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November 27, 2018

CMS proposes rule to lower drug costs for patients enrolled in Medicare Part D

Daily Briefing

    CMS on Monday released a proposed rule aimed at reducing out-of-pocket drug costs for beneficiaries enrolled in Medicare Part D and Medicare Advantage health plans.

    Infographic: How pharmacy can help reduce employee benefit costs

    Proposed rule details

    According to CMS, the proposed rule seeks to eliminate barriers that prevent patients enrolled in Medicare Part D plans from accessing lower-cost drugs.

    Proposal to change protected drug class rules

    Under the proposed rule, CMS would grant Medicare Part D health plans new flexibilities to manage the six protected classes of costly therapeutic drugs—anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals, and immunosuppressants for treatment of transplant rejection—through prior-authorizations and step therapy.

    Under current law, Part D plans are required to cover "all or substantially all" drugs in each of the six protected classes. However, the Trump administration argued that the policy has made it impossible for health plans to negotiate lower prices. The final rule, if finalized, would allow Part D plans to exclude protected drugs if they are a new formulation of an already covered drug, or if the drug's price has increased faster than the rate of inflation.

    CMS Administrator Seema Verma in a blog post wrote, "The protected class policy is in need of an update to ensure that beneficiaries who depend on these drugs are getting the same discounts that other beneficiaries get." Verma wrote, "To give you a sense of the impact: Typical private market discounts for these drugs are in the 20 to 30% range, but the average discount across all protected classes in Part D is just 6%."

    In addition, if finalized the proposed rule would "codif[y] a policy similar to the one implemented for 2019 to allow 'step therapy' in Medicare Advantage for Part B drugs." CMS estimated that the proposed changes to protected classes and the step therapy policy would lower beneficiaries' cost sharing by $754 million over 10 years.

    Price transparency proposals

    CMS under the proposed rule also seeks to increase drug price transparency by requiring Part D health plans to implement real-time prescription benefit tools to allow providers to access cost-sharing information for drugs when they are prescribing the treatments to patients. CMS said the tools would allow providers to determine "when lower-cost alternative therapies are available under the beneficiary's prescription drug benefit." CMS under the proposed rule would require Part D health plans to adopt a real-time benefit tool beginning on or before Jan. 1, 2020.

    CMS under the proposed rule also would amend policies related to the explanation of Part D benefits. Under the proposed rule, CMS would require Part D health plans to provide patients with access to information on drug prices and lower-cost alternative treatments in their explanations of benefits. The rule also would implement a law prohibiting the use of so-called pharmacy "gag clauses," which prevent pharmacies from proactively informing customers that they would save on a prescription drug by paying for it out-of-pocket rather than by using their insurance, in Medicare.

    CMS also said it is considering a proposal that would require rebates to be passed on to consumers at the point of sale. CMS said it "is considering for a future plan year, which could be as early as 2020, to require that the price a beneficiary pays at the pharmacy counter reflects the lowest possible cost, so beneficiaries receive the maximum benefit." The agency estimated the change, if finalized, would lower beneficiaries' cost sharing by about $12 to $15 billion over a decade.

    Taken as a whole, Verma said, the proposed rule "will provide seniors with more plan options featuring lower costs for prescription drugs, and seniors will remain in the driver's seat as they can choose the plan that works best for them. The result will be increasing access to the medicines that seniors depend on by lowering their out-of-pocket costs."

    Patient advocacy groups push back

    However, some patient advocacy groups criticized elements of the proposal, saying it could prevent patients from accessing treatments if a Part D health plan decides to exclude a treatment from its formulary.

    Carl E. Schmid, the deputy executive director of the AIDS Institute, said, "The Trump administration proposal is bad medicine and dangerous to people living with HIV. Not all HIV medications are the same. The Medicare Part D program is working well for people with HIV, and there is no reason to take these draconian actions."

    The drug industry also expressed concerns about the proposal.

    Juliet Johnson, a spokesperson for Pharmaceutical Research and Manufacturers of America, said the proposed rule could put health of some people with HIV/AIDS, cancer, and mental illness at risk.

    James Greenwood, the president of the Biotechnology Innovation Organization, said the proposed rule would allow "insurance company bureaucrats" to restrict a patient's access to drugs, undermining the safeguards established for "some of America's sickest and most vulnerable Medicare beneficiaries" (Luthi, Modern Healthcare, 11/26; Howell, Washington Times, 11/26; Pear, New York Times, 11/26; Inside Health Policy, 11/26 [subscription required]; CMS release, 11/26; Azar/Verma CMS blog, 11/26; CMS fact sheet, 11/26; Alonso-Zaldivar, Associated Press, 11/26; Florko, STAT News, 11/26).

    Medicare 101: Cheat sheets for Parts A through D

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