PharmacoEconomics & Outcomes News 672 - 23 Feb 2013 Obama to reduce Medicare costs In his 2013 State of the Union Speech, President Barack Obama has said that the US government will enact reforms to reduce the cost of Medicare. 1 Obama said that the rising cost of healthcare for an aging population was the major driver of long-term debt, and he added that for Medicare he was "prepared to enact reforms that will achieve the same amount of healthcare savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson- Bowles commission * ", which proposed healthcare savings of $US341 billion. He acknowledged that the Affordable Care Act is helping to slow the growth of healthcare costs, but he said that the reforms will go further than that. "We’ll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors. We’ll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital – they should be based on the quality of care that our seniors receive", he said. Drug price negotiations the answer? A possible way to cut the costs for Medicare would be to allow Medicare to negotiate drug prices like other wealthy countries, and data from the Center for Economic and Policy Research (CEPR) show that the federal government could save as much as $541 billion by 2022 if this was the case. 2 Additionally, state governments could save from $31 billion to $72 billion, and consumers could save from $48 billion to $112 billion over the same period. Co-director of CEPR, Dean Baker, says that it is "ridiculous for Medicare to be paying drug companies two and three times as much money for drugs as other countries at a time when we are cutting essential programs". * The Simpson-Bowles commission refers to the National Commission on Fiscal Responsibility and Reform, which Obama created in 2010 to identify policies that would give financial sustainability to the US. 1. Davies E. Obama promises to act on Medicare costs, medical research, and gun control. BMJ : 14 Feb 2013. Available from: URL: http://dx.doi.org/10.1136/ bmj.f1034. 2. Center for Economic and Policy Research. Armed With Powerful New Data, Progressive Groups Launch Grassroots Campaign to Enable Medicare Drug- Price Negotiations. Media Release : 14 Feb 2013. Available from: URL: http:// www.cepr.net. 801085651 1 PharmacoEconomics & Outcomes News 23 Feb 2013 No. 672 1173-5503/10/0672-0001/$14.95 Adis © 2010 Springer International Publishing AG. All rights reserved

Obama to reduce Medicare costs

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PharmacoEconomics & Outcomes News 672 - 23 Feb 2013

Obama to reduce Medicare costsIn his 2013 State of the Union Speech, President

Barack Obama has said that the US government willenact reforms to reduce the cost of Medicare.1

Obama said that the rising cost of healthcare for anaging population was the major driver of long-term debt,and he added that for Medicare he was "prepared toenact reforms that will achieve the same amount ofhealthcare savings by the beginning of the next decadeas the reforms proposed by the bipartisan Simpson-Bowles commission*", which proposed healthcaresavings of $US341 billion.

He acknowledged that the Affordable Care Act ishelping to slow the growth of healthcare costs, but hesaid that the reforms will go further than that. "We’llreduce taxpayer subsidies to prescription drugcompanies and ask more from the wealthiest seniors.We’ll bring down costs by changing the way ourgovernment pays for Medicare, because our medicalbills shouldn’t be based on the number of tests orderedor days spent in the hospital – they should be based onthe quality of care that our seniors receive", he said.

Drug price negotiations the answer?A possible way to cut the costs for Medicare would be

to allow Medicare to negotiate drug prices like otherwealthy countries, and data from the Center forEconomic and Policy Research (CEPR) show that thefederal government could save as much as $541 billionby 2022 if this was the case.2 Additionally, stategovernments could save from $31 billion to $72 billion,and consumers could save from $48 billion to$112 billion over the same period.

Co-director of CEPR, Dean Baker, says that it is"ridiculous for Medicare to be paying drug companiestwo and three times as much money for drugs as othercountries at a time when we are cutting essentialprograms".* The Simpson-Bowles commission refers to the National Commissionon Fiscal Responsibility and Reform, which Obama created in 2010 toidentify policies that would give financial sustainability to the US.

1. Davies E. Obama promises to act on Medicare costs, medical research, and guncontrol. BMJ : 14 Feb 2013. Available from: URL: http://dx.doi.org/10.1136/bmj.f1034.

2. Center for Economic and Policy Research. Armed With Powerful New Data,Progressive Groups Launch Grassroots Campaign to Enable Medicare Drug-Price Negotiations. Media Release : 14 Feb 2013. Available from: URL: http://www.cepr.net.

801085651