Medicare Weakens New Plan to Lower Drug Prices

The Trump administration has released the final version of a new Medicare payment plan called the GLOBE model. The plan was supposed to lower the cost of drugs given to patients in doctors' offices. It was designed to match prices that other countries pay for the same medicines. However, the final version of the plan is much weaker than what was first suggested.

When the plan was first proposed, the government said it could save nearly $12 billion over seven years. But the final version is now estimated to save only $440 million over that same period. That is a drop of 96 percent, meaning the new plan will save almost nothing compared to what was originally promised. Drug industry consultant Brian Reid put it bluntly, saying, 'The government has crafted it in such a way that it will touch almost no drugs and deliver almost no savings.'

The GLOBE model stands for Global Benchmark for Efficient Drug Pricing. It requires drug companies to offer a rebate, which is like a partial refund, if they charge Medicare more than certain other countries pay for the same drug. President Trump has made lowering drug prices a major goal of his time in office. But the final version of the GLOBE model has so many exceptions that very few drugs or companies are actually affected.

When the plan was first proposed, it was expected to cover about 40 drug companies. In the final version, only three companies are covered. A drug also has to cost Medicare more than $100 million per year just to qualify for the program. The Centers for Medicare and Medicaid Services, known as CMS, now says that less than 1 percent of eligible drug spending is targeted by the plan at the start.

One big reason so few companies are included is that there are many exemptions, or special cases where the rules do not apply. For example, if a company already made a separate deal with the White House for something called 'most-favored-nation' pricing in Medicaid, it does not have to follow the GLOBE rules. This has allowed most drug companies to avoid the new program entirely. Critics say these loopholes have made the plan almost useless.

CMS Administrator Mehmet Oz defended the program. He said that CMS is 'focused on more than promises to make healthcare more affordable' and is 'taking action to pilot a new approach to lower costs.' A pilot program is a small test run used to see if a new idea works before making it larger. Even so, many health experts are not convinced the GLOBE model will make a real difference for patients who need expensive medicines.