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HHS Advances Payment Model to Lower Drug Costs for Patients

Posted on Monday, October 29, 2018 12:33 PM

This week, CMS announced and seeks input on a new “International Pricing Index” (IPI) payment model to reduce the cost Americans pay for prescription drugs.

“President Trump promised that he would bring down drug prices and put American patients first,” said HHS Secretary Alex Azar. “With this innovative approach, he is now proposing historic changes to how Medicare pays for some of the most expensive prescription drugs, securing for the American people a share of the price concessions that drug makers voluntarily give to other countries.”

“In an era where the pharmaceutical industry is pricing drugs at levels approaching a million dollars—and jeopardizing the future of our safety net programs—the time has come to fix the perverse incentives in the Medicare program that are fueling price increases,” said CMS Administrator Seema Verma. “I appreciate President Trump and Secretary Azar’s bold leadership to lower seniors’ prescription drug costs and provide relief.”

In the new IPI private vendors would procure drugs, distribute them to physicians and hospitals, and take on the responsibility of billing Medicare. Vendors would aggregate purchasing, seek volume-based discounts, and compete for providers’ business, allowing them to create competition to drive down drug prices. 

Click here for the full press release from HHS.

Click here for the full proposal from CMS.

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