History of Prescription Drug Regulation What this means for future rulemaking BY ALEX TAIRA

In an October 2018 poll conducted by the Kaiser Family Foundation (KFF), healthcare was the most important issue among

registered voters, and healthcare costs, including prescription drugs, was listed as the most important issue within healthcare. A follow-up KFF poll con- ducted in March 2019 found that 79 percent of respondents viewed the costs of prescription drugs as unrea- sonable and showed broad bipartisan support for a number of drug-related reforms. This discontent has not gone unnoticed by politicians: in May 2018, the Trump administration released its American Patients First blueprint, a broad plan to lower the cost of pre- scription drugs and reduce patient out- of-pocket expenses. With drug policy dominating news headlines, it is worthwhile to take a moment to look back at how we got to our current framework of regula- tion and use that knowledge as a guide for actions from this administration and beyond. Although ASCs might administer and prescribe fewer drugs than other sites of services, the indus- try still needs to pay careful attention to changing regulations. For one, some changes targeting Part B drugs (physi- cian administered) might directly affect ASC operation. And, in a larger sense, ASCs can and should be advocates for patients having affordable, appropriate access to necessary medication.


The original Medicare and Medicaid programs as signed into law in 1965 were smaller programs than today. An original Medicare outpatient prescrip- tion drug benefit was seen as too costly and ultimately cut out of the program.


However, Medicare did cover phy- sician-administered drugs to prevent physicians from hospitalizing patients solely to administer medication. The decision to omit a prescrip- tion drug benefit seemed successful from a cost containment standpoint over the first few decades of Medicare and Medicaid; a 2000 report from the Health Care Financing Administra- tion shows that drug expenditures as a percentage of total national health expenditures decreased from 1965 (9 percent of expenditures) to 1980 (4.9 percent). However, new scientific dis- coveries in the 1970s and 1980s kick- started a burgeoning pharmaceutical manufacturing industry by allowing companies to advertise directly to phy- sicians and consumers through televi-

sion commercials. By 1999, Medicare would spend roughly $4 billion cover- ing more than 450 approved outpatient drugs, according to a March 2002 tes- timony from the US General Account- ing Office.

Modern Proposals The political

willpower to enact a

Medicare prescription drug benefit grew throughout the Clinton adminis- tration of the 1990s. Implementation of the Balanced Budget Act of 1997 caused Medicare spending to decline for the first time in history in 1999, and overall federal budget surpluses from 1998 to 2001 extended the projected life span of the Medicare Part A trust fund to 2029. With drug prices rising at an alarming rate there were increased

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