Senator Max Baucus (D-Mont.) |
September 10, 2009 – The latest health care reform proposal that Sen. Max Baucus circulated to his Senate colleagues Tuesday appears to hit the pharmaceutical industry significantly harder than did the deal the Montana Democrat negotiated with PhRMA in early summer.
The Monitor obtained a copy of the document titled “Framework for Comprehensive Health Care Reform,” released to the Finance Committee “Gang of Six” on the eve of President Barack Obama’s health care reform speech to Congress.
The chairman of the Senate’s powerful Finance Committee, Baucus announced Wednesday that he will start marking up his committee bill during the week of Sept. 21, regardless of whether he has Republican support for it. He expects to unveil the bill next week.
Higher Medicaid rebates
An earlier proposal that manufacturers provide a 50-percent rebate on drugs dispensed under Medicare Part D during the coverage gap remains in the Baucus proposal, although it would not apply to patients eligible for low-income subsidies or to individuals with employer-sponsored coverage.
But Medicaid rebates on brand name drugs would increase from 15.1 percent to 23.1 percent, and rebates on generics would increase from 11 percent to 13 percent, more than proposed in the President’s budget or the House bill. Rebates on hemophilia clotting factor and drugs approved only for pediatric use would be limited to 17.1 percent.
Since the 340B program uses the same discount methodology as the Medicaid rebate program, the increase in rebate percentages would likely also apply to 340B-covered entities.
Baucus’ $900-billion proposal would also require that rebates be paid on drugs dispensed under Medicaid managed care – as spelled out in the yet-to-be-enacted Medicaid Equalization Act.
A provision in the health care reform legislation voted out this summer by the House Energy and Commerce Committee, requiring that rebates be collected on drugs dispensed to patients eligible for both Medicaid and Medicare – so-called dual eligibles – is not included in the Baucus package, however. Instead, the industry would be hit with a $2.3-billion annual fee, allocated to each manufacturer by market share.
More Paperwork, More Accountability
The administrative burden would increase as well. Drug manufacturers and distributors would be required to report to the government the type and amount of drug samples required by and distributed to practitioners, with the practitioners’ names, addresses, and professional designations and signatures.
Under Baucus’ plan, drug and device manufacturers would also have to report any payments or transfers of value made to a physician or teaching hospital.
Drug coverage would have to be provided as a mandatory benefit for all plans sold in the non-group and small-group market, but an employer that doesn’t offer a prescription drug benefit already would not have to add one.
DSH Cuts Tied to Rising Insurance Rates
Baucus also responded to hospitals’ concerns that Medicaid disproportionate-share hospital (DSH) payments could be cut even if the number of uninsured wouldn’t drop. His package would retain state DSH payments until the percentage of uninsured individuals in the state has dropped by 50 percent. At that point, the DSH allotment would be reduced by 50 percent.
After that, the state’s DSH allotment would be reduced at a rate corresponding with the reduction in the rate of uninsured, although it would never decrease by more than 65 percent of the 2012 allotment.