President Trump on October 25th proposed a plan to cut drug costs for Medicare recipients by changing the price negotiation structure for Medicare Part B. From 2011 to 2016, Medicare increased their drug costs for Part B by 59% from $17.6 billion in 2011 to $28 billion in 2016.

Unlike in many other countries where the government is either the drug purchaser or has a heavy hand in controlling the prices of drug manufacturers, in the United States, drug prices are negotiated by insurers, hospitals, and even by doctors. The Centers for Medicare & Medicaid Services or CMS has proposed a rule to go into effect in either late 2019 or 2020 that would change how Medicare pays for infused and injected drugs as well as encourage drug vendors to also negotiate prices on specific drugs with the hope of reducing drug costs by an estimated 30%. Currently, doctors are paid a percentage of the purchase price of drugs which can be considered a conflict of interest from that of the patient.

There is no question that prescriptions have skyrocketed in price over the last few decades and a 59% increase in just 5 years for Part B drugs is simply not sustainable. On the other hand, American pharmaceutical companies have lobbied with deep pockets to limit regulations that they think would hinder innovation and, as James C. Greenwood, executive of the Biotechnology Innovation Organization, put it, “puts America’s patients last and diminishes their hope for a better future.” America has consistently ranked 1st in biopharmaceutical research, accounting for 44% of global biomedical R&D but accounting for 22% of the global GDP. Very few people would like to see American innovation deteriorate, however, it also cannot be that American consumer alone have to carry the burden of high drug prices and there must be solutions to reduce costs to patients.

At Solid Health Insurance Services, we will always strive to keep our clients informed about the healthcare trends and changes to the state and federal legislation around the Affordable Care Act. Our mission at Solid Health Insurance Services is to find for you affordable health insurance, life insurance, long-term care insurance and travel insurance which fits your medical needs and budget for your individual, family and business needs. Please contact us at 310-909-6135 or at