What Steps Are Washington Policymakers Pursuing to Control Medicare Prescription Drug Spending?

As policymakers in Washington discuss ways to curb the rising cost of prescription drugs, KFF has released a summary and analysis of proposals and recently finalized initiatives that affect Medicare prescription drug spending.  Medicare, the federal health program that covers more than 60 million seniors and younger people with disabilities, accounts for 30 percent of the nation’s retail prescription drug spending. A Look at Recent Proposals to Control Drug Spending by Medicare and its Beneficiaries serves as a primer for policymakers and others amid ongoing policy discussions pertaining to Medicare drug spending. It describes, in brief, recent and proposed changes, discusses the implications for key stakeholders, and provides information on projected savings (when available) for Medicare and beneficiaries for proposals, such as:
  • Limiting drug price increases by requiring manufacturers to pay a rebate to Medicare if drug prices increase faster than inflation;
  • Allowing the government to negotiate drug prices on behalf of Medicare beneficiaries;
  • Adding an out-of-pocket spending limit to Part D, and shifting more of the responsibility for catastrophic drug costs from Medicare to insurance plans and drug manufacturers; and
  • Using the price of drugs in other countries to help set Medicare payment rates.
Also available is a new brief, What’s the Latest on Medicare Drug Price Negotiations? This brief provides an in-depth look at an approach that would allow the Secretary of HHS to negotiate drug prices on behalf of Medicare beneficiaries. It describes current policy proposals that would allow the government to negotiate drug prices, summarizes the Congressional Budget Office’s (CBO) assessments of potential savings, and discusses the prospects for action on these proposals. For more KFF analyses and data on prescription drugs and their costs, visit kff.org.