Medicare Part D Frequently Asked Questions
We have a deficit problem in America. If we can save money by making biopharmaceutical companies pay rebates in Medicare Part D, why not do it?
When Medicare Part D was created it wasn't paid for, but rather just added to the deficit. Isn't it time for taxpayers to get that money back?
How would jobs in the biopharmaceutical industry and other sectors be affected by mandatory rebates in Part D?
We have a deficit problem in America. If we can save money by making biopharmaceutical companies pay rebates in Medicare Part D, why not do it?
Imposing mandatory rebates, or taxes, in Part D is a bad idea for several reasons: it could destabilize a successful Medicare Part D program, impede seniors' access to needed treatments, and it could result in job losses across America.
Such proposals also could chill future development of life-saving medicines. In fact, the Congressional Budget Office (CBO) has reported that price controls in Part D could "reduce the amount of funds that manufacturers invest in research and development of new products."
We don't need to choose between tackling the deficit and winning the war on cancer. We should balance the budget without risking reduced access to medicine for seniors, slowing medical innovation or cutting the highly-skilled, science-based jobs our economy needs.
When Medicare Part D was created it wasn't paid for, but rather just added to the deficit. Isn't it time for taxpayers to get that money back?
Part D has been an unparalleled success, exceeding nearly all expectations. Mainly due to its unique, competitive, market-based structure, Part D is costing far less than originally forecast, while still providing comprehensive, affordable prescription drug coverage to millions of seniors and disabled individuals.
Competition among participating drug plans has resulted in negotiated discounts on medicines and low monthly premiums for enrollees. The government is spending much less on Part D than initially projected - more than 40 percent less, according to CBO's most recent estimates.
And, an important new study published in the Journal of the American Medical Association found that Part D saves Medicare about $1,200 per year in hospital, nursing home and other costs for each senior who previously lacked comprehensive prescription drug coverage. Harvard researchers have said that coupled with other research, this suggests savings of about $13 billion per year in savings across Medicare.
Importantly, 84 percent of Part D enrollees are satisfied with their coverage, and 95 percent say their coverage works well.
As changes to entitlement programs are debated, the competitive bidding model of Part D should be seen as a model for federal health programs in the long term. Policies such as mandatory rebates, which threaten to destabilize Part D, are counter-productive at best.
How would jobs in the biopharmaceutical industry and other sectors be affected by mandatory rebates in Part D?
The biopharmaceutical sector is critical to maintaining U.S. competitiveness in the life sciences and knowledge economy of the 21st century. This was acknowledged in President Obama's Strategy for American Innovation: "innovations ripple through the economy, creating jobs for workers installing broadband networks, manufacturing biopharmaceuticals, and building advanced infrastructure."
Recent analysis by Battelle shows that reducing biopharma sector revenue by $10 to $20 billion per year--the same magnitude as policies recently proposed by the Administration and some in Congress--would result in 130,000 to 260,000 lost jobs.
In addition, economists agree that introducing Medicaid-style rebates into Part D risks raising costs for seniors and other consumers; one analysis by a former CBO director suggests premiums in Part D would increase by 20-40 percent.
Our nation's leaders should be embracing policies that foster job growth in industries such as the innovative biopharmaceutical sector, not policies that could lead to thousands of lost jobs.
It's widely thought that the biopharmaceutical companies are making windfall profits from the Medicare prescription drug program. Therefore, it should be ok to take some money back to lower our debt, right?
Allegations of windfall profits for biopharmaceutical companies as result of Medicare Part D are off base. In its first year of operation, the Part D program - which was enacted specifically to improve seniors' access to prescription medicines - lifted pharmaceutical sales "by just under 1 percentage point," according to IMS Health, a research firm that specializes in pharmaceutical information.
In addition, the rate of growth for spending on prescription medicines is lower than years prior to the enactment of Part D. According to IMS Health, spending on prescription medicines grew at an average rate of close to 4 percent annually between 2006 and 2010. This compares with an average growth rate of just over 9 percent per year from 2002-2006 and nearly 16 percent annually from 1998-2002. IMS projects that future growth will remain at historically low levels.
Further, due to the health care reform law, biopharmaceutical companies are now paying billions of dollars in fees and discounts on medicines in Part D. In fact, the Obama Administration has recently touted the huge savings for seniors from Part D coverage gap discounts that are paid for by pharmaceutical companies. These discounts and payments are never recognized by those alleging Part D provides a windfall to manufacturers.