A Government Success Story – Medicare Part D

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The Medicare Part D prescription drug program was voted into law 20 years ago and began full operation a little over 17 years ago. Adding a prescription drug program to Medicare was a long and arduous journey with many false starts and valiant attempts. You would think that installing a benefit that reduced suffering, kept people out of the hospital and saved lives would be a “no brainer” but the politics and timing seemed to continually work against its passage.

President Johnson first wanted to add it quickly after the creation of Medicare, but that idea languished as the Vietnam war escalated and President Johnson declined to run for a second term. President Reagan included a prescription drug plan in the ill-fated Medicare Catastrophic Coverage Act, but it died when the Act was repealed. President Clinton included a drug benefit in his healthcare initiative, but that legislation never got to a vote. President George W. Bush finally found that the stars had aligned in such a way that the passage of a prescription drug benefit was possible. Through a lot of wrangling and political arm twisting the law was narrowly passed in November of 2003 and Medicare Part D was born.

It is interesting that many of the same issues we’ve debated recently were part of the debate in 2003. Many lawmakers back then wanted to open the flood gates to allow the direct importation of drugs from foreign countries. The director for the Centers for Medicare & Medicaid Services (CMS) nominee, Mark McClellan, MD, argued that CMS couldn’t guarantee the safety of these imported drugs and the safety attestation on restriction stayed in the legislation. It is still part of the Part D program today stating that drugs can only be imported if the Secretary of HHS certifies their safety. That certification has not been granted for 17 years, although Florida is pursuing a program that has yet to be fully approved by the federal government. Another debate happened when the Bush administration, as a stop gap to the slow pace of passing the drug benefit legislation, wanted to institute a mandatory discount on drugs. The courts found that the Administration didn’t have the legal authority to impose this discount on the manufacturers. The power of the government to impose prices is again in the courts as several manufacturers and other entities have entered lawsuits claiming that parts of the Inflation Reduction Act (IRA) exceed the government’s legal authority.

One of the most important results of the passage of Medicare Part D was its cost. The actual cost of the program was below the government’s original estimates. According to a 2008 CMS report, the cost for Part D “is about 37 percent lower than originally projected when the benefit was established in 2003.” I have never found a government program that came in 37% below its original estimate.

So . . . For four decades multiple administrations knew we needed a Medicare prescription drug program but for a myriad of reasons couldn’t get one passed. Each of these attempts refined and expanded on a workable approach, with different solutions being examined and debated. The final legislation was a public/private partnership that has successfully operated below budget for 17 years, remained a steady approximate 11% of total Medicare spending and, according to our yearly survey, has around a 90% approval rating from its beneficiaries. It is this program that our lawmakers have decided needed huge changes, and so they passed the IRA. This new law allows the government to dictate the price of drugs, an approach that was debated and rejected by both the courts and lawmakers 20 years ago. They want to change a program that has made America the world center for the discovery of new medicines, ignoring the prediction that this law will cause a decrease in the discovery of new medicines. They want to alter a system that discovered and manufactured a COVID-19 vaccine in record time that saved millions of lives. It just doesn’t make sense.

There is a milestone coming up on September 1. This is when CMS will release the first 10 medicines to face the price fixing constraints dictated by IRA. The drug makers affected will have one month to decide if they will participate in the “negotiations” which in essence gives them the option to sell their medicine at the price the government dictates or to exit the Medicare marketplace which is a huge percentage of their total sales. That’s why it’s more of “it’s our way or the hi-way” than it is a negotiation. It is this chilling process that has already affected the research and development of new medicines. I will continue to keep you up to date on how this process plays out. Don’t miss an opportunity to tell your lawmakers that you value the discovery of new medicines over the shortsighted political maneuvering of the IRA.

Update – Meeting with my lawmaker. The staff of my Utah congressional safety district 1 Representative, Blake Moore, has responded to my request for a meeting. They asked if I would rather meet with a member of their staff, which I declined. They also asked for some more information about where I live (to ensure that I was actually a constituent) and what were the questions I had. I wanted to be up front with them, so I recounted my career in public policy and my current position as a spokesperson for Seniors Speak Out. I am waiting for their return communication.

Best, Thair

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