Drugmakers Get Reprieve From Medicare Cost-Cutting Board

Pfizer Inc. (PFE) and other drugmakers will avoid a reduction in U.S. government payments that was to be imposed in 2015 by a cost-cutting panel created by President Barack Obama’s Affordable Care Act.

Spending in Medicare, the federal health program for the elderly and disabled, has been growing so slowly that the Independent Payment Advisory Board wasn’t triggered for 2015, the first year it could have acted, the actuary for the Centers for Medicare and Medicaid Services said today in a memo. The board was created to propose ways to reduce costs if Medicare spending exceeds target growth rates.

Republicans and the drug industry have urged a repeal of the board, and Obama hasn’t yet appointed any of its members. A spokeswoman for the Pharmaceutical Research and Manufacturers of America, the industry’s Washington-based lobbying group, didn’t immediately comment on today’s decision.

“Since the Affordable Care Act was enacted, growth in Medicare per capita spending has slowed significantly, putting Medicare on a more sustainable path to keep its commitment to seniors and persons with disabilities today and well into the future,” Brian Cook, an agency spokesman, said in an e-mail.

Medicare’s spending per patient is projected to grow at an average rate of about 1.15 percent from 2011 to 2015, the program’s actuary said in a memo. Spending would have to grow more than twice as fast, at an average 3.03 percent, for the payment advisory panel to be triggered.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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