Health Industry Washington Watch

GAO Finds Part D Coverage Gap Discount Program Did Not Spur Increased Drug Prices

The GAO has issued a report that responds to concerns raised by certain Democratic lawmakers that manufacturers participating in the Medicare Part D drug “Coverage Gap Discount Program” would raise prices for brand-name drugs used by beneficiaries in the coverage gap to offset the 50% discount that manufacturers must provide under the Affordable Care Act. Contrary to these concerns, the GAO found that prices for brand-name drugs used by beneficiaries in the coverage gap increased similarly to those used by beneficiaries who did not reach the gap, both before and after the Discount Program was implemented in January 2011. The GAO also reports that while pharmacy benefit managers (PBMs) interviewed believe that some manufacturers decreased brand name rebate amounts as a result of the Discount Program, most plan sponsors did not observe this, and manufacturers reported no effects on their rebate negotiations as a result of the Discount Program. Most sponsors and PBMs also reported that the Discount Program did not affect Part D plan formularies, plan benefit designs, or utilization management practices. The GAO cautioned that its findings are limited to those sponsors, PBMs, and manufacturers interviewed and may not be representative of the effects observed across all of these types of entities, and multiple factors besides the Discount Program can affect drug prices over time.

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Reed Smith LLP