HEALTH CARE BRIEFING: Employers Fear Deal Could Bump Drug Prices

Employers that offer health coverage for workers fear Medicare drug price reduction provisions in Democrats’ spending package, the Inflation Reduction Act, would lead to drugmakers shifting bigger price increases onto commercial plans in order to make up for lost revenue.

Employers could face higher health-care costs, and their workers could see increased premiums and out-of-pocket costs, if that happens. That’s on top of missing out on hundreds of billions of dollars in potential savings after the Senate rules arbiter found that private insurers couldn’t benefit from the price caps and rebate provision in the plan.

Under the Senate-passed measure, Medicare would be permitted to negotiate drug prices, starting with 10 high-priced drugs by the middle of this decade and expanding from there. The bill would cap out-of-pocket drug costs for seniors enrolled in Part D at $2,000 per year. The House is expected to vote on it later this week.

Employer groups lobbied unsuccessfully for allowing private plans to get the benefit of drug price negotiation, but they had hoped a provision requiring drug companies to pay Medicare a rebate to the government for drug prices that increase faster than inflation would be applied to private plans as well. But the Senate’s parliamentarian ruled the inflation cap provision for private plans didn’t meet budget requirements necessary to approve the legislation by a simple majority.

“We were deeply disappointed that the inflation rebate calculation did not include the commercial market,” said Ilyse Schuman, senior vice president of health policy for the American Benefits Council, in an interview with Bloomberg Law. The council sent a letter to congressional leaders Aug. 6 opposing the drug pricing provisions of the measure because they excluded commercial markets. Read more from Sara Hansard.

• Negotiation Provision Explained: Empowering Medicare to negotiate some drug costs is being marketed by Democrats as a landmark change that will lower drug costs for Americans. The Congressional Budget Office has estimated the provisions would save the Centers for Medicare & Medicaid Services roughly $102 billion over a decade. But some drug-pricing experts question whether the bill will actually reduce costs. Celine Castronuovo breaks it down.

What Else to Know Today

US Allows New Monkeypox Injection Method: The US will stretch its limited monkeypox vaccine supply by allowing an injection method that uses one-fifth of the current dose per shot, The New York Times reported Monday, citing senior officials. FDA would authorize intradermal injections that involve using one-fifth of the current dose into the skin instead of a full dose into underlying fat, according to the report. Read it here.

Hospitals See Abortion Bans Hurting Shortages: Some doctors don’t even want to think about taking jobs in Texas, Wyoming, or other states with strict abortion bans, raising questions about how hospitals will recruit and retain medical staff in a post-Roe country. Specialists in obstetrics and gynecology—frequent targets of medical malpractice cases—especially are wary of taking jobs in states where the laws could limit their practice, recruiters for Merritt Hawkins said. Jennifer Kay has more.

HHS Allocates $60 Million for Rural Health Care: The HHS has announced nearly $60 million in investments in rural health care, which includes $46 million from the American Rescue Plan, according to a news release on Monday. The ARP funding will go to 31 awardees to expand health-care capacity in rural and tribal communities, the agency said. Around $10 million will also support 13 organizations through the Rural Residency Planning and Development Program, it said. Read more.

More Headlines:

• Safeway Whistleblower Asks High Court to Revive Drug Price Suit
• VA Properly Terminated Three Anti-Virus Glove Supply Contracts
• Healthineers’ Profits From Covid Tests Safe as Cellex Drops Fight
• Bausch & Lomb Cataract Lens Eye Injury Lawsuit Gets Reinstated

To contact the reporter on this story: Brandon Lee in Washington at blee@bgov.com

To contact the editor responsible for this story: Giuseppe Macri at gmacri@bgov.com