US administration proposes to negotiate drug prices for Medicare

The Obama administration on Monday unveiled a proposal seeking to grant the US Department of Health and Human Services the authority to negotiate prices for high-cost drugs and biotechnology products through Medicare's Part D programme. In the proposal, which was unveiled as part of the administration's 2016 fiscal year budget, discounts on branded drugs would also be increased under the Part D programme.

HHS Secretary Sylvia Burwell remarked "I think it's something we believe will help with the issue of drug prices." Burwell added that the administration would work with Congress to establish that authority. The proposal follows criticism about high-priced therapies such as Gilead Sciences' hepatitis C treatment Sovaldi (sofosbuvir), which was launched at a cost of $84 000 in the US for a course of treatment (for related analysis see Spotlight On: Where will US payers strike next?).

The administration also proposed increasing discounts on branded therapies in 2017, three years earlier than previously planned. In addition, the budget includes two proposals designed to increase access to generic drugs and biologics, which could save $16 billion over 10 years. The first proposal suggests cutting the exclusivity period for biologic therapies from 12 years to seven years, while the second calls for the prohibition of additional periods of exclusivity for such medicines due to minor changes in product formulations.

Commenting on the news, Matt Salo, executive director of the National Association of Medicaid Directors, argued that a comprehensive approach is necessary to manage rising drug costs among insurers. "If in this competitive market, Medicare is able to drop the floor on prices, what is the ripple effect," Salo questioned, continuing "does Medicaid get charged more?"

To read more Top Story articles, click here.