Trump’s plan to ‘lower drug costs’ is a bait-and-switch that leaves seniors paying more.

On Thursday, January 31, the Department of Health and Human Services (HHS) led by Secretary Alex Azar, announced a proposal that will have the biggest impact on the American healthcare system since the Affordable Care Act passed in 2010.

The Trump Administration aims to lower drug prices for recipients of Medicare and other government programs by banning drug makers from paying rebates to pharmacy benefits middlemen known as PBMs.

Ironically, Azar is the former president of Lilly USA, a pharmaceutical company that has been criticized for raising its prices. During his decade with Lilly, the company notoriously tripled the price of insulin.


via Brookings Institution / Flickr

Unfortunately for seniors, the new policy is a huge bait and switch that leaves most paying more — a fact the HHS admits in its own report.

THE BAIT

The HHS claims that its new policy will lower out-of-pocket drug costs from 9 to 14%.

“This proposal has the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter, ever, and finally ease the burden of the sticker shock that millions of Americans experience every month for the drugs they need,” Azar said in a statement.

But are PBMs really the price gouging bogeymen the HHS claims them to be?

According to Forbes’ Policy Editor Avik Roy, the attack on PBMs for high drug prices is “balderdash” — a classy term for "bullshit" — and a PR strategy cooked up by drug companies to shift the blame for their high prices.  

THE SWITCH

While the Administration has been touting the over-the-counter cost savings of its new proposal, they’ve been quiet about the increase in premiums for Medicare drug plans the proposal will create.

Health insurance companies work with PBMs because they do an effective job at keeping their prices down by providing patients with medications at the lowest possible price. So without these protections, insurance premiums for Medicare drug plans will rise.

Over 77% of people on Medicare are also enrolled in a prescription drug Part D plan and, according to Bloomberg, premiums for Medicare drug plans under the proposal could increase anywhere from 8% to 22%.

The HHS admits in its own report that 70% of Medicare part D users will pay more after the new policy.

However, the authors of the report spun it as a positive.

“An estimated 30% of Part D beneficiaries have drug costs high enough that their out-of-pocket savings will likely exceed any premium changes,” the report reads.

That means 70% of Part D beneficiaries will pay more for insurance premium increases than they will save from the potential drop in drug prices.

“The majority of Medicare beneficiaries will see their premiums and total out-of-pocket costs increase if this proposal is finalized,” House of Representatives Ways & Means Committee Chairman Richard Neal of Massachusetts and Energy and Commerce Committee Chairman Frank Pallone of New Jersey said in a joint statement. “We are concerned that this is not the right approach.”

The proposal has zero protections against drug manufacturers raising their prices.

via Rural Health Professions Action Plan

“Azar said Friday that the rule would deprive drug makers of an excuse for not lowering list prices. But the rule says manufacturers could reset their pricing strategies,” Bloomberg said.

Peter Bach, director of the Memorial Sloan Kettering Center for Health Policy and Outcomes, told Politico that drug makers don’t increase their prices due to PBM rebates, but “to increase their revenues.”

“From the start, the focus on rebates has been a distraction from the real issue,” Matt Eyles, president and CEO of America’s Health Insurance Plans, told Politico. “The problem is price. Manufacturers have complete control over how drug prices are set. Already this year, more than three dozen drug makers have raised their prices on hundreds of medications.”

IT'S HARD TO TRUST THE TRUMP ADMINISTRATION ON HEALTHCARE

While running for president in 2016, Donald Trump promised voters that his Affordable Care Act repeal-and-replace bill would provide insurance for everyone. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us," he said.

Instead, the proposal would have caused 14 million people to lose their healthcare immediately and another 10 million people to lose it over the next decade.

Luckily, it failed to pass the Senate.

In October 2018, the Trump Administration imposed new rules to make it easier for insurance providers to discriminate against sick consumers. While on the same day, he told supporters at a Philadelphia rally, “We will always protect Americans with preexisting conditions.”

WHAT HAPPENS NEXT?

The new rule includes a 60-day period for public comment. The new protections could go into effect as soon as that period passes.

It's unlikely that this proposal will affect working Americans' healthcare in the near future because it has been criticized by two committees overseeing healthcare in the Democrat-controlled House.

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In many ways, 18-year-old Idaho native, Hank Cazier, is like any other teenager you've met. He loves chocolate, pop music, and playing games with his family. He has lofty dreams of modeling for a major clothing company one day. But one thing that sets him apart may also jeopardize his future is his recent battle against a brain tumor.

Cazier was diagnosed in 2015. When he had surgery to remove the tumor, he received trauma to his brain and lost some of his motor functionality. He's been in physical, occupational, and speech therapy ever since. The experience impacted Cazier's confidence and self-esteem, so he's been looking for a way to build himself back up again.

"I wanted to do something that helped me look forward to the future," he says.

Enter Make-A-Wish, a nonprofit organization that grants wishes for children battling critical illnesses, providing them a chance to make the impossible possible. The organization partnered with Macy's to raise awareness and help make those wishes a reality. The hope is that the "wish effect" will improve their quality of life and empower them with the strength they need to overcome these illnesses and look towards the future. That was a particularly big deal for Cazier, who had been feeling like so many of his wishes weren't going to be possible because of his critical illness.

"In the beginning, it was hard to accept that it would be improbable for me to accomplish my previous goals because my illness took away so many of my physical abilities," says Cazier. His wish of becoming a model also seemed out of reach.

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Courtesy of Macy's

Make-A-Wish can't fulfill children's wishes without the generosity of donors and partners like Macy's. In fact, since 2003, Macy's has given more than $122 million to Make-A-Wish and impacted the lives of more than 2.9 million people.

Cazier's wish experience was beyond what he could've imagined, and it filled him with so much joy and confidence. "It is like waking up and discovering that you have super powers. It feels amazing!" he exclaims.

One of the best parts about the day for him was the kindness everyone who helped make it happen showed him.

"The employees of Macy's and Make-A-Wish made me feel welcome, warm, and cared for," he says. "I am truly grateful that even though they were busy doing their jobs, they were able to show kindness and compassion towards me in all of the little details."

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Courtesy of Macy's

Overall, Cazier feels he grew a lot during his modeling wish and is now emboldened to work towards a better quality of life. "I want to acquire skills that help me continue to improve in these circumstances," he says.

You can change the lives of more kids like Cazier just by writing a letter to Santa and dropping it in the big red letterbox at Macy's (you can also write and submit one online). For every letter received before Dec. 24, 2019, Macy's will donate $1 to Make-A-Wish, up to $1 million. By writing a letter to Santa, you can help a child replace fear with confidence, sadness with joy, and anxiety with hope.

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