HHS Predicts Sharp Increase in Prescription Drug Spending

New estimates from the U.S. Department of Health and Human Services (HHS) indicate that spending on prescription drugs is growing at record levels and outpacing spending on health care nationally. Prescription drug spending grew 12.6 percent in 2014, and is projected to continue to increase by approximately 7.3 percent annually through 2018. Drug spending increased just 2 percent between 2008 and 2012. Officials say that demand for more expensive medications is largely to blame for the increased spending. But because these more expensive specialty drugs are also more expensive to make, the growth in drug spending has not resulted in increased profits for pharmaceutical companies. Revenues for brand-name drugs remained relatively flat in 2014.

CMS Proposes Part B Drug Payment Change

The Centers for Medicare and Medicaid Services (CMS) has released plans for a pilot program to restructure Medicare reimbursements for Part B drugs. The new model would cut the reimbursement rate in Medicare Part B by more than half, while adding a flat rate per prescription. The reimbursement rate would drop from average sales price (ASP) plus six percent to ASP plus 2.5 percent, plus the new flat payment of $16. The new payment system is meant to incentivize providers to prescribe higher-value drugs rather than the most expensive drugs in order to control Medicare spending on prescription medications. In 2017, CMS would expand the pilot to test what happens when providers are paid extra for prescribing drugs with the highest success rates, and to examine the effects of reducing or eliminating patient cost-sharing. Part B drugs cost a total of $20 billion in 2015. CMS is accepting comments on the Part B payment proposal through May 9.

Upcoming Congressional Meetings and Hearings

POSTPONED: Senate Finance Committee markup to vote on the nomination of Mary Katherine Wakefield to be deputy HHS secretary; time and place TBD 

House Energy and Commerce Committee Broad Review of Concussions: Initial Roundtable; 2:00 p.m., 2123 Rayburn Bldg.; March 14

House Energy and Commerce Committee vote on H.R. 4725, Common Sense Savings Act of 2016; 5:00 p.m., 2123 Rayburn Bldg.; March 14

House Science, Space, and Technology Subcommittee on Research and Technology hearing titled: “An Overview of the Budget Proposal for the National Institute of Standards and Technology for Fiscal Year 2017;” 10:00 a.m., 2318 Rayburn Bldg.; March 16

House Appropriations Labor, Health and Human Services, Education, and Related Agencies Subcommittee hearing on the budget for the National Institute of Health; 10:00 a.m., 2358-C Rayburn Bldg.; March 16

House Ways and Means Health Subcommittee hearing titled “Preserving and Strengthening Medicare;” 10:00 a.m., 1100 Longworth Bldg.; March 16

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