Health Care Costs

An Ad’s Charge That Price Haggling Would ‘Swipe $500 Billion From Medicare’ Is Incorrect

The advertisement opens with a doctor sitting across from his patient and holding a prescription drug pill bottle. “You want to continue with this medication?” the doctor asks while an older patient nods.

The doctor then explains that he can no longer provide the medicine to her because insurance companies and Washington bureaucrats “are working together to swipe $500 billion from Medicare to pay for [House Speaker Nancy] Pelosi and [Senate Majority Leader Chuck] Schumer’s out-of-control spending spree.”

“They’re calling it Medicare negotiation, but, really, it’s just a way to cut your benefits and no longer pay for lifesaving medicines,” the doctor says.

Medicare negotiation refers to the federal government bargaining directly with pharmaceutical companies on the price of prescription drugs. Currently, Medicare is prohibited from using its vast market-share muscle to set prices. But supporters of Medicare drug negotiations eye the Democratic-backed budget reconciliation bill now being discussed in Congress as a means to reverse the policy.

This ad, seen on television and online, is part of a multiplatform campaign by the 60 Plus American Association of Senior Citizens, a conservative group that lobbies on senior issues and brands itself as the “right alternative to AARP.” It’s one example of a swath of ads that have popped up in the past month about Medicare drug price negotiations.

Since drug pricing is a hot topic and a critical piece of the broad, politically charged debate in Congress, we thought it was important to dig into the ad’s messages.

The $500 Billion Number

First, the ad claims that Medicare drug price negotiation will take “$500 billion from Medicare.”

All five of the Medicare and drug pricing experts we consulted said that was a misleading way to frame this policy.

The reference to $500 billion most likely comes from a Congressional Budget Office estimate of a provision in H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act. It’s an estimate of how much the government would save over 10 years if drug price negotiations were enacted.

That is, the government would be paying pharmaceutical companies $500 billion less for prescription drugs.

And, in that bill, $300 billion to $400 billion of the savings were to be used to expand benefits to include dental, hearing and vision coverage, said Juliette Cubanski, deputy director of the program on Medicare policy at KFF. Right now, Medicare doesn’t provide that coverage to seniors.

If this policy were to make it into the pending budget reconciliation, some of the savings would also likely address other Democratic health care priorities, such as permanently closing the Medicaid coverage gap and improving Affordable Care Act coverage and subsidies.

So the ad’s charged language — that Pelosi and Schumer are planning to “swipe” this money from Medicare — is incorrect. That $500 billion in savings would be slated for reinvestment in the program. And some experts said the changes to drug pricing could also translate into lower premiums and out-of-pocket costs for seniors.

The point of negotiations is “to spend less on the drugs we’re already buying and put the money back into the health system,” said Rachel Sachs, a law professor and expert on drug policy at Washington University in St. Louis.

But what about the ad’s other main point — that Medicare negotiation will result in seniors no longer being able to get their medications?

Since 60 Plus did not return requests for comment, it’s hard to know exactly what it is asserting will come between seniors and their medication.

It’s possible the ad is implying that drugmakers may walk away from the negotiating table if they don’t like the prices the government promotes. But experts said it’s likely a financial penalty would be in place to motivate the companies to work with the government. H.R. 3 proposed an escalating excise tax.

The U.S. has the world’s largest prescription market, so it seems unlikely companies would stop selling drugs here completely, said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University.

And the number of drugs subject to negotiation would probably be a small subset of all drugs on the market, based on the negotiation method that was proposed in H.R. 3.

In real life, the scenario shown in the ad is unlikely to happen, said Joseph Antos, senior fellow in health care policy at the American Enterprise Institute.

“The question of whether a drug would be taken off the market — it’s always a little hard to say and, clearly, that is a possibility,” said Antos. “But it’s much more plausible to say this is the kind of policy that would lead to some new drugs not coming out to the market.”

That’s an argument often wielded by the pharmaceutical industry.

Evidence suggests there’s a grain of truth in the assessment that lower industry profits results in less research and development, said Paul Van de Water, a senior fellow in health care policy at the Center on Budget and Policy Priorities. But only a grain. For the most part, the drug industry overstates the effect of lost profits.

“A lot of these drugs are what’s known as ‘me-too’ medicines, which means the drugmakers are making small innovations on existing drugs,” said Van de Water. “The loss to Medicare beneficiaries of those types of drugs would be relatively small.”

