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On the President’s Drug Cost Plan, Three Important Concerns

May 25, 2018
Part 3. Restricting access under Medicaid Is not the answer

This week, BIO launched a three-part blog series highlighting proposals in the Trump administration’s drug cost plan that could pose significant challenges for patients and their access to the medicines they need. Part 1 of the series looked at possible changes to the Medicare Part D prescription drug benefit program. Part 2 the series examined the possible consequences of shuffling certain drugs from Medicare Part B to Part D. In the third and final part of this series, we look at proposed reforms to Medicaid.

Restricting Access Under Medicaid Is Not the Answer

Medicaid provides vital support to more than 67 million vulnerable individuals. For those without the means to purchase health insurance on the private market, Medicaid is a joint federal and state program that helps ensure low-income individuals and families get the health care services they need, including the medicines they need.

According to information provided by the Kaiser Family Foundation, Medicaid beneficiaries in most states pay a minimal copay – often as low as $3 or $5 – for their prescription medicines. If a Medicaid patient arrives at a pharmacy and cannot afford his or her copay, then the medication is provided at no cost. Even with such broad, low cost access, it is estimated that prescription drugs accounted for just 5% of total Medicaid spending in 2014.

To help control costs for taxpayers and provide affordable access to patients, drugmakers provide significant rebates to state Medicaid programs. These rebates reduce the average manufacturer’s price by at least 23.1 percent. But rebates can be even greater because of the “best price” rule, which requires drugmakers to provide Medicaid the lowest price offered to any other entity in the marketplace. Medicaid receives whichever concession leads to the best possible price for taxpayers.

States can then require supplemental rebates, all of which help provide low-income patients access to innovative medicines at a lower cost to taxpayers. It is estimated that in 2014, Medicaid spent approximately $22 billion on prescription drugs after receiving roughly $20 billion in rebates from drug manufacturers.

Despite the success at providing broad access at low cost, the Trump administration’s drug pricing plan includes a provision that may allow states to fundamentally alter the program. Under the proposal, a limited number of states would be authorized to experiment with closed formularies. In other words, states would decide which drugs patients could and couldn’t have access to.

Public officials in Massachusetts have proposed a similar idea, and patients advocates warned the plan would restrict patient access to innovative and lifesaving treatments. The state filed a proposal with the federal government that would have provided greater flexibility in the state’s Medicaid program (MassHealth), and included in that plan was a closed formulary that would restrict access to certain medications.

According to one letter signed by organizations representing “millions of patients who are currently battling or who have fought serious, chronic, and life-threatening diseases,” the letter noted:

“Prescription drugs have different indications, different mechanisms of action, and different side effects, depending on the person’s diagnosis and comorbidities. Restricting MassHealth’s drug benefits to a closed formulary would limit the ability of providers to make the best medical decisions for the care of their patients, effectively taking the clinical care decisions away from the doctor and patient and giving it to the state.”

Speaking on behalf of those fighting cancer, the American Cancer Society Cancer Action Network said of the Bay State’s plan:

“There is no single oncology drug that is medically appropriate to treat all cancers. Cancer tumors respond differently depending on the type of cancer, stage of diagnosis, and other factors … Oncologists take into consideration multiple factors related to the expected clinical benefit and risks of oncology therapies and the patient’s clinical profile when making treatment decisions. Making oncology medicines subject to a closed formulary would restrict the ability of the doctor to make the best medical decision for the care of the patient, which is of great concern, given the life-threatening nature of cancer.”

Formularies might make sense in the private-sector, but that’s because patients have choices. If they do not like the drug coverage a particular health plan has to offer, they can generally shop around for a better plan. That’s not true for many low-income individuals, whose only option for health coverage is through the safety net provided by Medicaid.

Policymakers should look for responsible solutions for making cures and treatments accessible and affordable for patients, but experimenting with the ability of our most vulnerable citizens to access the medicines they need is not the answer.


Read part 1

Read Part 2