PD Editorial: An opportunity for bipartisanship on Medicare drug prices

Despite bitter partisanship in Washington, politicians of all stripes should agree that reducing Medicare drug costs without harming patient care is a pretty good idea.

One reason for America's high cost of health care is that many medicines are much more expensive here than abroad. In fact, an analysis by the U.S. Department of Health and Human Services found the typical price of Medicare Part B drugs was 80 percent higher in the U.S. than in other industrialized nations.

A report this year from Medicare trustees said parts of the program are heading toward insolvency by 2026. That dismal prospect is three years earlier than previously projected.

The Trump administration wants to bring down those Medicare drug prices, keeping them more in line with prices charged abroad. A similar plan floated by the Obama administration drew fierce opposition and was shelved.

Yet if President Donald Trump is on board and newly empowered Democrats in the House of Representatives really do want to curb rapidly increasing health care costs, this could be an area for bipartisan compromise.

The administration's proposed Medicare model would use the International Pricing Index to limit prices for Medicare Part B drugs that must be administered in doctors' offices or hospitals. These include medications for cancer, arthritis and a host of other diseases. Spending on such Part B drugs has doubled since 2006, according to Health and Human Services.

The Trump administration would phase in that Plan B drug pricing over five years, cutting costs by 30 percent - a projected savings of $17.2 billion.

In general, Medicare Part B currently reimburses for the average cost of a drug plus 6 percent for the health provider's cost of administering it. Critics say the 106 percent reimbursement creates an incentive to use the most expensive drugs.

Fair enough, but that margin also enables some independent medical practitioners to stay in business.

The challenge is to reform drug pricing in ways that neither stifle competition nor prevent patients from receiving the most effective medications.

In addition, the pharmaceutical companies deserve a reasonable return on their research and development investment. But what is reasonable, and how much of it should come from Americans? Trump contends foreign medical systems are freeloaders, negotiating lower drug prices while Americans wind up subsidizing the drugs' development.

In describing the proposal, Health and Human Services officials said, “This free-market approach seeks the same type of discounts that drug makers already voluntarily negotiate with economically similar countries.” Medicare would pay 126 percent of the prices that other countries pay.

Health and Human Services researchers had compared U.S. prices for 27 different Part B drugs with those charged in 16 other countries. Most U.S. prices were higher - in some cases four times as high.

There are many variables across national lines that limit the validity of these sorts of analyses, but the researchers' bottom line was direct: Higher U.S. prices “mean that the Medicare program pays nearly twice as much as it would pay for the same or similar drugs in other countries.”

That reality should galvanize action across party lines. America is as far from national elections as it gets. It's the perfect time for bold measures to control health care costs.

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