Are Drug Prices About to Fall in the Us?

Are Drug Prices About to Fall in the Us?

A simple new rule change has arrived in the world of medical billing which looks to try and dramatically cut the cost of drug prices in the US. But how can a small change to the way we bill patients to affect a multi-dollar industry?

Drug Prices go up soonIf you are managing a medical practice you will know all too well that having a deep, detailed and subtle changes to the rules of medical billing can have drastic effects on profit margins. For those not ingratiated into the tiresome and confusing world of medical billing, let me break it down for you. When a patient gets treated the following process occurs: A patient comes into the hospital and they need to be treated effectively and without the hassle of paying for each and every piece of the treatment they receive. So a “code” is produced that lets the hospital know what the patient has done to them and how much that should cost. This allows a bill to be formed quickly and easily at the end of their stay. Take the following examples provided by the medical billing company Medpmr’s website:


  • A patient comes in and is monitored for cardiac output. The code is 4A1209Z
  • 4 stands for “measuring and monitoring”
  • A represents physiological systems
  • 1 is the operation of monitoring the patient
  • 0 tells us an open approach was taken
  • Z tells us nothing else was needed


Complicated right? This is an example of ICD-10 billing. But according to the the Trump administration, a small change could have a big impact on drug prices. The WashingtonPost reported last Friday that the administration was making “biosimilar” drugs have differing hospital billing codes. In old rules, copycat drugs, that are often cheaper, were coded with the same code as the original often more expensive drugs. CMS (Centers for Medicaid and Medicare services” said that is would “encourage innovation and competition” and “may lead to additional cost savings over the long term” according to the WashingtonPost.

Others weren’t so sure. Some health policy experts argue the rule changes might reduce the need for price competition between drug companies and will have the opposite effect that CMS hopes for the rule change.

In conclusion, it is unlikely that rule changes to medical billing will cause drug prices to drastically fall in the US. However, the actual effect the change will have is yet to be seen and it could lead to some reduction in cost as suppliers fight over the cheapest codes. Whilst the Trump campaign continually argued it would drug reduce prices once in office, the Trump administration is finding this much harder to achieve. Drug prices in the United States are higher in the US than other developed countries (although some argue these data aren’t truly representative as they don’t take into consideration deals made with insurers behind closed doors) so this will continue to be a top priority for the White House.


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