PharmExec Blog

Pharma Pricing Top Target for Medicare Cutbacks

In the dog-eat-dog world of federal deficit reduction, there seems to be one health-related spending cut with broad bi-partisan support:  require drug companies to give the federal government “a better deal on medications for low-income people on Medicare.” Nearly 70% of respondents back this strategy, according to a survey sponsored by the Kaiser Family Foundation (KFF), the Robert Wood Johnson Foundation and the Harvard School of Public Health. That’s far more than the mere 32% who want to raise Medicare premiums or the 26% who support a higher Medicare eligibility age (67, up from 65 years).

Most notable is the surprisingly strong bipartisan support for this hit on pharma:  61% of Republicans “strongly favor” this action, as do 77% of Democrats, according to this January poll. Congressional Democrats have been pressing hard to require pharma companies to pay rebates on drugs provided to Medicare “dual eligible” beneficiaries who qualify for assistance from state Medicaid programs and previously received prescription drugs through state plans that collect rebates.

Meanwhile, most of the 1347 people surveyed want to keep funds flowing to other government health-related programs, such as veteran’s health, anti-terrorist preparations, research to find new cures and treatments, and actions to prevent chronic illnesses and the spread of infectious diseases. Less than half (47%) back government funding of  “programs to ensure the safety and effectiveness of prescription drugs,” reflecting less enthusiasm for FDA operations.

The biggest surprise for the pollsters was the relatively strong backing – from both Democrats and Republicans – for state governments to establish health insurance exchanges this year. More than half (55%) of those answering the survey list creating exchanges, or “marketplaces,” as a top priority.

Although most respondents– particularly Republicans – want quick action to tackle the federal budget deficit, there’s not much consensus on where the axe should fall. No surprise that Democrats prefer to raise taxes, while Republicans want to reduce federal spending. The most popular revenue-raiser is to hike taxes for people making more than $400,000 a year. But the majority opposes reductions in spending on education, Medicare, and social security – and economists say that any serious budget cutting has to hit those programs.

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  1. Posted January 31, 2013 at 9:25 am | Permalink

    We have some fundamental problems that create this situation: our patent expiry life is not long enough to cover costs of regulatory requirements, research, and development. We should address this and make it worthwhile to companies to continue to research and develop or suffer the societal consequences of shutting down this wonderful machine. We should also understand that insurance companies (including Medicare) have a difficult time covering the underwriting implications of these products. I believe that a collaborative partnership between the companies, the plans, and the members could address some of these concerns.

    Raising taxes and/or rebates (effectively also taxes) just shifts costs onto what remains of the private sector.

    We need to act very soon.

  2. Bruce Grant
    Posted January 31, 2013 at 9:46 am | Permalink

    Which economists, in particular, did you have in mind as agreeing that “serious” budget cutting must target education, Medicare, and social security…rather than, say, military spending or tax expenditures (e.g., carried interest, non-taxability of offshore corporate revenues, etc.) favoring the wealthy? Stiglitz and Krugman (among others) were economists last time I checked, and they don’t seem to be part of the consensus you describe.

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