HHS Seeks to Use International Pricing Index for Medicare Part B Drugs

Regulatory NewsRegulatory News
| 25 October 2018 | By Zachary Brennan 

The US Department of Health and Human Services, via its Centers for Medicare & Medicaid Services (CMS), on Thursday unveiled a new “International Pricing Index” (IPI) payment model meant to reduce payments for prescription drugs.

Under the IPI model, explained in an Advance Notice of Proposed Rulemaking (ANPRM), Medicare’s payments for select physician-administered drugs would more closely align with prices in other countries. Overall, savings for American taxpayers and patients are projected to total $17.2 billion over five years, HHS said.

The proposal of the IPI Model aims to ensure the US is paying comparable prices for Part B drugs, a small fraction of the total spent of pharmaceuticals in the US, relative to other countries by phasing in “reduced Medicare payment for selected drugs based on a composite of international prices,” in addition to reduced out-of-pocket costs.

Speaking at the Department of Health and Human Services (HHS) on Thursday, President Donald Trump made clear his intention to bring down the cost of pharmaceuticals in the US.

The short speech, coming just weeks ahead of the midterm elections, did not get political and hit on many of the same talking points he’s made in prior speeches.

“We’re taking aim at the global freeloading,” Trump said. “Same company, same box, same pill…For decades other countries have rigged the system so that American patients are charged much more for the exact same drug.”

Earlier on Thursday, HHS released a report detailing how the prices charged by drug manufacturers to wholesalers and distributors in the US Medicare Part B program are 1.8 times higher than in other countries.

“We find these higher U.S. prices mean that the Medicare program pays nearly twice as much as it would pay for the same or similar drugs in other countries,” the report concluded.

The move follows on the heels of last week's announcement proposing to require companies to include wholesale acquisition costs (WAC) in direct-to-consumer television advertisements.


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