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New CMS Rule Bolsters MA and Part D Negotiations With Drug Manufacturers

Posted in Drug Pricing, Pharmaceuticals, Reimbursement Matters, Uncategorized

On November 26, 2018, the Centers for Medicare & Medicaid Services (CMS) proposed a new rule aimed at lowering the cost of prescription drugs and out-of-pocket expenses under Medicare Advantage (“MA”) and Part D prescription plans. Under the proposed rule, MA and Part D plans would have flexibility to secure discounts from drug manufacturures for the following “protected classes” of commonly used therapeutic drugs  — antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals, and antineoplastics.

In addition to receiving higher discounts from manufactures, the proposal provides three exceptions that allow Part D sponsors to control costs by:

  1. implementing broader use of prior authorization and step therapy for protected class drugs;
  2. excluding a protected class drug from a formulary if the drug represents only a new formulation of an existing single-source drug or biological product, regardless of whether the older formulation remains on the market; and
  3. excluding a protected class drug from a formulary if the price of the drug increased beyond a certain threshold over a specified look-back period.

The HHS Secretary and CMS Administrator explained that “Part D plans are constrained in their negotiating power.” MA Plans are generally required to cover all available products related to these protected classes. “As a result, beneficiaries taking these drugs have not seen the types of discounts that beneficiaries taking other drugs experience.” The proposed rule can go into effect as early as 2020.

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