Cycles and “Go-Rounds”: A Brief History of Medicare Prescription Drug Coverage

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In 2020, Americans are heading to the polls. Just as Covid-19, the economy, and systemic racism will feature as significant issues, healthcare and, more specifically, Medicare outpatient prescription drug coverage will also no doubt continue to be of interest to voters.

This is not a new issue. Thirty years ago, John Coster wrote about this topic in Pharmacy in History, and his article, “Politics, Congress, and Outpatient Prescription Drug Coverage under Medicare: A Historical Review, 1965-1989” documented the, then, unsuccessful twenty-five year effort to add more robust prescription drug coverage to Medicare. AIHP is pleased to make this article available via open-access until the end of 2020.

Coster concluded that, “given the sudden changeability of the political winds,” the pharmacy profession should be prepared “for the possibility of another potential go-round” on the subject (p. 126). His analysis continued only through the end of the Reagan administration. But Medicare prescription drug coverage has remained a hot topic ever since, and this post will bring Coster’s historical analysis to the present.

President Donald Trump recently released his 2020 proposed plans for Medicare Part D changes, which include reimbursing out-pocket drug costs at the time prescriptions are written (rather than when they are filled), prohibiting “gag clauses,” providing better explanation of benefits, offering beneficiaries more drug coverage plan options, allowing generic drug substitutions, and lowering cost sharing. Presumptive Democratic nominee Joe Biden has also shared his healthcare plan, which aims to control high prescription drug prices via cost-control and consumer inflation caps and by enabling the federal government to engage in direct drug price negotiation.

In short, the future of outpatient prescription drug coverage under Medicare lies in the hands of voters—and the fate of health care reform depends on who they put in the Oval Office in November 2020.

“Strong Government Bureaucracy”

Since the publication of Coster’s article in 1990, Medicare’s prescription drug coverage has continued to be a subject of debate in Washington. Although the biggest changes did not occur until President George W. Bush signed the Prescription Drug Improvement and Modernization Act of 2003, President Bill Clinton had fully intended to bring about changes to Medicare Part D.

In a 1993 report describing the proposed Health Security Act, Clinton stated:

Under reform, with the addition of prescription drug coverage, Medicare will become the world’s largest purchaser of drugs. And, the Medicare program will use its negotiating power to get discounts from the pharmaceutical companies. In addition, with competing health plans trying to become more efficient, more and more buyers will use the same successful negotiating techniques.

Clinton’s legislation was ultimately rejected. Opponents in Congress critiqued its “strong government bureaucracy,” and Big Pharma opposed the reforms due to concerns about price control and regulation.

The Prescription Drug Improvement and Modernization Act of 2003, passed with support from the Bush administration, went into effect in 2006. This remarkable change in Medicare provided outpatient prescription drug programs access to more drug coverage options with prescription drug discounts.

Tweaks to Medicare Part D did not stop there; President Barack Obama followed with the Patient Protection and Affordable Care Act of 2010 (ACA). Obama’s healthcare reform was massive in all areas of Medicare, but his Part D revisions mandated that prescription drugs be covered as an essential health benefit. 

While we await the results of the 2020 presidential election, Coster’s analysis still rings true that Medicare prescription drug coverage is strongly rooted in politics and that the left and right have differing projections when it comes to the future of Medicare Part D (and to healthcare reform in general). In the thirty years since his article’s publication, Coster’s prediction that the future held many more “go-rounds” with outpatient prescription drug benefits has proven correct.

Contributed by Maeleigh Tidd, Doctoral Candidate, University of Wisconsin–Madison School of Pharmacy, Social and Administrative Sciences Division