Don’t Fix What Isn’t Broken

posted by Matt Eyles, President & CEO, AHIP

on September 24, 2018

Since 2006, health insurance providers have offered affordable, reliable prescription drug coverage for millions of seniors on Medicare—while big pharma has sought higher prices and higher profits. The rebates we negotiate and fight for keep premiums down, as Joseph Antos and James C. Capretta note in “Drug Rebates Aren’t ‘Kickbacks.’”

However, we strongly disagree that plans have weak incentives to manage drug costs due to the structure of Medicare’s drug benefit. Part D plans have every incentive to keep costs down: specifically, to offer lower premiums and copays, increase enrollment, and better serve seniors. Premiums are set, in part, based on the total costs to the government—not simply on “plan liability.” In fact, a recent study by Milliman found that the policy changes advanced by the authors would raise premiums on millions of seniors.

Addressing drug prices is an urgent national priority. Our Board and member companies unequivocally support lower drug prices. Instead of asking seniors to pay more, a better approach is for pharma to cut the price of prescription drugs.

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