Health and Disability

The high price of prescription drugs is an issue of great concern to most Americans and has even attracted theattention of presidential candidates from both parties. Although the growth rate was slower than in the previous year, prescription drug prices continue to outpace price growth for other health care sectors. It’s no wonder then that CMS is taking action to try to reduce drug spending. But strong pushback from the drug industry, among others, illustrates why tackling high drug prices remains such a challenge.

The current proposal takes aim at a perverse incentive in Medicare Part B that pays physicians a percentage of the cost of a drug they administer in their office. As a result, reimbursement is much higher for higher cost drugs. But the proposal started drawing fire before it was even unveiled. Opponents have mischaracterized the proposal as interfering with clinical decision making, but in reality it does nothing of the sort. It is merely designed to remove the financial incentive to administer more expensive drugs. However, many physician groups and patient support groups have joined PhRMA in opposition. It will be interesting to see whether CMS stays the course or whether the general but diffuse societal interest in lower drug prices will be trumped (can I still use that word?) by the intense interest of those who are most closely affected.