Medicare Part D

Lilly believes that a competitive private market is the most effective means of delivering efficient and high-quality care for patients.

The prescription drug benefit in the U.S. Medicare program is an example of how a competitive marketplace can deliver value to both patients and payers. The Medicare Part D program continues to provide unprecedented coverage and choice for seniors and disabled Americans. Average premiums for Part D coverage in 2011 will be $30 – just $1 more per month compared to 2010 and considerably lower than originally projected when the program was established.  According to 2011 CBO figures, Medicare will save $217.8 billion or 32.9 percent from 2006-2014 compared to 2004 projections. Part D recipients can choose the plan that best meets their needs rather than getting a one-size-fits-all government program. They have access to the medicines they need and are saving money.

Governments have a role in ensuring that high-quality care is available to vulnerable patients, such as the elderly, people with disabilities or people with very low incomes. In the United States, the biopharmaceutical industry helps the government fulfill this obligation by participating in public health programs, offering substantial discounts to support patient access to the medicines they need.

Recently, the U.S. government has greatly expanded its role in health care, not only broadening the scope of Medicaid coverage to new patient populations, but also requiring substantial increases in the rebates paid by industry. In 2010, federal health care reform legislation – the Patient Protection and Affordable Care Act (ACA) – significantly increased and expanded Medicaid rebate taxes – increasing the minimum rebate percentage to 23.1% from 15.1% for innovative medicines while also expanding rebates to include medicines used through Medicaid managed care plans. Additionally, innovator biopharmaceutical companies are providing a 50% discount on branded pharmaceuticals for Medicare beneficiaries who reach the coverage gap or donut hole. 

Despite these dramatic rebate increases, there is continued pressure in the U.S. to intensify the use of price controls over pharmaceuticals in response to budgetary pressures and the need to reduce the federal deficit. Discussed price controls include expanding Medicaid rebates into the Medicare drug program and granting the government authority to negotiate prices within Medicare. The move toward increasingly substantial price controls in Medicare and Medicaid risks future research into the treatments most needed by the patient populations those programs serve. If there is limited funding for medicines for seniors or people with disabilities, venture capital for research into new, innovative treatments targeted for these population segments will decrease, ultimately harming Medicare and Medicaid patients.

The success of the Medicare Part D program in providing participating seniors with broad access to innovative medicines while controlling costs is evidence that the private market works. Expanded government price controls in the United States threatens the ability of the biopharmaceutical industry to continue to discover new cures and treatments and jeopardizes the ability of the innovative industry to be a vibrant generator of high-quality U.S. employment opportunities.