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From Health Law Daily, November 27, 2018

CMS to lower prescription costs by giving flexibility to Parts C and D

By David Yucht, J.D.

CMS proposed polices for 2020 to "strengthen and modernize" the Medicare Part C and D programs. The proposal would give Medicare Advantage and Part D plans greater ability to negotiate lower drug prices. CMS is also considering a policy to require pharmacy rebates to be passed on to seniors. In announcing this proposed rule, HHS Secretary Alex Azar commented that the Trump administration was seeking to "bring tougher negotiation to Medicare and bring down drug costs for patients, without restricting patient access or choice."

Changes to protected drug classes. CMS has issued proposed rule changes to give Medicare Advantage and Part D plans greater ability to negotiate lower drug prices. Current Part D policy requires sponsors to include on their formularies all drugs in six categories or classes including antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals; and antineoplastics. If enacted the proposed regulations will give Part D plans more flexibility to negotiate discounts for drugs in these protected therapeutic classes including allowing broader use of prior authorization and step therapy for protected class drugs, allowing plans to exclude a protected class drug from the formulary if the drug is a new formulation that does not provide a unique route of administration; and allowing plans to exclude a protected class drug from the formulary if the drug had a price increase beyond a certain threshold. The estimated savings to the Medicare Trust Fund from this proposal is $141-$180.5 million in 2020-2024, increasing to $195-$240 million in 2025-2029.

Other proposed changes. Other proposed rule changes would require Part D plans to provide a patient’s out-of-pocket cost obligations for a prescription drug at the time a prescription is written; permit step therapy, where a patient may be required by their insurer to try a less expensive drug before moving on to a more expensive drug, in Medicare Advantage for Part B drugs, encouraging access to high-value products including biosimilars; and implement a law, recently signed by the President, that prohibits Part D. pharmacy gag clauses that prevent pharmacists from telling patients that paying with cash may be less expensive than using their insurance benefits. Going forward, CMS is also considering, a policy that would ensure that enrollees pay the lowest cost for their prescription drugs, after considering back-end payments from pharmacies to plans.

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