The Trump administration recently proposed one of the biggest Medicare reforms in a generation. But after the proposed rule sparked a furious lobbying battle between some of the country's most powerful special interests, the president scrapped the effort.
That's unfortunate. President Trump's drug rebate rule would have delivered real savings to patients. Here's how.
Right now, pharmaceutical companies give Medicare prescription drug plans, which are managed by private insurance companies, tens of billions of dollars in discounts.
Insurers use these savings to reduce patients' monthly premiums. That's good news for seniors, of course. But because these savings are spread across the 45 million Americans with Medicare drug plans, each enrollee only saves a few dollars a month.
The administration's rule would have forced insurers to funnel those discounts to sick patients by reducing copays and coinsurance, rather than reducing premiums. The goal was making it more affordable for sick seniors to fill their prescriptions.
When patients don't take their medicines as directed, they often get sicker and require more expensive medical care. This phenomenon, known as "medication non-adherence," is responsible for 10 percent of all hospitalizations across the nation and upwards of 125,000 deaths per year.
Medication non-adherence also costs our government a lot of money. Patients' failure to abide by their doctor-prescribed drug regimens costs our healthcare system as much as $289 billion a year.
By making it easier for patients to afford their medicines, the new rule would have helped patients avoid costly hospital visits and medical procedures.
Consider how the rule would have impacted patients with diabetes. Currently, a quarter of diabetic patients ration their insulin due to high out-of-pocket spending, according to a study from Yale University.
But under the rebate rule, patients with diabetes would save $791 per person per year, according to my organization, the Partnership to Fight Chronic Disease.
An analysis of the rule by the Office of the Actuary in the Centers for Medicare and Medicaid Services found that patients would save $43 billion over the next ten years.
Patients could have saved billions thanks to the administration's reform -- and lived healthier lives as a result.
Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.
