You may wonder what the significance of the alpha-numeric title of this piece is or question why you should bother reading any further. Let us see if we can keep this interesting.
Mr. Sajak, ..... I think I will spin the wheel and buy a vowel........just kidding.
First: H.R.1 is the Social Security Amendment of 1972. Actually, only its mom refers to it as H.R.1, (typically when it is in serious trouble) everyone else just calls it the "The Law of 72'".
Secondly: This legislation contains a statute titled the "Anti-Kickback Statute."
Thirdly: This statute made it illegal for any entity (think pharmaceutical manufacturer, pharmacy, or health insurance company) to offer anything of value (think coupons and/or rebates) for items or services that a federal healthcare program pays for in whole or in part.
Fourth: It is this statute that prohibits Medicare from allowing participants to use pharmaceutical coupons and/or rebates.
Let's jump ahead thirty-one years to 2003. Federal lawmakers have gathered, debated, opined, and eventually create the Medicare Part D provision. However, when they created the Medicare Part D provision they also deliberately created a statute that made it illegal for Medicare to negotiate drug prices directly with the pharmaceutical companies. (Now why would they do that? More on that latter. Spoiler alert: It's exactly what you think.)
Now, do you think that the lawmakers of 1972 had a crystal ball that allowed them to see through all that polyester to the future where they were able to witness the house and senate of 2003 create a law that would "declaw" the Center of Medicare/Medicaid Services ability to run its programs effectively and efficiently? Let me ask that question differently; Can you imagine how much more waste, abuse, and general misconduct the Medicare system would have to endure if the Law of 72 did not exist? (Or for that matter, the False Claim Act of 1863 and the Stark Law of 1989?)
But change is afoot. Recently, both the White House and Congress have openly criticized the pharmaceutical industry for its unaffordable prices. That's different.
Moreover, they worked together to draft a statute to change the 2003 legislation that restricts Medicare from negotiating with pharmaceutical manufacturers. That statute is contained within the $2 trillion dollar social and climate spending package that the House passed last month. Specifically, that statute provides Medicare with broad authority to negotiate drug prices directly with pharmaceutical companies.
Now, that sounds pretty damn good. Actually, it sounds too good to be true. Well upon closer inspection you will find out that it is. What the bill proposes is the following:
- Beginning in 2023, Medicare will negotiate prices for high-cost small molecule prescription drugs as well as for biologics once they have been on the market for nine (9) years and twelve (12) years, respectively.
- Beginning in 2023, Medicare will negotiate up to ten (10) drugs and will eventually negotiate up to twenty (20) drug prices per year. Any negotiated price made in 2023 will take effect in 2025.
- The package imposes a tax penalty on pharmaceutical manufacturers that increase their prices faster than inflation and an excise tax on manufacturers if they refuse to negotiate with Medicare.
- The package offers to lower insulin prices so that a diabetic patient's out of pocket expense is no more than $35 per month.
- The package proposes a $2,000.00 annual cap on what seniors' and people with disabilities spend on drugs.
This bill still has to pass the Senate. If past history is any indication, the Senate will more than likely change or modify several of the proposals in the package that the House passed, including those mentioned directly above.
The bad news is that a change in this specific statute is more like a certainty. The worse news is that any change will most likely not be for the better. Why is that? Well for the simple reason that seventy-two (72) Senators out of a total of one hundred (100) received and cashed a check from big pharma ahead of the 2020 election.
Guess what? Two of the 72 happen to be fellow Hoosiers Senator Todd Young and Senator Mike Braun. As a matter of fact, campaign finance reports from the Federal Election Commission indicate that from 2007 through the first part of this year (2021) our boys collected a tidy sum of money from big pharma.
Sen Todd Young
2007 – 2022
24 Different Pharmaceutical Companies
Sen Mike Braun
2019 - 2022
11 Different Pharmaceutical Companies
However, there is hope. Despite the fact that three hundred and two (302) members of the House of Representatives out of the four hundred and thirty-five (435) representatives in total accepted contributions from big pharma ahead of the 2020 election, a bill to reduce the cost of drugs for seniors was created and actually got passed by the House!
Sure, what was passed is more than likely a compromise from what was originally proposed. But once again, you have to start someplace.
By the way, all nine (9) of Indiana's Congressional people accepted and cashed checks from a pharmaceutical company in 2020. Five (5) of the nine (9) accepted and cashed checks from a pharmaceutical company in 2021. Moreover, campaign finance reports indicate that since 2007 Hoosier representatives Jackie Walorski and Larry Bucshon accepted and cashed checks from pharmaceutical companies totaling a whopping $173,500.00 and $360,000.00 respectively.
So, to recap:
- While they appear great, coupons and rebates are nothing more than a way in which pharmaceutical companies influence patients to utilize more expensive drugs. Yes, they reduce the patient's out-of-pocket expense, but in actuality they do nothing to bring down the overall cost of the patient's healthcare insurance. Remember, the entities that are paying the lion's share of the cost of those drugs do not derive any benefit from those coupons and/or rebates. Meaning; Those rebates and coupons do nothing to reduce the expense to Medicare or if not on Medicare, the insurance company.
- If the pharmaceutical companies were really interested in helping reduce the out-of-pocket cost of the patient, they would sell the drug to the U.S. patient at the same price that they sell the drug in other countries around the world.
- The Anti-Kickback Statute remains as written and in effect. What is proposed and is now being considered in the Senate does not contain any language to reverse this particular statue.
- What is proposed are baby steps. However, if passed it represents more than forward movement, it represents a fundamental shift in the way the U.S. thinks about the Healthcare Industry.
- There are 100 Senators and 435 Congressional people. (But you already knew that, right?)
- The Law of 72' has nothing to do with the Rule of 72. The former is what we discussed in this piece of this newsletter. The latter is a simplified formula that calculates how long it'll take for an investment to double in value, based on its rate of return. And not for nothing, much easier to write about.
In this instance, a lower co-insurance payment or co-payment would actually mean a lower cost to Medicare (the taxpayer) or if not on Medicare, the insurance company. (The latter of which could also mean lower self-payment amounts if a participant has a shortage of hours.)
What can you do?
- Call or write your Senator and inform them of your thoughts on the matter.
- Check Out GoodRx. In some instances, GoodRx can obtain prices that are lower than what you'll pay through the United HealthCare Medicare Advantage with supplemental pharmaceutical coverage through SavRx program. If this is the case, meaning; if GoodRx can save you more money than the United HealthCare Medicare Advantage with supplemental coverage through SavRx programs, why not utilize it?
- You cannot use both as it is illegal for Medicare to pay for items or services that are monetarily influenced.
- If you purchase medications through GoodRX or another such program, please remember to submit the receipts to United HealthCare (UHC). No, UHC will not reimburse you for that expense for the exact reason stated directly above. However, they will track your total-out-of-pocket expenses so as to monitor your drug usage for any negative drug interactions and so that you can capitalize on the different tiers of the Part D program (the donut hole and catastrophic coverage).
- Give Generics a Chance. Generics are the same as the brand-name drugs in safety, strength, quality and how they work. Think of it this way, Mercury had the Mountaineer and Ford had the Explorer. They are basically the same vehicle, just one came in a better package. Either one got you where you needed to be, but one was easier on your wallet than the other.
- Mail Order. Often co-pays are lower when utilizing the mail-order feature of the Plan rather than getting refills at the local pharmacy.
While you're at it, ask them why they accepted and cashed a contribution check from a pharmaceutical company.