Seema Verma,
Administrator, Centers for Medicare & Medicaid Services Feb 05, 2020
Increasing Access to Generics and Biosimilars in Medicare
Under the leadership of President Trump, CMS
is committed to lowering prescription drug prices for all Americans. A
key component of our strategy is strengthening competition among generic and
biosimilar medicines. Competition in the market for prescription drugs
lowers costs and improves access for patients. Generic and biosimilar
products typically launch at a lower cost than the corresponding branded drug
or biologic to attract market share – and when generics and biosimilars arrive
on the market, the price of the brand or biologic can drop in response.
While competition lowers costs, sometimes it
can take multiple competitors arriving on the market for costs to drop
substantially. And even once prices fall, health insurance plans
sometimes prefer the original higher-priced product if they can negotiate a
larger rebate payment from manufacturers for it, and then apply the rebate to
reduce beneficiary premiums. Therefore, across all of our programs, CMS
has worked to promote market competition to lower costs and improve quality.
Generic Utilization
Today
CMS closely tracks the use of generic
prescription drugs in Part D. Plans are already achieving high
utilization rates, but there is room to do better. Here is a summary of
the trends we are currently seeing for generics.
In 2017, the “generic dispensing rate” – which
is the percent of all Prescription Drug Events (essentially, the percent of all
prescription drug fills) that was for generic drugs – was 82.2% in Part
D. If we only look at Part D prescription drug fills for which an
approved generic drug was on the market for the same strength, route of
administration, and dosage form, the generic was used 90.8% of the time in
2017; this was the “generic substitution rate.”
In addition to tracking the overall rates of
use of generic drugs, CMS monitors Part D formularies to see how often plans
are making generics readily available to enrollees. After ensuring
beneficiary protections, CMS provides plans with flexibility in designing
benefit packages so plans can put together options that are attractive to beneficiaries
through their negotiations with manufacturers. Nevertheless, CMS tracks
plan formulary composition closely. From 2017-2019, thirty-two new
generic drugs were approved and added to the list that Part D plans use to
create their formularies. In 2019, for those thirty-two new brand-generic
drug combinations:
·
The average rate of
formulary inclusion for the generics was 69.3%, while the average rate of
formulary inclusion for the brands was 37.0% across all Part D formularies.
·
When the brand was included
on a plan’s formulary, the equivalent generic was also on the formulary 91.8%
of the time. For the remaining 7.2% of cases in which the brand was on a
plan’s formulary but the equivalent generic was not, the brand drug in question
was typically one of five drugs for which the average wholesale price of the
generic was only 5-15% lower than the brand drug’s average wholesale price.
In the majority of cases in which Part D plans
do not cover new generics, those generics are higher in cost than what would
typically be expected for generic drugs. Similarly, in looking at
formulary patterns for all generic products, the agency has found that when
plans place generic drugs on higher tiers with larger copays, the price of
those generics is typically at least twice as high as the price of generic
drugs on lower tiers. Not all generics come at a substantially lower cost
than the original product. It is critical that plans be empowered to
negotiate for rebates and other discounts, and that they not be required to
automatically cover generics in a particular way regardless of costs.
Some have suggested that CMS dictate that all generic drugs go on particular tiers with favorable cost sharing amounts. However, CMS’s authority to regulate plan negotiations with manufacturers is limited in statute by the non-interference clause, which prohibits interference in negotiations between plans and manufacturers and pharmacies. Moreover, making plans
Some have suggested that CMS dictate that all generic drugs go on particular tiers with favorable cost sharing amounts. However, CMS’s authority to regulate plan negotiations with manufacturers is limited in statute by the non-interference clause, which prohibits interference in negotiations between plans and manufacturers and pharmacies. Moreover, making plans
Nevertheless, there remains additional
opportunity for Part D plans to make generic drugs available, so we committed
from day one to encourage innovation in these products to bolster competition
and drive down prescription drug prices.
Promoting Generic
Competition
Our agency has already taken action
across-the-board to remove barriers that inhibit generic and biosimilar
competition. In 2017, we finalized a rule to improve competition for
biosimilars by giving each new biosimilar its own payment code for Medicare
Part B; and in 2018, we permitted Part D plans to substitute generic
prescription drugs onto their formularies more quickly and allowed Medicare
Advantage plans to have beneficiaries start on a biosimilar product before
trying the corresponding biologic.
In Part II of the Advance Notice of
Methodological Changes for Calendar Year (CY) 2021 for Medicare Advantage
Capitation Rates and Part C and Part D Payment Policies (Advance Notice), the
agency is announcing additional efforts to advance this goal. CMS is
considering whether and how to develop measures of generic and biosimilar
utilization in Medicare Part D for possible use in the calculation of a plan’s
star rating. Therefore, the agency could reward plans based on the rate
at which they encourage market adoption of these competitor products to lower
costs for patients. In the Advance Notice, CMS puts forth three potential
measure concepts, which are listed below, and we ask stakeholders for comments
on these concepts and for any additional information they can provide on
barriers to generic uptake.
·
Generic Substitution
Rate (higher is better): Total number of generic fills divided by the sum
of brand and generic fills for drugs that had approved therapeutically
equivalent generic products that were available on the market at the time of
the fill.
·
Generic Therapeutic-Alternative
Opportunity Rate (lower is better): Total number of brand fills divided
by the sum of brand and generic fills within select drug classes or subclasses
where both brands and generics are available. Classes consisting of only brand
National Drug Codes (NDCs) or only generic NDCs will be excluded from the
measure.
·
Biosimilar Utilization
Rate (higher is better): Total number of biosimilar fills divided by the
sum of reference biologics and biosimilar fills for biologics that had approved
biosimilars available on the market at the time of the fill.
Star Ratings and
Transparency
Star Ratings are used by beneficiaries to
select plans and therefore are a powerful motivator and signal of quality for
MA and Part D plans. That’s why we’re proposing additional improvements to the
Star Ratings program. In the proposed rule for Medicare Advantage and
Part D for 2021, the agency is proposing to increase the impact that patient
experience and access measures have on a plan’s star rating, as we recognize
that one of the best indicators of a plan’s quality is how enrollees feel about
their coverage experience.
Also in the proposed rule, we’re seeking
comment on potential star ratings that could incentivize the uptake of a
standard set of measures for plans to use in evaluating pharmacy
performance. CMS has heard concerns from pharmacies that the measures
plans use to assess their performance are unattainable or otherwise
unfair. Encouraging the use of a standard set of measures, once the industry
establishes one, could ensure a more fair and transparent process.
Our efforts to shine a light on pharmacy
quality don’t stop there. Currently, Part D plans do not have to disclose
to CMS the measures that they use to evaluate pharmacies. The 2021
Medicare Advantage and Part D proposed rule would require Part D plans to share
these measures with CMS. That way, CMS could track and share publicly how
plans are assessing
The 2021 proposed rule for Medicare Advantage
and Part D is the third proposed rule for these programs issued under the Trump
Administration. It reflects the Administration’s commitment to rolling up
its sleeves and improving these programs for our nation’s seniors. We are
aiming to ensure that every senior has access to a plan that meets his or her
unique healthcare needs; and we want plans to attract beneficiaries by
improving quality and reducing costs. Those goals can only be
accomplished by increasing competition, promoting value, and moving away from
an increasingly outdated fee-for-service system.
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