CMS expands step therapy, backs off controversial pricing proposal in final rule

CMS finalized a rule that aims to boost transparency of the cost of prescription drugs in Medicare Part D and enable Medicare Advantage plans to negotiate better prices for medicines. Notably, the final version backs off a controversial proposal that would have allowed Medicare Part D plans to exclude certain drugs if prices rise beyond a threshold, though several of the original proposals were finalized.

The main changes in the rule focus on boosting transparency about drug prices in Medicare Part D plans and allowing MA plans to leverage step therapy.

“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,” CMS Administrator Seema Verma said in a statement. “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.”

CMS kept in place the current six protected drug classes, codifying current regulations that allow Part D plans to impose prior and step therapy requirements for beneficiaries starting new therapy in 5 of the 6 drug classes. Antiretrovirals remain as a protected class that is not allowed to have those requirements imposed. This action pulls back on previous proposals to allow Part D plans to exclude drugs if their costs rise too much or are a new formulation of some existing products. The agency received more than 4,000 comments on the issue as it considered implementing the new policy in 2020.

The decision was applauded by the American Medical Association.

“Seriously ill patients who faced the prospect of new hurdles to accessing their medication can breathe a sigh of relief now that the Trump administration has discarded the proposal," Barbara L. McAneny, MD, president of AMA, said in a statement. "The American Medical Association commends the administration for recognizing its proposal to weaken coverage for six protected drug classes under Medicare Part D had potential dangers for patient health."

By 2021, Part D plans will be required to include drug price increases and lower cost therapeutic alternatives in the Part D Explanation of Benefits send to Part D plan members every year. The rule solidifies the banning of pharmacy gag clauses, an industry policy that was taken up in the Senate last year.

The final rule also allows MA plans to implement step therapy for Part B drugs, which are typically administered in a doctor’s office or healthcare facility. The focus of this allowance is to save money, the agency stated. The policy applies to new starts of medication, which must be reviewed and approved by the plan’s pharmacy and therapeutics committee. In instances where patients request coverage of or appeal a denial for a Part B drug, the timeline for decision making by the plan will mirror Part D rules and be shorter.

“We believe that use of step therapy as a utilization management tool will better enable MA organizations to ensure that Medicare beneficiaries pay less overall or per unit for Part B drugs,” a fact sheet reads.

Step therapy is a drug utilization management approach that is designed to save costs and often requires patients to start therapy with the most cost-effective drug therapy before progressing to other therapies that can be more costly if necessary. Proponents of this approach say it reduces costs while keeping high quality care for proven medical therapies, while opponents argue it limits patient choice and can cause delays in effective and innovative treatments.

Additional changes

Among other changes in the rule, Part D plans, which are the prescription drug plans of Medicare, are required to adopt at least one electronic Real Time Benefit Tool (RTBT) that can integrate with at least one prescriber’s ePrescribing system or EHR by 2021. The RTBTs enable prescribers to know about cheaper, alternative therapies under the prescription drug benefits of a beneficiary. This can lower prescription drug costs, reduce out-of-pocket costs for the beneficiary and improve medication adherence, according to CMS.

CMS also backed off another proposal that would have redefined the negotiated price as the lowest payment possible to a pharmacy. The proposal would have counted the price reported to CMS at the point of sale as the negotiated price, which can be lower than the current definition of the negotiated price. CMS plans to keep reviewing the idea.

The pharmaceutical industry appeared to count the changes in the finalized rule as a win.

“We are pleased with the administration’s thoughtful approach to overseeing price concessions negotiated between pharmacies and PBMs that are reflected in beneficiaries’ cost sharing,” Pharmaceutical Care Management Association (PCMA) President and CEO JC Scott said in a statement. “These competitive negotiations between PBMs and pharmacies generate significant savings for the federal government and beneficiaries, while incentivizing pharmacies to meet quality standards, such as generic dispensing rates.”

See the final rule here.