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This Week in Health Care Reform: August 9th, 2019

A drug importation rule is proposed; separately, a new bill is also released aimed at controlling prices for drugs developed with the aid of federally-funded research; Medicaid stakeholders call on Congress to repeal the HIT; and, the increased focus on rising health care costs forces a shift in the narrative of who’s responsible.

Week in Review

Drug Importation: Late last month, the Administration released a plan that would allow for the importation of certain drugs from Canada, an idea that already enjoys the support of a majority of Americans.  However, the mechanics of implementing the plan have prompted stakeholders to urge caution and experts to question when, or even if, consumers would see the benefits.  Released jointly by the Department of Health & Human Services (HHS) and the FDA, the plan represents something of a shift in thinking for the Administration, who had previously been resistant to importation of medicines from foreign countries, largely owing to concerns over drug safety.  The proposal has two parts, comprised of the creation of a pilot project, followed by guidance issued from the FDA to drugmakers allowing manufacturers to offer a lower price than that of their current distribution contracts.

Federally-Funded Research: A recent study established that one-third of all U.S. patents were at least partially the result of government-funded research.  In fact, 10 percent of all NIH grants now directly result in patents being filed, with some arguing further that other industrial breakthroughs which have led to popular consumer products owe a great deal to research backed by government funding.  With that in mind, a new bipartisan bill from Sens. Chris Van Hollen (D-Maryland) and Rick Scott (R-Florida) takes aim at pharmaceutical companies who’ve benefitted from federal funding for their research – the argument being that the government has essentially subsidized these companies’ efforts to develop drugs that they then go on to charge exorbitant prices for.  The bill would require these drugmakers to follow specific pricing restrictions or incur strict penalties.

MHPA & HIT: Last month, stakeholders applauded as House lawmakers overwhelmingly supported the elimination of the so-called “Cadillac tax”, a 40 percent excise tax on applicable employer-sponsored coverage that, left unchecked, would’ve increased health care costs for most of the 180 million Americans who currently receive health insurance coverage through their place of work.  In commending lawmakers’ efforts, stakeholders also urged immediate action on the similarly destructive health insurance tax (HIT), which is scheduled to return next year, bringing with it the threat of rising costs for small businesses, hard-working families, and seniors.  The Medicaid Health Plans of America (MHPA) also weighed in, sending a letter of their own to Congressional leadership on behalf of Medicaid managed care plans and their beneficiaries urging for a further delay or full repeal of the HIT, as the reimplementation of the tax would also result in higher overall costs to the Medicaid program

Cost of Care:
As candidates continue to hone their messaging on the campaign trail, focusing their attacks on who’s to blame for rising health care costs, a growing body of evidence points to the largely unacknowledged role that hospitals have quietly played in driving up those costs.  By contrast, new analysis actually points to the important role that private insurance plays in helping Americans save money.  With the focus clearly on what we’re all paying for our health care, experts believe that 2020 could represent a turning point in the evolving conversation surrounding what to do about those rising costs.      

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