Medicare de-fangs new drug pricing model

Medicare de-fangs new drug pricing model

The Trump administration rolled out the final version of a new Medicare payment model aimed at lowering the prices of drugs administered in doctors’ offices to match those paid in countries overseas.

President Trump has made lower drug prices a signature part of his administration’s affordability agenda. The Global Benchmark for Efficient Drug Pricing (GLOBE) model requires drug companies to offer a rebate if a price exceeds rates in certain countries.

But the final version is significantly scaled back from when it was first proposed.

It’s now estimated that the GLOBE model will save $440 million over seven years — a 96 percent reduction from the proposed version, which estimated nearly $12 billion in savings over the same period.

The payment model is mandatory, but there is a myriad of exemptions , most notably if a company entered a separate deal with the White House for “most-favored-nation” pricing in Medicaid.

In the end, only three companies are covered by the final model, a decrease from about 40 firms estimated in the proposed rule.

“The government has crafted it in such a way that it will touch almost no drugs and deliver almost no savings,” drug industry consultant Brian Reid wrote Wednesday.

To qualify for GLOBE, a drug must account for more than $100 million in traditional Medicare Part B spending per year.

The final version of the model only covers a handful of drugs ; Centers for Medicare and Medicaid Services (CMS) now estimates that less than 1 percent of eligible Part B drug spending is initially targeted by GLOBE.

“At CMS, we’re focused on more than promises to make healthcare more affordable — we’re taking action to pilot a new approach to lower costs and strengthen the quality of care while preserving medical innovation,” CMS Administrator Mehmet Oz said in a statement.

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