Thursday, January 24, 2008

Listen for the Threat of the Medicare Rebate

Here we are shamelessly tooting our horn for calling the politics and action around pharmaceuticals and Part D correctly in 2007 and blowing a clarion call warning for 2008.

Tooting The RPM Report horn: In January a year ago, price negotiating and eviscerating the Medicare Advantage section of Part D were watched widely as two of the early objectives for the health leadership in the new Democratic Congress.

In the thick of the media obsession with those stories, The RPM Report pointed out how unlikely Congress would be to deliver on those goals in 2007 and why. (See here, and here and here, for clear foresight in retrospect).

Call to alert for 2008: This year, some in the media (for example, an interesting wrap-up piece in the Wall Street Journal January 23) are expecting a high-profile dangerous year for pharma.

Elections are always tough years for pharma in the news, but this one does not look to us like a year for major legislative initiatives against the drug industry.

Even the prospect of Democratic sweep in November may not be as threatening to Big Pharma as the Journal story suggests. The Democratic front-runners certainly do support action on pharma pricing that industry opposes--but their overall message is more nuanced and makes health care reform sound much less threatening to industry than it did 15 years ago. (You can read more here.)

There is one new threat, however, in a proposal that is generally beneath the radar for most observers: rebates to the government on Medicare Part D drug purchasers (see here).

We understand that rebates to Medicare sound pretty boring, wonky and not nearly as worthy of a headline as government price negotiation, but rebates could add up to big dollars from pharma. And the technical fix is just the type of tweaking to Part D that draws a real shiver from pharma execs.

The movement on Capitol Hill is just beginning for this way to recapture some of the alleged windfall that pharma reaped by moving Medicaid rebated drugs to Medicare. Listen for the distant horn.

No comments: