition, while the proposed rule would not eliminate the six protected classes, it does seek to make significant changes to the program that could harm a Medicare recipient’s access to medically-appropriate therapies by requiring step therapy.

Our central concern is that the new step therapy guidelines can result in an approach that deters physicians from providing the most effective life-preserving treatment for particular patients.

Who would create these guidelines? How would these guidelines take into account a person’s age, disability, or terminal illness in a way that did not discriminate against these qualities? What would the consequence be for a doctor who felt that due to the particular nature of his patients failed to use step therapy?

Under step therapy, patients are forced to first try older, cheaper, and potentially less effective drugs before being able to receive the newer, but more expensive drug their physician believes is best for them. To put it bluntly, step therapy can cost lives. A cancer or HIV patient may not have the time left to be forced to try older and less effective drugs first.

While we can understand the need to bring drug costs down for our seniors in the Medicare program, the proposed rules risk deterring innovation and could reduce access to life-saving medication.

Footnotes:

1.) https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-25945.pdf

2.) https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/life-sciences-health-care/deloitte-uk-measuring-return-on-pharma-innovation-report-2018.pdf