Wednesday, August 15, 2018

CMS’ plan to lower drug spending in Medicare Advantage


By BRIANNA EHLEY (behley@politico.com@BriannaEhley)
08/08/2018 10:00 AM EDT
With help from Sarah Karlin-Smith, Victoria Colliver, Paul Demko, Rachel Roubein, Dan Goldberg and Dan Diamond
CMS TAKES STEPS TO LOWER DRUG SPENDING IN MEDICARE ADVANTAGE — Medicare Advantage plans will soon be able to use step therapy for physician-administered drugs, to help contain pharmaceutical costs, the agency said Tuesday. Step therapy generally requires a patient to start with the most cost-effective drug option. Insurance companies have to give prior approval before more costly medications are then administered. CMS previously discouraged plans from using prior authorization for Part B drugs and prohibited step therapy, giving the plans little ability to negotiate to bring down the cost of medicines, CMS said.
Part B spending by Medicare Advantage plans amounts to about $12 billion a year. The change should lead to about a 15 percent to 20 percent reduction in spending per year, Dan Best, an HHS adviser tasked to help guide drug policy, said on a press call. More on the change from Pro's Sarah Karlin-Smith here.
How it's playing ... Some policy analysts were immediately skeptical that the plan would result in savings. John Leppard of Washington Analysis wrote in a note to clients, “we are skeptical that the full extent of these potential savings (predicated on experience in commercial markets) will be realized." Rick Weissenstein of Cowen Washington Research Group shared that sentiment: “It is unlikely this will significantly reduce drug spending overall but depending on how aggressive MA plans want to be it could make a difference in some classes of drugs."
That's it? Some viewed the step as a bit of a letdown, since HHS Secretary Alex Azar has been touting more sweeping changes to drug prices in Medicare Part B, like letting the private sector insurance plans negotiate the costs of the drugs in fee-for-service Medicare plans, which serve about two-thirds of Medicare beneficiaries.
“The rhetoric surrounding the proposal is out of step with what the administration is actually doing, as has been true with many of this administration’s drug pricing actions,” said Rachel Sachs, of Washington University in St. Louis.
Public Citizen’s Peter Maybarduk called the move "the leftovers of the small potatoes" compared to what the federal government could do "to make medicines affordable." He added that "step therapy can come at the risk of patients not receiving the treatments best suited to them."
Industry not keen on the move ... "PhRMA has serious concerns with the new CMS guidance regarding Medicare Advantage coverage of Part B medicines and the implications for patients suffering from complex conditions," said Nicole Longo, public affairs director for the drugmaker trade group, echoing similar concerns raised by Public Citizen about how step therapy could "delay patients' access to medicines they need."
Others say it's a good first step ... “I think it’s a pretty bold first move,” said Stacie Dusetzina, a drug pricing expert at Vanderbilt University School of Medicine. The policy should push drug companies to negotiate harder, because they will want to offer a price for their drugs that won’t put them on a higher formulary tier that will require step therapy. She expects there will be significant clinician push back to the plan however, because step therapy typically requires a lot of paperwork to move patients from one drug to the next if they fail the first treatment.
The pharmacy benefit managers, who have received a lot of negative attention from HHS on drug pricing, also praised the move.
Get ready for another legal battle ... The Obama administration issued a memo in 2012 indicating that step therapy is legally forbidden in Medicare Advantage. That could leave the Trump administration’s action open to a court challenge.

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