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CMS proposes giving Part D plans greater negotiating power with drug manufacturers

CMS is proposing to give Medicare Part D drug plans flexibility to negotiate discounts for drugs in "protected" therapeutic classes.

Susan Morse, Senior Editor

The Centers for Medicare and Medicaid Services is considering implementing a policy to ensure enrollees pay the lowest possible price for a prescription drug at the pharmacy counter, after taking into account back-end payments from pharmacies to plans.

The policy is being proposed for an as yet-set plan year, but as early as 2020. It would result in savings of $12 to $15 billion over four years, CMS Administrator Seema Verma said Monday.

CMS is also proposing to give Medicare Part D drug plans greater flexibility to negotiate discounts for drugs in "protected" therapeutic classes.

CMS wants to update the protected class policy to allow Part D sponsors to exclude a protected class drug from their formulary if the price of the drug is increased greater than inflation.

Current Part D policy requires sponsors to include on their formularies all drugs in six categories of protected classes. This includes antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals and antineoplastics.

Part D plans must cover all available products without exception. As a result beneficiaries don't see discounts, Verma said.


The proposed rule has the goal of lowering prescription drug costs, saving both the government and beneficiaries money.

Stakeholders are asked to submit comment by 5 p.m., January 25, 2019. The policies, except potentially for the one that ensures enrollees pay the lowest cost for a drug, would be implemented in 2020.


Other CMS proposals include:

Implementing a statutory requirement, recently signed by President Trump, to prohibit pharmacy gag clauses in Part D that prevent beneficiaries from learning whether they would pay less if they paid out-of-pocket rather than through their insurance;

Having Part D plans provide enrollees and their doctors with a patient's out-of-pocket cost obligations for prescription drugs when a prescription is written;

Codifying a policy similar to one implemented for 2019, to allow "step therapy" in Medicare Advantage for Part B drugs, encouraging access to high-value products including biosimilars;

Requiring pharmacy rebates to be passed on to seniors to lower their drug costs at the pharmacy counter.


The policies proposed on Monday have been developed in the commercial marketplace, CMS said. The result has been lower costs for patients.

An estimated 37 percent of all Medicare beneficiaries are expected to enroll in private Medicare Advantage plans in 2019, representing an increase from the one-third enrolled today. Part D enrollment is also increasing.

Premiums for both are projected to decline next year due to competition, CMS said.

Beneficiary protections in MA and Part D will continue and will include CMS's review of Part D plan formularies, an expedited appeals process and a requirement for plans to cover two drugs in every therapeutic class.


"By bringing the latest tools from the private sector to Medicare Part D, we can save money for taxpayers and seniors, improve access to expensive drugs many seniors need, and expand their choice of plans," said Health and Human Services Secretary Alex Azar.

"Today's changes 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,' said CMS Administrator Seema Verma. 

Twitter: @SusanJMorse
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