Kohl backs drug-spending cuts focused on Medicare Part B

As promised, Sen. Herb Kohl (D-WI) has put forth a bill that would cut U.S. drug spending by billions of dollars over the next decade. It's not exactly a death by a thousand cuts, but the 6 new policies he proposes are sure to prompt responses from the industry. Look for debate, lobbying and a press release from PhRMA, for starters.

Kohl's proposals aren't big surprises; they include measures that have been well debated on Capitol Hill, at industry meetings, and in the media. Still, they're now here in actual legislative language, with cost-saving estimates attached. The biggest spending cut would come from applying Medicaid rebates to Medicare Part B drugs, which include doctor-administered injectables and some oral cancer meds. Kohl's staff figures that would save between $36 billion and $44 billion over 10 years.

Another measure would give the Centers for Medicaid and Medicare Services license to negotiate Part B prices when the government is the product's primary purchaser, taking that price-setting power away from drugmakers. The bill would also codify the old "least costly alternative" policy. And in a move that won't make doctors any happier than it does pharma, it would cut the 6% payment on Part B drugs, which Kohl figures incentivizes physicians to use more expensive drugs.

Other portions of the bill would affect pharmacy benefits managers, nursing-home prescriptions, and discounts on drugs for safety-net hospitals and long-term care programs.

- see the release from the Senate Committee on Aging

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