Part D plans could experiment with “preferred” specialty drug tier
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Trine K. Tsouderos
HRI Regulatory Center Leader, PwC USFebruary 21, 2020
Medicare prescription drug plans could gain new leverage over drugmakers per proposed regulation from CMS, which would allow Part D plans to create “preferred” specialty drug tiers.
Medicare Part D plans can offer only one specialty drug tier. CMS is proposing to codify the maximum patient coinsurance amount for drugs in that tier to between 25% and 33%, depending on whether the plan includes a deductible. It also would allow Part D plans to establish a second, preferred specialty tier that must offer lower patient cost sharing than the regular specialty tier.
“This proposal is designed to give Part D plans more tools to lower out-of-pocket costs for enrollees,” according to a CMS statement. “Plans would be able to demand a better deal from manufacturers of the highest-cost drugs in exchange for placing their products on the ‘preferred’ specialty tier.”
Under the proposal, drugs could be included in specialty tiers only if their monthly ingredient costs are in the top 1% based on Medicare prescription drug event data.
The proposed rule also would require Part D plans in 2022 to offer real-time drug price comparison tools to enable Medicare patients to shop for lower-cost alternatives. So, for example, if a doctor recommended a specific drug, the patient could immediately look up what the copay would be and find out if a different, similarly effective option might cost less.
“Patients would be better able to know what they’ll need to pay before they’re standing at the pharmacy cash register, and pharmaceutical companies and plans would have to compete on the basis of the costs that patients face for their prescription drugs,” CMS said.
In addition, the agency is seeking comment on whether to develop measures of generic and biosimilar utilization in Medicare Part D that would factor into drug plans’ star ratings as a way to reward them for encouraging these typically lower-cost products.
HRI impact analysis
The proposed regulation is indicative of the Trump administration’s desire to lower prescription drug costs for consumers. Medicare specialty drugs, with their big price tags, are an inviting target.
In 2019, drugs qualified for the specialty tier if they cost more than $670 a month, according to the Kaiser Family Foundation. Although specialty drugs are taken by a relatively small share of Medicare drug plan enrollees, spending on these medications now accounts for more than 20% of total Part D spending, up from about 6% to 7% before 2010.
A Kaiser foundation analysis of 30 specialty tier drugs that treat cancer, hepatitis C, multiple sclerosis and rheumatoid arthritis found that the median annual out-of-pocket cost for 28 of the drugs ranged from $2,622 for a hepatitis C drug to $16,551 for a leukemia treatment in 2019.
The CMS proposal relies on Medicare Part D plans’ willingness to offer a new preferred specialty drug tier with lower patient cost sharing to appeal to consumers. In turn, it counts on pharmaceutical companies’ willingness to offer plans larger rebates on specialty drugs to get them on preferred-drug lists whose lower cost-sharing amounts ideally would give their medication an edge over competitors.
The agency is accepting comments on the proposal through April 6.