CMS proposes new Medicare prescription drug rules

CMS proposed several new policies for 2020 that aim to lower prescription drug prices by revising the way Medicare pays for medications.

In addition, the agency is also considering a policy that would pass drug rebates on to seniors. Currently, pharmacy benefits managers secure rebates for their customers, but there is no policy that requires those savings to be passed on to consumers. Some companies, like CVS Health, have stated that they do pass on the majority of the savings from rebates, but the process is opaque.

Among the changes, CMS would “modernize” Medicare Advantage and Part D programs by giving Part D plans more flexibility to negotiate discount drugs, banning pharmacy gag clauses and requiring transparency with out-of-pocket costs for drugs when prescriptions are written. In addition, the proposals would allow step therapy in Medicare Advantage for Part B drugs.

“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,” HHS Secretary Alex Azar said in a statement. “The Part D proposals complement efforts to bring down costs in Medicare Advantage and in Medicare Part B through negotiation, all part of the President’s plan to put American patients first by bringing down prescription-drug prices and out-of-pocket costs.”

Under the proposal, Part D sponsors would also be able to use prior authorization more broadly and step therapy for protected class drugs and exclude a protected class drug from a formulary if the drug is a new formulation of an existing single-source drug or biological product. Plans can also exclude a drug if the price increases beyond a set threshold over a certain period.

Those exclusion capabilities come at a time when drug prices have risen drastically over the last several years. Sky-high drug prices have become a main target of the Trump administration, with President Trump calling out specific drugmakers individually via Twitter for pushing prices higher. Recently, Pfizer announced it would raise the price of at least 41 drugs in 2019 after the company committed to keep prices level in 2018 following pressure from Trump.

The proposals further include requirements of drug pricing information and lower-cost therapeutic alternatives in the explanation of benefits in Part D. CMS also wants Part D plans to adopt Real Time Benefit Tools that can inform prescribers when lower-cost alternative therapies are available.

“In designing today’s proposal, foremost in the agency’s mind was the impact on patients, and the proposal is yet another action CMS has taken to deliver on President Trump and Secretary Azar’s commitment on drug prices,” CMS Administrator Seema Verma said in a statement. “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. The result will be increasing access to the medicines that seniors depend on by lowering their out-of-pocket costs.”

Find the proposed rule here.