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Lobbyists quash Medicare effort to curb soaring drug costs

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K Street N.W. at 19th Street in Washington D.C.,  at the epicenter of downtown Washington, D.C’s maze of high-powered “K Street Lobbyists”.

 

Politics: A strife of interests masquerading as a contest of principles. The conduct of public affairs for private advantage.

— Ambrose Bierce

After heavy lobbying by the drug industry and some provider groups, the Obama administration has canceled plans for a mandatory five-year Medicare initiative that would  have tested new ways of paying for outpatient drugs.

The move is widely seen as a disastrous blow to efforts to control the soaring cost of drugs.

The program, proposed by the CMS Innovation Center, which was created by the Affordable Care Act, would have sought new ways to pay for drugs under Medicare Part B in an effort to both curb costs and incentivize better patient outcomes. Last year, Medicare  (i.e., the taxpayers) spent more than $24 billion on drugs.

Under the current Part B reimbursement model for drugs administered by infusion or injection in physicians’ offices and in hospital outpatient departments, Medicare pays 6 percent in addition to the  the average sales price of the medication. The effect is to encourage physicians to choose more expensive drugs, instead of cheaper but equally effective drugs in order to increase physicians’ incomes.

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