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Obama's 2016 budget seeks lower drug prices, higher costs for wealthy Medicare patients

Proposal aims to decrease price of costly prescription drugs, such as Sovaldi

The Obama administration's proposed $4 trillion budget for Fiscal Year 2016 includes a provision that would allow the federal government to negotiate prices for costly drugs covered under the Medicare Part D program. Currently, federal law prohibits such negotiations.

The proposal will target "biologics and high-cost drugs." The latter would include Gilead's hepatitis C drug, Sovaldi--a course of treatment costs about $100,000 per person. Payers say covering Sovaldi for the entire hepatitis C population would cost $200 billion, reported Retuers.

Negotiating prices could save $126 billion in Medicare drug payments over 10 years, the proposal noted.

The budget would also cut payments to providers and private Medicare plans, which would save the program $222 billion. See FierceHealthcare for coverage on how Obama's budget plan would impact providers.

Recently, payers and state Medicaid agencies have been working to strike deals with pharmaceutical companies as they update their drug coverage lists for 2015. UnitedHealth, for example, announced it chose Gilead's Harvoni as its preferred hepatitis C drug to be offered this year, while Missouri signed a deal with AbbVie to offer Viekira Park.

Including drug negotiating in the budget proposal has been a long time coming, according to the National Journal. Many liberals say that as the nation's largest payer, Medicare, should have the same negotiating regime as private insurers.

Other items in the proposal include:

  • High-income Medicare beneficiaries would dish out more for coverage and have higher deductibles for doctor visits. 
  • Aligning Medicare drug payments with Medicaid policies for low-income beneficiaries.
  • Increasing discounts on brand drugs in Part D by 2017.
  • Suspending coverage for questionable Part D prescriptions.

For more:
- here's the proposal
- read the Reuters piece
- check out the National Journal article

Related Articles:
What Obama's 2016 budget will mean for healthcare providers
Hospitals don't want cuts outlined in Obama budget proposal
Insurers, states strike hepatitis C deals with pharmaceutical companies
Insurers figure out ways to cover pricey treatments
AHIP slams pharma for taking advantage of insurers