In a separate analysis, the CBO examined to what extent negotiated drug prices could squeeze the pharmaceutical industry’s R&D capacity. The agency, using a 30-year window, estimated that 59 drugs wouldn’t come to market. That’s against a baseline of about 900 drugs being released per year, said Sachs, which means it would stymie only a tiny fraction of otherwise expected drugs.

Still, some experts say the CBO report can’t precisely predict the future and a loss in profits would have a larger effect on smaller, start-up pharmaceutical companies.

“At the small operations, a scientist thinks they have an insight into some biological process and they attract venture capitalists to develop a drug,” said Antos. “But drug development is a complicated business, and the drug might not make it to market. With less funds for that type of research, that is the part of the drug business most directly affected by the drug pricing policy.”

Why It Matters

The political stakes surrounding the Medicare drug price negotiations are high.

Currently, the idea is seen as a way to help pay for the Democratic-backed health initiatives being discussed as part of the reconciliation bill.

And, a recent poll from KFF shows that almost 90% of the public supports the government’s ability to negotiate for lower drug prices.

But allowing Medicare to bargain on drugs is controversial, even among Democrats, some of whom say they don’t want to stifle drug companies’ innovation, especially if it’s a big industry in the area of the country they represent.

Meanwhile, PhRMA, the powerful pharmaceutical industry trade group, announced Sept. 15 it would be launching a seven-figure ad campaign against the drug pricing proposals, according to The Hill.

Our Rating

The 60 Plus Association ran an advertisement that claimed Medicare drug price negotiations were “swiping” $500 billion from Medicare and going to be used as a way to “cut benefits and no longer pay for lifesaving medicines.”

While the $500 billion number is based on facts, everything else this ad says is misleading.

If Congress approves a plan to let Medicare negotiate drug prices, Democrats are calling for most of the savings to be funneled directly back into the Medicare program to provide vision, dental and hearing benefits. So, it’s not true that the plan for the money is to steal from Medicare. Experts also agreed it is specious to say seniors could no longer get the medications they’re currently taking.

We rate this claim False.

Sources

60 Plus American Association of Senior Citizens, “Our Mission,” accessed Sept. 22, 2021

60 Plus American Association of Senior Citizens, “Protecting Medicare,” accessed Sept. 22, 2021

Center on Budget and Policy Priorities, Build Back Better Legislation Would Close the Medicaid Coverage Gap, Sept. 13, 2021

Congressional Budget Office, CBO’s Simulation Model of New Drug Development, August 2021

Congressional Budget Office, H.R. 3, Elijah E. Cummings Lower Drug Costs Now Act Cost Estimate, Dec. 10, 2019

Congress.gov, H.R.3 — Elijah E. Cummings Lower Drug Costs Now Act — 116th Congress (2019-2020), accessed Sept. 22, 2021

Email interview with Stacie Dusetzina, associate professor of health policy at Vanderbilt University, Sept. 21, 2021

Fierce Pharma, “Advocates Roll Pricey Ad Campaigns as Biden, Congress Push for Medicare Drug Negotiations,” Aug. 17, 2021

The Hill, “PhRMA Launches 7-Figure Ad Campaign Against Democrats’ Drug Pricing Measures,” Sept. 15, 2021

KFF, What’s the Latest on Medicare Drug Price Negotiations?, July 23, 2021

KFF, Public Opinion on Prescription Drugs and Their Prices, June 15, 2021

KHN/PolitiFact, “Pharma’s Take on the Pelosi Drug-Pricing Bill: Fair Warning or Fearmongering?” Dec. 5, 2019

KHN/PolitiFact, “Biden Promise Tracker — Promise: Lower Cost of Prescription Drugs,” updated July 15, 2021

Open Secrets, “Pharmaceutical Industry Backs Democratic Holdouts on Drug Pricing Plan,” Sept. 17, 2021

Politico, “House Leadership Looks to Jam Holdouts on Drug Pricing,” Sept. 21, 2021

Phone interview with Juliette Cubanski, deputy director of the program on Medicare policy at KFF, Sept. 21, 2021

Phone interview with Joseph Antos, senior fellow and Wilson H. Taylor Scholar in health care and retirement policy at the American Enterprise Institute, Sept. 21, 2021

