Medicare Proposes Rules for 2020 Drug Pricing

On November 26, 2018, the Centers for Medicare and Medicaid Services (CMS) proposed new rules to offer lower cost drug options and support the private sector by providing tools to lower the cost of prescription drugs.  The objective is to lower drug costs by the 2020 contract year.

CMS is proposing a number of provisions that implement several strategies for lowering drug costs.

1. Providing Plan Flexibility to Manage Protected Classes
   Current Part D policy requires sponsors to include all drugs in six categories or classes including antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals and antineoplastics (except in limited circumstances). The proposed regulations maintain all six protected classes, however the proposal would provide Part D plans with greater flexibility to negotiate discounts for drugs in “protected” therapeutic classes so beneficiaries who need these drugs will pay lower costs.
2. E-Prescribing and the Part D Prescription Drug Program
   In order to accelerate the use of Electronic Real Time Benefit Tools (RTBT) in the Part D program, CMS is proposing that each Part D plan adopt a provider (i.e. EHR-integrated) RTBT of its choosing beginning on or before January 1, 2020. RTBTs have the capability to inform prescribers when lower-cost alternative therapies are available under the beneficiary’s prescription drug benefit, which can improve medication effectiveness, lower prescription drug costs and minimize beneficiary out-of-pocket costs.
3. Medicare Advantage and Step Therapy for Part B Drugs 
   CMS is proposing a policy similar to the one implemented for 2019, under which Medicare Advantage plans would implement step therapy for Part B drugs as a recognized utilization management tool.
4. Part D Explanation of Benefits
   CMS proposes to amend regulations related to the Part D Explanation of Benefits to require the inclusion of drug pricing information and lower cost therapeutic alternatives in the Explanation of Benefits that Part D plans send members. This information will inform Medicare beneficiaries about possible ways to lower their out of pocket costs by taking a lower cost medication.
5. Prohibition Against Gag Clauses in Pharmacy Contracts
   This provision implements the statutory requirement that restricts Part D sponsors from prohibiting or penalizing a pharmacy from disclosing a lower cash price to an enrollee.
6. Pharmacy Price Concessions in the Negotiated Price 
   CMS is also considering for a future plan year, which may be as early as 2020, a policy that would re-define negotiated price as the baseline, or lowest possible payment to a pharmacy. 

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By Robert J. Blackburn, Managing Principal, Blackburn Group, Inc., contact him at This email address is being protected from spambots. You need JavaScript enabled to view it..