September 20, 2012 / 7:00 PM / in 7 years

Pharma group calls for broader US market approach in Medicare

WASHINGTON, Sept 20 (Reuters) - The role of the U.S. pharmaceutical industry within Medicare should be expanded as a way to reduce the popular healthcare program’s contribution to the federal deficit without resorting to drug rebates, the chief of the industry’s trade group said on Thursday.

John Castellani, head of the Pharmaceutical Research and Manufacturers of America, or PhRMA, proposed applying elements of the Medicare Part D prescription drug program to other areas including drug benefits under Medicare Part B, which covers visits to doctor’s offices and outpatient clinics.

He said such a move could help the $300 billion industry avoid Medicare payment reductions next year, when deficit talks are expected to resume on a range of potential changes that could prove draconian for the industry, including cuts to scientific research and Food and Drug Administration funding.

“What we know is that Medicare Part D works, and works very well,” Castellani said during remarks at Washington’s National Press Club.

Part D, created by the George W. Bush administration, allows Medicare beneficiaries to purchase coverage from private insurers for drug costs that are not addressed by other segments of the Medicare program.

The rebates that concern PhRMA would go to the insurers, whose costs are covered by the programs.

“The challenge is to look at whether or not what we’ve learned in Part D can be applied in other parts,” Castellani said, citing Part B services that cover drugs purchased and administered by physicians rather than obtained by beneficiaries.

Drug costs are also covered by Medicare hospital insurance and private plans purchased through Medicare Advantage.

Castellani spoke a day after Health and Human Services Secretary Kathleen Sebelius announced that Part D premiums in 2013 would remain steady at about $30 a month, evidence she said that the program will remain accessible for most of Medicare’s 50 million elderly and disabled beneficiaries.

He said the Part D program has saved Medicare billions of dollars since its inception in 2006

Medicare spending, which is expected to exceed $590 billion this year, is a leading presidential campaign issue and has been a major target of proposals seeking to cut the federal deficit and mounting national debt.

Castellani said he was concerned about a White House proposal that would save $135 billion over 10 years by increasing Medicare drug rebates within Part D, where the administration says per capita spending has outpaced spending for traditional Medicare.

He criticized mandates as a form of price controls, adding:

“We are very much concerned that that would inhibit innovation.”

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