Phone interview with Paul N. Van de Water, senior fellow at the Center on Budget and Policy Priorities, Sept. 21, 2021

Phone interview with Rachel Sachs, Treiman professor of law at Washington University in St. Louis School of Law, Sept. 21, 2021

The Washington Post, “Three Democrats Say They’ll Oppose Party’s Drug-Price Plan, Creating Roadblock for Larger Package,” Sept. 14, 2021

YouTube, 60 Plus Association Official Account, “Doctor’s Visit,” Sept. 10, 2021

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Death in Dallas: One Family’s Experience in the Medicaid Gap

For years, Millicent McKinnon of Dallas went without health insurance. She was one of roughly 1 million Texans who earn too much to qualify for Medicaid in the state but too little to buy their own insurance. That is, until she died in 2019. She was 64 and had been unable to find consistent care for her breast cancer.

Lorraine Birabil, McKinnon’s daughter-in-law, said she is still grieving that loss.

“She was such a vibrant woman,” she said. “Just always full of energy and joy.”

Health insurance for roughly 2.2 million Americans is on the table as Congress considers a spending bill that could be as high as $3.5 trillion over the next decade.

This plan would extend health coverage to residents of the 12 states that have yet to expand Medicaid to their working poor through the Affordable Care Act. In those states, people who earn too little to qualify for Medicaid — but who can’t afford to buy insurance in the individual marketplace — are left in what’s referred to as the Medicaid gap. Like McKinnon, most of these people work in jobs that don’t offer affordable health insurance.

If Congress approves the measure, those individuals would have access to a health plan through the federal government.

This could be a lifeline to some of the 17.5% of Texans who are uninsured, the highest rate in the country.

McKinnon was a descendant of runaway slaves who settled in Chicago. As an adult, she moved to Dallas and worked in health care her entire career. Her last job was as a home health aide, taking care of the elderly and people with disabilities. Birabil said she didn’t make a lot of money, though, and didn’t get health insurance.

And that’s why, when McKinnon started feeling sick, she put off going to the doctor.

“She didn’t have the coverage,” said Birabil, a lawyer who served briefly in the Texas House of Representatives. “She was doing everything she could do to live a healthy lifestyle. And so, when she realized that something was wrong and she went to find out what it was, it turned out that it was stage 4 breast cancer.”

In the year after her diagnosis, she bounced around hospitals. Doctors would stabilize her and send her home. Without coverage, consistent treatment was hard to find. Her family looked for insurance but found nothing.

All they could do in the end was be there as she slowly died.

“At the time that we found out, you know, we were also pregnant,” Birabil said. “And she kept saying, ‘I just want to meet my grandbaby.’ And she didn’t make it.”

A month before her granddaughter was born, McKinnon died. She was months away from getting Medicare.

Birabil said the health care system her mother-in-law spent her life working in ultimately failed her.

Laura Guerra-Cardus, deputy director of the Children’s Defense Fund in Texas, said advocates like her have been pleading with state lawmakers for years to cover uninsured Texans.

“But purely political opposition from our highest leaders, the governor and the lieutenant governor,” she said, “is enough to block progress on an issue that is a basic right.”

That’s why Guerra-Cardus, and other health care advocates across the country, are now looking to President Joe Biden and Congress to fix this problem. The Democrats’ $3.5 trillion spending bill — Biden’s “human infrastructure” bill — includes money to cover the uninsured via the health insurance marketplace and state Medicaid programs.

Most of those who would benefit are people of color in the South.

“We are asking them to choose to make America a country that does not block health care from anybody,” Guerra-Cardus said.

The racial disparity is stark in Texas, where about 70% of people in the coverage gap are Latino or Black.

Jesse Cross-Call with the Center for Budget and Policy Priorities said this is the first time since the Affordable Care Act went into effect that Congress may have enough votes to address this issue.

“This really is the unfinished work of the ACA to ensure that everybody in this country who is poor or of moderate incomes has access to affordable health care coverage,” he said.

But this insurance lifeline is competing for money and attention with other priorities.

Politico reported that this plan could be curtailed as Democrats negotiate a trimmed-down version of the spending bill.

For example, some lawmakers have suggested they would be willing to scale back health coverage for people in the Medicaid gap to just five years.

