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Part D plans required to give drug pricing information through electronic prescribing or EHR

Pharmacy groups express frustration that CMS did not reform direct and indirect remuneration fees.

Susan Morse, Senior Editor

Medicare Part D plans will be required to provide clinicians with access to prescription drug pricing information either through tools integrated into a clinician's electronic prescribing or electronic health record, the Centers for Medicare and Medicaid Services said in a final rule.

Some plans are already offering these tools, but now they are mandatory, following an implementation period.

The rule also requires the Part D Explanation of Benefits document to include drug price increases and lower-cost therapeutic alternatives.

And "gag clauses," which keep pharmacists from telling patients they would spend less for a drug by paying out-of-pocket than through their insurance co-pay amount, are no longer allowed.


CMS is using drug pricing transparency policy to lower the cost of prescriptions.

Pharmacy groups claim that pharmacy benefit managers and insurers assign an expensive copay for a drug well beyond its actual price.

CMS said that seniors in Medicare are paying more for drugs than commercially insured beneficiaries.


The rule follows another issued earlier this month requiring pharmaceutical companies to post the list prices of drugs in television ads.


In the final rule for Medicare Advantage and Medicare Part D plans, CMS did not include a change to the current practice of direct or indirect remuneration fees.

A direct and indirect remuneration fee is the money a Part D plan or PDM may collect from a pharmacy to offset member costs.

The decision has upset pharmacy groups, which claim that payers misuse  direct remuneration fees to "claw" back reimbursement from pharmacies.

One way payers do this is by imposing penalties for pharmacies' alleged failure to achieve certain benchmarks, many of which are vague, undefined, inconsistent, unachievable or outside of the control of pharmacies, the groups said.

CMS said it considered ending the direct remuneration fee policy, but decided against implementation for 2020 after receiving over 4,000 comments. The agency said it is considering policies to lower drug costs and address the challenges that independent pharmacies face.


Additionally, CMS did not finalize the rule for facilitating negotiations for discounts for drugs in Part D's protected therapeutic classes.

Proposed exceptions would have allowed Part D sponsors to exclude a protected class drug from a formulary for two reasons: if the price of the drug increased beyond a certain threshold over a specified look-back period; or if the drug represents only a new formulation of an existing single-source drug or biological product, regardless of whether the older formulation remains on the market.

The administration remains concerned that prescription drug companies are offering seniors in Medicare substantially smaller discounts for protected class drugs than are offered in the commercial market.

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.

Under current policy, Part D sponsors are only permitted to impose prior authorization and step therapy requirements for beneficiaries initiating therapy for five of the six protected classes, with no prior authorization or step therapy allowed for antiretrovirals.

The final regulatory provision codifies this existing policy, which has been in effect since 2006.


The Partnership for Part D Access, a broad-based coalition of healthcare stakeholders, commended CMS for not finalizing the protected class proposal, saying it would have substantially weakened Medicare's six classes policy.

Medicines in the six protected classes treat serious health conditions, and among these vulnerable beneficiaries -- the frail, disabled or those with multiple chronic conditions -- many medicines are not interchangeable, the Partnership for Part D Access said.


CMS is also codifying policy that enables beneficiaries to select a Medicare Advantage plan that negotiates prices for physician-administered medicines when beneficiaries are first starting on the medicines.

By strengthening a plan's ability to negotiate with prescription drug companies, this policy will ensure that plans deliver a better deliver value, CMS said. Many physician-administered medicines are biologics, which are some of the most expensive therapies in use today, but lower-cost biosimilars are coming to market to compete with biologics.


"In its proposed rule the administration cited the recent 45,000 percent increase in pharmacy price concessions, an increase that is unsustainable,"  said the National Community Pharmacists Association and the National Association of Chain Drug Stores, in expressing frustration that CMS did not reform direct and indirect remuneration fees.

"The improvements we are making to Medicare Advantage and Medicare Part D deliver on the promises in the President's blueprint to provide more negotiating tools and more transparency for patients," said Health and Human Services Secretary Alex Azar.

"Today's rule requires Part D plans to adopt tools that provide clinicians with information that they can discuss with patients on out-of-pocket costs for prescription drugs at the time a prescription is written. By empowering patients with information on the cost of their prescription drugs, today's rule will ensure that pharmaceutical companies have to compete on the basis of price. This effort builds on new requirements for hospitals to disclose chargemaster prices and other agency initiatives to promote price transparency," said CMS Administrator Seema Verma.

Twitter: @SusanJMorse
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