On Thursday, CMS issued its final rule on “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out of Pocket Expenses.” The proposed rule was released in November as part of the Trump Administration’s “America First” prescription drug initiative and is aimed at lowering the cost of prescription drugs by reducing administrative hurdles and providing resources to private-sector partners. NAHU submitted comments to the proposed rule in February, noting our support for many of these reforms and recommended adjustments to improve the effectiveness of the rule.
The rule finalizes a core tenet of President Trump’s “America First” prescription drug blueprint by codifying the statutory requirements banning “gag clauses” in Part D plan pharmacy contracts. President Trump enacted legislation last October to ban clauses that prevent pharmacists from telling customers when they can save money on their prescriptions by paying out-of-pocket for the retail price of the drug, rather than using their insurance and making the co-payment. The previously-enacted legislation applies to both private plans as well as patients covered under Medicare Part D and MA plans. The rule this week follows the final rule issued last week to require pharmaceutical companies to disclose drug prices in consumer advertising.
The rule also finalized a key provision designed to give Medicare enrollees and providers more transparency on medication costs and options, as well as a proposal for MA plans to allow step therapy for Part B drugs administered by a physician for patients newly starting a medication. The transparency provision requires Medicare plans to provide real-time access to drug pricing data through a doctor's electronic health records or e-prescribing software by 2021. This is to ensure that the prescriber is alerted if lower-cost alternatives are available under a patient's benefits. The explanation of benefits for Part D plans will also need to include drug pricing information and lower-cost therapeutic alternatives in an effort to help enrollees reduce their out-of-pocket costs. The administration believes that as a result of these changes, patients and their providers will be able to better understand the cost of prescription drugs and seek out high-value options that will improve health outcomes.
The administration opted not to finalize a proposal that was part of the president’s prescription drug blueprint of allowing health plans to limit or exclude drug coverage in six “protected classes” from their formularies when prices rise more than inflation or only minor changes are made to older medicines. Part D plans are required to cover all drugs in these protected classes: antidepressants, anti-psychotics, anticonvulsants, immunosupressants for transplant rejection, antiretrovirals and cancer drugs. Minor updates to drugs could have resulted in them being excluded even if the older version remains on the market. CMS contends that manufacturers are offering Medicare enrollees substantially lower discounts for protected class drugs than are offered in the commercial market. The proposal was expected to save the government $2 billion and Medicare enrollees $492 million in out-of-pocket costs over a decade. The administration also opted not to finalize a proposal requiring plans to factor pharmacy price concessions and dispensing fees into patient-cost sharing.
NAHU supports the Administration’s efforts at reducing healthcare costs and believes many provisions of the rule will help issuers better manage drug costs and save money for Medicare beneficiaries.