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US seeking price cuts for Medicare drugs

White House proposes allowing Medicare Part D to haggle with pharma companies for discounts

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The US government wants to tackle escalating medicine costs by giving the federal Medicare programme the right to negotiate the prices of high-cost drugs.

Under proposals issued by the White House yesterday, the Department of Health and Human Services (DHHS) would be able to leverage the enormous buying power of Medicare Part D - which provides private health insurance to around 25 million people in the US - to haggle for discounts.

The move comes as the pricing of new medicines is arguably under more scrutiny than ever before, with questions being raised about the impact of an eroding payer environment on healthcare provision.

A plethora of new drugs for cancer and other diseases are reaching the market that cost well upwards of $100,000 a year, while the $1,000-a-day price of Gilead Sciences' hepatitis C therapy Sovaldi (sofosbuvir) is the subject of a congressional investigation.

The DHHS proposals - revealed in President Barack Obama's $3.99bn budget for fiscal 2016 - have come about because "the administration is deeply concerned with the rapidly growing prices of specialty and brand name drugs," according to the budget document.

Specifically, it aims to give the Secretary of HHS "the authority to negotiate drug prices for biologics and high-cost drugs in Medicare Part D to help ensure access to and affordability of these treatments," adding that this is "one of a range of potential solutions to address these growing costs."

However, they still need to win the backing of Congress and given that Republicans currently control both The House of Representatives and Senate, the chances of the clause reaching the final version may be slim.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said the President's budget proposals "includes harmful and misguided proposals that could undermine seniors' access to care in the successful Medicare Parts D and B programmes," adding that it would "jeopardise that access by driving up premiums, reducing choice and restricting coverage."

FDA seeks 9% budget hike

Meanwhile, the FDA is requesting a budget of $4.9bn in fiscal 2016, a 9% increase, which the agency says is necessary to fund the increased regulatory responsibilities resulting from "groundbreaking legislation passed in recent years."

That includes the FDA Safety and Innovation Act (FDASIA), which ramped up monitoring requirements for drug safety both domestically and around the world, and the Drug Supply Chain Security Act (DSCSA) that has introduced a pack-level traceability requirement for prescription medicines.

Other key priorities that need financial support include measures to fight the threat of antibiotic resistance and addressing the safety of compounded drugs, said the FDA.

The regulator would like an extra $33m to help it fund measures to promote the safety and quality of medical products and another $5m - on top of a $24m increase already promised - to modernise the agency and add staff.

"This budget accurately reflects the challenges FDA faces in a global regulatory environment, which is becoming increasingly complex and scientifically demanding," commented the agency's Commissioner Margaret Hamburg.

Article by
Phil Taylor

3rd February 2015

From: Sales, Regulatory, Healthcare

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