Government negotiations on drug prices could reverse Medicare Part D

Congress created Medicare Part D to provide beneficiaries with a prescription drug benefit. The program took effect in 2006 and in the past ten years, almost half of North Carolina's Medicare participants have enrolled in it.

America's seniors like Part D the way it is. In fact, one recent poll found that 89 percent of seniors are satisfied with their drug coverage -- and 94 percent think that their plan is convenient to use.

In Washington, D.C., legislators are considering a bill to change Medicare Part D that would reduce the incentive for North Carolina’s biopharmaceutical firms to innovate. If the proposal passes, good jobs, economic development, and lifesaving medicines could vanish.

The proposal seeks to change Medicare Part D, the prescription drug benefit that enables 800,000 North Carolina seniors to access the medicines they need. Specifically, it would allow the government to inject itself into negotiations between private insurers and drug manufacturers and enable government officials to restrict the availability of new medicines.

Part of the program's appeal is its affordability. The average premium for a basic Part D plan is expected to remain stable next year, up just fifty cents from 2015's average cost of $32 per month. That's about half of what government officials originally expected. Part D has also come in well under budget for taxpayers.

If lawmakers adjust the structure of Part D so that government officials can interfere, much of the program’s success could be reversed.

Current federal health programs provide an illustration of how government interference would limit choices. Avalere, a leading advisory company, recently analyzed drug coverage at the Department of Veterans Affairs, which restricts access to cutting-edge medicines in order to save money. Avalere found that just 81.5 percent of the 200 most popular drugs among Part D beneficiaries are covered. The average Part D plan covers more than 95 percent of those 200 drugs.

Interfering with Part D could also cause healthcare spending to go up elsewhere. Research from Columbia professor Frank R. Lichtenberg found that for every $1 spent on innovative drugs that replace older ones, overall health care spending falls by $6.17. These savings are made possible because innovative drugs help reduce hospital stays and physician costs. A National Bureau of Economic Research paper says that Medicare Part D has helped cut hospital admissions by 8 percent, Medicare expenditures by 7 percent, and total resource use by 12 percent.

Choking off access to needed medications will compromise the health of North Carolina's Medicare enrollees — and its economy. Without adequate access to medicines, seniors will suffer severe illness, requiring their working-age friends and family to cut down their own hours to provide care. That will drive down productivity and deprive our state of new growth.

That's not the only way tampering with Part D will hurt the North Carolina economy. By ratcheting back drug coverage — thus shrinking pharmaceutical firms' customer base — these "reforms" will reduce drug makers' incentive to research and develop new medicines.

Drug firms are conducting nearly 1,800 clinical trials in North Carolina. That research directly pumps $400 million into the local economy. And those companies support over a quarter of a million jobs. Changes to Medicare would jeopardize this research and the jobs it supports.

Medicare's prescription drug benefit helps beneficiaries afford medicines, improving their lives and reducing healthcare spending. Undermining Part D would harm seniors, threaten the economy, and endanger North Carolina's role as one of the great biotechnology hubs in the world.

E. Bruce Beasley III is the Former President of the Wilson Chamber of Commerce and a partner in the Beasley Group.

http://www.reflector.com/Op-Ed/2016/03/06/Protect-Medicare-Part-D-prescription-drug-benefit-for-North-Carolina-s-seniors.html