U.S. Rep. Lloyd Doggett (D-Texas), chair of the House Ways and Means Health Subcommittee, said in a statement Tuesday that Congress “must permanently close this coverage gap” so people in the 12 Republican-controlled states are never again denied health care.

“Closing the coverage gap means getting access to a family physician, essential medicines and other health care for [millions] who have been left out and left behind for more than a decade,” he said.

Some Democrats have also raised political concerns that extending coverage in non-expansion states would reward the Republican leaders in those states that have blocked Medicaid expansion for years.

Guerra-Cardus said that argument “is so far from the point” when it comes to why Congress should address the coverage gap.

“This is about people who are dying and suffering from preventable, treatable illnesses in the 21st century in our rich country,” she said.

In every state where Medicaid expansion has been put on a ballot, it has been approved by voters, most recently in Oklahoma and Missouri.

This story is part of a partnership that includes KUTNPR and KHN.

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Alzheimer’s Drug Targets People With Mild Cognitive Impairment. What Does That Mean?

The approval of a controversial new drug for Alzheimer’s disease, Aduhelm, is shining a spotlight on mild cognitive impairment — problems with memory, attention, language or other cognitive tasks that exceed changes expected with normal aging.

After initially indicating that Aduhelm could be prescribed to anyone with dementia, the Food and Drug Administration now specifies that the prescription drug be given to individuals with mild cognitive impairment or early-stage Alzheimer’s, the groups in which the medication was studied.

Yet this narrower recommendation raises questions. What does a diagnosis of mild cognitive impairment mean? Is Aduhelm appropriate for all people with mild cognitive impairment, or only some? And who should decide which patients qualify for treatment: dementia specialists or primary care physicians?

Controversy surrounds Aduhelm because its effectiveness hasn’t been proved, its cost is high (an estimated $56,000 a year, not including expenses for imaging and monthly infusions), and its potential side effects are significant (41% of patients in the drug’s clinical trials experienced brain swelling and bleeding).

Furthermore, an FDA advisory committee strongly recommended against Aduhelm’s approval, and Congress is investigating the process leading to the FDA’s decision. Medicare is studying whether it should cover the medication, and the Department of Veterans Affairs has declined to do so under most circumstances.

Clinical trials for Aduhelm excluded people over age 85; those taking blood thinners; those who had experienced a stroke; and those with cardiovascular disease or impaired kidney or liver function, among other conditions. If those criteria were broadly applied, 85% of people with mild cognitive impairment would not qualify to take the medication, according to a new research letter in the Journal of the American Medical Association.

Given these considerations, carefully selecting patients with mild cognitive impairment who might respond to Aduhelm is “becoming a priority,” said Dr. Kenneth Langa, a professor of medicine, health management and policy at the University of Michigan.

Dr. Ronald Petersen, who directs the Mayo Clinic’s Alzheimer’s Disease Research Center, said, “One of the biggest issues we’re dealing with since Aduhelm’s approval is, ‘Are appropriate patients going to be given this drug?’”

Here’s what people should know about mild cognitive impairment based on a review of research studies and conversations with leading experts.

Basics. Mild cognitive impairment is often referred to as a borderline state between normal cognition and dementia. But this can be misleading. Although a significant number of people with mild cognitive impairment eventually develop dementia — usually Alzheimer’s disease — many do not.

Cognitive symptoms — for instance, difficulties with short-term memory or planning — are often subtle but they persist and represent a decline from previous functioning. Yet a person with the condition may still be working or driving and appear entirely normal. By definition, mild cognitive impairment leaves intact a person’s ability to perform daily activities independently.

According to an American Academy of Neurology review of dozens of studies, published in 2018, mild cognitive impairment affects nearly 7% of people ages 60 to 64, 10% of those 70 to 74 and 25% of 80- to 84-year-olds.

Causes. Mild cognitive impairment can be caused by biological processes (the accumulation of amyloid beta and tau proteins and changes in the brain’s structure) linked to Alzheimer’s disease. Between 40% and 60% of people with mild cognitive impairment have evidence of Alzheimer’s-related brain pathology, according to a 2019 review.

But cognitive symptoms can also be caused by other factors, including small strokes; poorly managed conditions such as diabetes, depression and sleep apnea; responses to medications; thyroid disease; and unrecognized hearing loss. When these issues are treated, normal cognition may be restored or further decline forestalled.

