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Medicare would tie what it pays for some medications administered in doctors’ offices to the lowest prices of these drugs in some overseas countries under one of two new regulations the U.S. Department of Health and Human Services (HHS) released on Friday.
HHS also announced a rule that would require manufacturers to give Medicare beneficiaries enrolled in the Part D prescription drug program the rebates that insurers and middlemen — called pharmacy benefit managers — now use to negotiate and keep monthly premiums down. According to the nonpartisan Congressional Budget Office (CBO), this regulation would cause Part D premiums to increase, costing taxpayers $177 billion over 10 years.
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Overseas price rule limited to certain drugs
The international pricing rule, which has been called the “most favored nation” regulation, will affect only about 50 medications that are currently administered in doctors’ offices. These are generally very expensive cancer drugs provided intravenously, such as chemotherapy medicine. These therapies are paid for as part of Medicare Part B, which covers doctor visits and other outpatient services.
This rule, which is scheduled to take effect in January, would provide for a seven-year mandatory nationwide pilot that would peg Medicare's reimbursement to providers for administering these drugs to the lowest price available among a group of other countries whose economies are similar to the U.S. economy. Drug prices are typically much lower in those countries. The regulation would not impact the prices of Part D prescription drugs, which represent the vast majority of Medicare spending on medications.
HHS estimates that this regulation could save Medicare recipients $28 billion over seven years, because the lower prices of these expensive medications would decrease patients’ copays.
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