January 2, 2021

January 2, 2021

As we begin a new year, we hope you had the best holiday season possible under the conditions we all continue to face because of the coronavirus pandemic.  We know the past ten months have been extremely hard for many Americans, especially for senior citizens and their families.

In a normal year the two-week period around Christmas and New Years Day is a slow news period.  But, as with so much else, that was not true this year.

The news was dominated by the pandemic and the beginning of the vaccination roll-out, the drama over President Trump’s veto of the National Defense Authorization Act as well as his threatened veto of the government funding/economic stimulus bill, and his continued attempts to try and overturn the election results.

Congress is now back in session but they will not begin considering new legislation for a few days.  They are in the process of organizing for a new session and, of course, they will be involved in the electoral college process of electing a new President starting, but perhaps not concluding, on Wednesday.

However, there is news of importance to seniors that hasn’t gotten nearly as much attention.

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Two Courts Halt Rule Tying Certain Drug Prices to Other Countries

Near the end of this past November President Trump issued two rules aimed at lowering prescription drug prices that affect Medicare beneficiaries. The rules followed up on executive orders that Trump signed in July.

One rule, known as “most favored nation,” would require Medicare to tie the prices it pays for drugs to those paid by other wealthy countries. The other rule would limit rebates paid to middle men (called “pharmacy benefit managers” or “PBMs”) by drug makers in Medicare.

There are two points to remember about the first rule: Medicare has always been barred from negotiating prices directly with drug companies; and other countries regulate their health care spending more heavily, including for prescription drugs.

The first new rule affects Medicare Part B drug costs, which are typically infused or injected drugs used mainly in the treatment of cancer.  The intent is to cap the cost of those drugs at the lowest price that drug manufacturers receive in other countries and to pay doctors a flat fee for each dose of a drug, instead of a percentage of each drug’s cost.

The Centers for Medicare and Medicaid Services said the rule would be mandatory and will focus on 50 single source drugs and biologic drugs that comprise the largest majority of Medicare Part B drug spending.

However, one week ago a federal judge in California issued a ruling stopping the implementation of the rule because of the “government’s failure to complete the notice and comment procedures required by the Administrative Procedure Act.”

That was the second ruling in a week to delay the policy.  A federal judge in Maryland had ordered on Dec. 23 that the rule, which was slated to take effect Jan. 1, be paused for two weeks.

The Health and Human Services Department finalized the policy through an interim final rule in November, meaning the agency skipped the comment period. Lowering drug costs for patients is the end goal of the policy, which the government argues justified the speedy implementation.

In his ruling the California judge admonished the federal government for skipping a key step in the rulemaking process and called the government’s reasons for doing so “contrived.”

“While there’s nothing unlawful per se about rushing to enact policy in the final days of a presidential administration (indeed, it’s a time-honored tradition), executive branch officials may not circumvent clear legal requirements in the eleventh hour to achieve goals they couldn’t accomplish in the normal course,” he said.

The judge’s order stops the implementation of the rule until the completion of the notice and comment process.

The other rule concerns drug rebates involving Medicare Part D.  The Department of Health and Human Services (HHS) said that last year Part D rebates totaled $39.8 billion, representing an average discount of nearly 30% for brand drugs.

The rule would require drug companies to give Medicare beneficiaries rebates that now go to insurers and PBMs. The nonpartisan Congressional Budget Office estimates it would increase taxpayer costs by $177 billion over 10 years.

The Pharmaceutical Care Management Association, which represents pharmacy benefit managers that run the Medicare prescription drug plans targeted by the rebate rule, said at the time that it was exploring litigation.

The group said in a statement that the rule, which had been proposed and then left to languish by the administration last year after the Congressional Budget Office said it would cost taxpayers $177 billion, circumvents the regular rule-making process.

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Judge Rules Hospitals Must Disclose Prices

In yet a third judicial ruling, The U.S. District Court of Appeals for the District of Columbia upheld a rule by the Trump Administration that hospitals will have to publicly disclose the prices they negotiate with insurance companies.

While the other two rulings went against the Trump Administration, this one was a win on a key piece of Trump’s health-care agenda at the end of his administration.

Under the hospital price transparency rule, some 6,000 U.S. hospitals will have to publicly provide their negotiated rates with insurers for 300 common medical services, along with the discounted cash price they’re willing to accept for those procedures.

Industry groups and health systems led by the American Hospital Association challenged the rule, arguing that the rule would do more harm than good because it won’t “tell consumers their actual out-of-pocket costs, will likely produce confusion and may be less effective than the price-transparency tools the hospital field has been developing.”

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Drug Discount Cards

In mid-December there were reports that the Administration expected to begin sending out President Trump’s promised $200 drug discount cards to seniors by Jan. 1.  However, we have not heard any report about whether or not that has begun.  We will keep you posted when there is new information about the distribution of the cards.

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Despite the coronavirus emergency, TSCL is continuing its fight for you to protect your Social Security, Medicare, and Medicaid benefits.  We have had to make some adjustments in the way we carry on our work, but we have not, and will not stop our work on your behalf.

For progress updates or for more information about these and other bills that would strengthen Social Security and Medicare programs, visit the Bill Tracking section of our website or follow TSCL on Twitter.