Proposed Drug Pricing Rule – A Closer Look and its Potential Industry Impact

Feb 7, 2019 | Independent Pharmacy Insights, Pharmacy Growth

In November 2018, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule called “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses.”

This proposed rule is comprised of several major provisions aimed at helping health and drug plans negotiate for lower drug prices, as well as reduce the costs that beneficiaries pay to receive their prescription medications and other treatments inside and outside of pharmacies.

CMS argues that ultimately, the rule will help to improve the system’s regulatory framework, which will in turn help in developing Part C and Part D products that are more capable of meeting the unique needs of each beneficiary.

Let’s explore the provisions set forth in the rule, the consequential outcomes that CMS projects, and relevant points brought up in the public’s debate over the issues.

Pharmacy Price Concessions at POS

The provision titled “Pharmacy Price Concessions to Drug Prices at the Point of Sale” would redefine “negotiated prices” of drugs. Under the current definition, negotiated prices don’t typically reflect performance-based pharmacy price concessions that ultimately result in lower prices for sponsors.

Under the new definition, “negotiated price” would mean the lowest amount that a pharmacy can receive as reimbursement for ARX-690 Blog – Proposed Drug Pricing Rule-Spot 01drugs covered through Part D.

The provision is intended to pass savings directly to patients when they purchase their medications. CMS estimates that this would save beneficiaries $7.1 to $9.2 billion over the next 10 years.

Three Exceptions to Protected Class Medications

The provision titled “Providing Plan Flexibility to Manage Protected Classes” would impact the six drug classes that are currently protected. Currently, Plan D sponsors are required to include all drugs in these classes on their formularies.

The protected classes are antidepressants, antipsychotics, anticonvulsants, immunosuppressants for transplant rejection, antiretrovirals, and antineoplastics.

The provision proposed three exceptions to the current rule:

  1. The ability to increase use of prior authorization and step therapy, including determining the use of the drug for protected class indications.
  2. The ability to exclude protected drugs from formularies if the drug is deemed a new formulation of an existing single-source medication, even if the older formulation is no longer on the market.
  3. The ability to exclude a protected drug if its price increased past a defined threshold over a specified look-back period.

Other Provisions

Other provisions include:

  • “E-Prescribing and the Part D Prescription Drug Program; Updating Part D E-Prescribing Standards,” which would require sponsors to create at least one electronic real-time benefit tool (RTBT) so prescribers can see details like coverage and cost information.
  • “Part D Explanation of Benefits,” which would require sponsors to show price changes and lower-cost alternatives for the beneficiary’s medications.
  • “Medicare Advantage and Step Therapy for Part B Drugs,” which would allow Medicare Advantage plans to use step therapy with designated safeguards in place.

Closing Thoughts

While there’s no way to truly know the impact of new measures until they’re implemented, pharmacies and patients should be prepared for new changes on the horizon. One of the best ways to do this is to stay connected throughout the industry, like becoming an AlliantRx member.

If you’re not yet a member, now is better than ever to join us. If you are a member, be sure to leverage your benefits and help maximize the success of your pharmacy and your patients’ health.