CMS Proposes Actions to Lower Prescription Drug Costs: 4 Things to Know

December 12, 2018

In an effort to lower prescription drug prices, CMS unveiled proposed polices for 2020 to strengthen and modernize the Medicare Part C and D programs. Here’s a closer look at what CMS’ provisions entail and how they help accomplish the Administration’s four strategies.

In an effort to lower prescription drug prices, CMS unveiled proposed polices for 2020 to strengthen and modernize the Medicare Part C and D programs on November 26. According to a press release, the proposal would ensure that Medicare Advantage and Part D plans have more tools to negotiate lower drug prices.

The Trump Administration outlined four key strategies for lowering drug prices and reducing out-of-pocket costs in its proposal: improved competition, better negotiation, incentives for lower list prices, and lowering out-of-pocket costs. Here’s a closer look at what CMS’ provisions entail and how they help accomplish the Administration’s four strategies.

Related article: HHS’ Plan to Lower Medicare Part B Prescription Drug Prices: 5 Things to Know

1. Provide Part D plans with greater flexibility to negotiate discounts for drugs in protected therapeutic classes, so beneficiaries who need these drugs will see lower costs. Since the inception of the Part D benefit, the protected classes (i.e., oncology, HIV, antidepressants, antiepileptics, antipsychotics, and immunosuppressants) have been guaranteed formulary coverage and generally minimal management by Part D plans.

“CMS’ proposed rule would allow Part D plans to be more aggressive in protected classes by permitting more prior authorization and step therapy, and excluding drugs with price increases greater than inflation as well as new formulations of older drugs or so-called ‘me too’ products,” says Jeremy Schafer, PharmD, MBA, senior vice president, Precision for Value, a market access agency. “If adopted, the market could see these classes managed similarly to how it’s done in the commercial world. The result will be more restrictive access for patients, providers, and manufacturers in exchange for deeper discounts and greater savings.”

2. Require Part D plans to increase transparency and provide enrollees and their doctors with a patient’s out-of-pocket cost obligations for prescription drugs when a prescription is written. Cost transparency is a cornerstone of the Trump administration’s endeavor to lower drug prices. Immediately following the administration’s release of its drug blueprint last spring, CMS created a public drug dashboard to share and compare cost information.

The recent Part D proposal extends transparency efforts by proposing the use of real-time prescription benefit tools. Specifically, CMS has proposed that each Part D plan implement a Real Time Benefit Tool (RTBT) by January 2020. RTBTs integrate with electronic health record systems and provide decision support for physicians at the time of prescribing.

“Physicians would be alerted when lower cost prescription alternatives are available for a given patient, which can lower system and patient out-of-pocket costs, and improve medication adherence,” says Meagan O’Neill, MS, a manager with ECG Management Consultants.

3. Codify a policy similar to the one implemented for 2019 to allow “step therapy” in Medicare Advantage for Part B drugs, encouraging access to high-value products including biosimilars. Step-therapy provisions are common in the commercial market and are a form of prior authorization used to tier access to drugs based on price. Step therapy requires patients to start on a lower cost generic or biosimilar drug before moving to a brand name or costlier biologic product. “This type of tool could help Part D plans ensure that beneficiaries receive the most appropriate and lowest-cost option first, ultimately aiming to keep premiums low for patients,” O’Neill says.

4. Implement a statutory requirement, recently signed by President Trump, that prohibits pharmacy gag clauses in Part D. “The prohibition against the gag clauses requirement is similar to the step therapy policy in that it expands price control tools commonly used in the private market to Part D plans,” O’Neill says. Part D plans would have access to prescription benefit tools that give patients and their providers real-time cost information. Theoretically, prescribing decisions could be made based on an evaluation of different options’ cost-sharing requirements (e.g., copays).  

Related article: Formulary Management for Biosimilars: 4 Payer Challenges

Schafer says the removal of the gag clause will provide patients with more opportunities to save money at the pharmacy counter via guidance from pharmacists on the lowest cost options.

Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.