Build Back Better’s Medicare Drug Payment Cap Is Worth Saving

Senate Democrats have restarted negotiations on their Build Back Better Act. The $1.75 trillion bill contains a long list of bad ideas, especially when it comes to health policy.

But there is one reform in the legislation that makes sense — a $2,000 cap on out-of-pocket prescription drug costs for Medicare beneficiaries. The proposal would not only save money, but also lives by helping to ensure that patients take their medication in the right amounts at the right time.

It’s an idea worth considering if Build Back Better fails — or if Democrats eliminate it from a new version of the bill.

In 2019, 1.2 million enrollees in Medicare Part D, the program’s prescription drug benefit, paid more than $2,000 out of pocket for their drugs. Costs like these can keep patients from following their prescription regimens.

Indeed, a 2020 survey found that 44% of respondents did not purchase a necessary prescription due to cost concerns. It’s no surprise, then, that a recent survey of nearly 5,000 patients with active prescriptions found that 41% had not taken their medications as directed at some point in the past year.

When patients don’t adhere to their prescription regimens, it hurts their health and their wallets. To see why, consider statins. In the long run, taking a cholesterol-lowering pill regularly is much cheaper than risking emergency heart surgery.

Limiting out-of-pocket drug spending to Medicare beneficiaries would make it much easier for patients, especially those of limited means, to obey their doctors’ orders.

A Kaiser Family Foundation report found that for the 10% of Medicare Part D enrollees who spend the most on prescription drugs, a $2,000 cap would reduce their financial burden by 63%.

Not taking medications as directed can allow conditions to worsen and turn what would otherwise be treatable chronic problems into costly medical disasters. Such “non-adherence” to prescription drugs causes an estimated 125,000 deaths each year.

Improving adherence would benefit not only patients, but the entire healthcare system.

Prescription drugs account for about 10% of healthcare spending in the United States. Hospitals, by comparison, account for a third.

That’s why even expensive drugs can save the healthcare system money by avoiding even more costly hospitalizations.

Take the drug Sovaldi from Gilead Sciences Inc., which treats hepatitis C. When it first started, a four-month regimen cost about $84,000 before discounts.

It is not a small sum. But it is money well spent. A course of Sovaldi cures hepatitis C in the vast majority of patients, eliminating the annual cost of managing the disease, as well as the potential need for liver replacement. The average cost of such a transplant? About $600,000. And patients may have to wait for a liver to be transplanted, which can take a long time.

Since then, other hepatitis C treatments have come onto the market and have driven down the price of Sovaldi. So it’s a better deal for patients and the health care system now.

Overall, patients who do not take their medications as prescribed by physicians may account for more than two-thirds of all medication-related hospital stays. Nationally, some studies put the cost of non-compliance at nearly $300 billion a year.

Opponents of refundable caps argue that they will lead to higher premiums for the average insured, as insurers will spread their higher costs across the entire group of beneficiaries.

Yet 66% of Americans say they are willing to accept slightly higher premiums in exchange for lower out-of-pocket expenses. They may prefer to pay a little more each month to eliminate the risk of incurring huge out-of-pocket expenses due to a new or worsening illness or injury.

A shelled cap could save lives and money. It may be the only policy worth surviving the Build Back Better Act.

Sally C. Pipes is president and CEO and health policy researcher at the Pacific Research Institute.

About Matthew R. Dailey

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