Insurers to CMS, Congress: For Lower Rx Costs, Hand Us the Reins

WASHINGTON — Congress and the administration can help rein in rising drug costs through a few key regulatory and legal fixes, said insurers and pharmacists at AHIP’s National Conference on Medicare, Medicaid and Duals on Tuesday.

“I think plans need to be given a little bit more leeway to truly assess the value of drugs to make a decision: does this drug at the cost really provide any additional value?” said Sarah Marche, PharmD, vice president of pharmacy services at Highmark, a Blue Cross affiliate in Pennsylvania.

She noted that not every drug Medicare covers adds value.

“Glumetza [a branded version of metformin] provides no value above and beyond what’s available, and if you look at a lot of the commercial formularies, it’s blocked,” she said. “Nobody’s dying. Nobody has any huge issues with that, but we don’t have that same flexibility within the Medicare space. So, you’re covering a drug that really provides no additional value, just increasing the cost.”

These difference are true across specialty pharmacies and utilization management, she added. “We’re just not being able to manage as aggressively as we could, while ensuring appropriate access in the right patient.”

Another panelist, Mark Owen, MBA, president of government programs for the the Blue Cross-affiliated Health Care Service Corp., highlighted three changes he thinks would help to better manage Medicare Part D costs.

  • Giving biosimilars the same discount as their predicate drugs in the coverage gap
  • Creating two tiers for specialty drugs
  • Allowing the option to restrict access to specialty pharmacies

“Biosimilars create an option for specialty drugs, but the way they’re treated now actually creates a disincentive for us to even put them on the formulary or for the member to get the drug,” said Owen.

Under current law, manufacturers are required to provide a discount for brand-name drugs of roughly 50% in the Medicare coverage gap or “donut hole,” said Owen. While biosimilars might initially be priced at 15% less than their predicate drugs — that is, the original biologics from which biosimilars are copied — biosimilar manufacturers are not required to apply the same discount.

Not only are the copays higher for the biosimilar, but beneficiaries who take the biosimilar over the predicate drug also don’t receive any credit towards their maximum out-of-pocket costs, he explained. For the predicates, however, the total cost including copays and discounts counts towards the out-of-pocket threshold for brand drugs.

This is significant because it means beneficiaries who choose a biosimilar will be stuck in the coverage gap for twice as long — 2 months versus 1 month — as those who choose the brand drug.

“So they have no incentive to take the lower-priced drug … We’ve got to fix that because it creates a disincentive for competition,” he said. Extending the discount to the biosimilar would require legislative action, as the Centers for Medicare and Medicaid Services have said the change is out of its jurisdiction, Owen added.

With regard to tiers, Owen favors implementing “preferred” and “nonpreferred” categories in the specialty drug tier. In modeling the concept, Owen suggested the preferred tier might have a 20% copay and the nonpreferred tier could offer a 34% copay.

This regulatory change would allow insurers to gain price concessions or rebates. In addition, the resulting premium decrease would not affect only the beneficiaries taking the drug but every member in that plan design, Owen added. The premium savings, with the additional tier in the proposed model, would yield $1.40 to $9.00 in savings per member per month, for all members in that plan.

Lastly, Owen argued that Medicare Part D sponsors should be allowed to limit beneficiary access to specialty pharmacies. Under current regulations, payers may limit access to a subset of their pharmacy network only when the FDA restricts distribution to a subset of physicians or sites, or when the drug requires “special handling, provider coordination, or patient education.”

While Owen noted that critics of the idea have said such a change could pose access challenges, he argued that allowing plans to direct beneficiaries towards only certain pharmacies could lower costs and increase adherence.

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