Subtypes. During the past decade, experts have identified four subtypes of mild cognitive impairment. Each subtype appears to carry a different risk of progressing to Alzheimer’s disease, but precise estimates haven’t been established.

People with memory problems and multiple medical issues who are found to have changes in their brain through imaging tests are thought to be at greatest risk. “If biomarker tests converge and show abnormalities in amyloid, tau and neurodegeneration, you can be pretty certain a person with MCI has the beginnings of Alzheimer’s in their brain and that disease will continue to evolve,” said Dr. Howard Chertkow, chairperson for cognitive neurology and innovation at Baycrest, an academic health sciences center in Toronto that specializes in care for older adults.

Diagnosis. Usually, this process begins when older adults tell their doctors that “something isn’t right with my memory or my thinking” — a so-called subjective cognitive complaint. Short cognitive tests can confirm whether objective evidence of impairment exists. Other tests can determine whether a person is still able to perform daily activities successfully.

More sophisticated neuropsychological tests can be helpful if there is uncertainty about findings or a need to better assess the extent of impairment. But “there is a shortage of physicians with expertise in dementia — neurologists, geriatricians, geriatric psychiatrists” — who can undertake comprehensive evaluations, said Kathryn Phillips, director of health services research and health economics at the University of California-San Francisco School of Pharmacy.

The most important step is taking a careful medical history that documents whether a decline in functioning from an individual’s baseline has occurred and investigating possible causes such as sleep patterns, mental health concerns and inadequate management of chronic conditions that need attention.

Mild cognitive impairment “isn’t necessarily straightforward to recognize, because people’s thinking and memory changes over time [with advancing age] and the question becomes ‘Is this something more than that?’” said Dr. Zoe Arvanitakis, a neurologist and director of Rush University’s Rush Memory Clinic in Chicago.

More than one set of tests is needed to rule out the possibility that someone performed poorly because they were nervous or sleep-deprived or had a bad day. “Administering tests to people over time can do a pretty good job of identifying who’s actually declining and who’s not,” Langa said.

Progression. Mild cognitive impairment doesn’t always progress to dementia, nor does it usually do so quickly. But this isn’t well understood. And estimates of progression vary, based on whether patients are seen in specialty dementia clinics or in community medical clinics and how long patients are followed.

A review of 41 studies found that 5% of patients treated in community settings each year went on to develop dementia. For those seen in dementia clinics — typically, patients with more serious symptoms — the rate was 10%. The American Academy of Neurology’s review found that after two years 15% of patients were observed to have dementia.

Progression to dementia isn’t the only path people follow. A sizable portion of patients with mild cognitive impairment — from 14% to 38% — are discovered to have normal cognition upon further testing. Another portion remains stable over time. (In both cases, this may be because underlying risk factors — poor sleep, for instance, or poorly controlled diabetes or thyroid disease — have been addressed.) Still another group of patients fluctuate, sometimes improving and sometimes declining, with periods of stability in between.

“You really need to follow people over time — for up to 10 years — to have an idea of what is going on with them,” said Dr. Oscar Lopez, director of the Alzheimer’s Disease Research Center at the University of Pittsburgh.

Specialists versus generalists. Only people with mild cognitive impairment associated with Alzheimer’s should be considered for treatment with Aduhelm, experts agreed. “The question you want to ask your doctor is, ‘Do I have MCI [mild cognitive impairment] due to Alzheimer’s disease?’” Chertkow said.

Because this medication targets amyloid, a sticky protein that is a hallmark of Alzheimer’s, confirmation of amyloid accumulation through a PET scan or spinal tap should be a prerequisite. But the presence of amyloid isn’t determinative: One-third of older adults with normal cognition have been found to have amyloid deposits in their brains.

Because of these complexities, “I think, for the early rollout of a complex drug like this, treatment should be overseen by specialists, at least initially,” said Petersen of the Mayo Clinic. Arvanitakis of Rush University agreed. “If someone is really and truly interested in trying this medication, at this point I would recommend it be done under the care of a psychiatrist or neurologist or someone who really specializes in cognition,” she said.

We’re eager to hear from readers about questions you’d like answered, problems you’ve been having with your care and advice you need in dealing with the health care system. Visit khn.org/columnists to submit your requests or tips.

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