CMS to allow step therapy in MA plans in bid to boost price competition
- CMS on Tuesday evening said it will allow Medicare Advantage plans to use step therapy for certain physician-administered drugs in Medicare Part B next year in an effort to curb drug costs.
- Step therapy allows plans to steer patients to the most preferred drug therapy, moving them to other therapies only if necessary. Dan Best, CMS senior advisor for drug pricing reform, told reporters the policy could save 15-20% of the $12 billion annual spend by MA plans on Part B drugs. But an expert at Cowen Washington Research Group says the idea is unlikely to reduce drug spending overall, predicting the impact will be limited to certain classes of drugs depending how aggressive plans are.
- Consumer group Public Citizen immediately slammed step therapy as an idea that could put patients at risk of not getting the best treatment for them and does little to reduce actual drug prices. Other critics could include patient advocates and oncologists hesitant about any incursion into care decisions, a pharmaceutical lobbyist tells Healthcare Dive.
The effort echoes President Donald Trump's drug pricing blueprint pledge to leverage pharmacy benefit manager-style negotiation and rebates in the Medicare Part B program. CMS announced it is rescinding its prohibition on the practice put into place in 2012, saying more than half of the savings generated from the move will be required to be passed to consumers through lower co-insurance or gift cards.
"PBMs will have an important role in developing any of these policies, they are already experienced in administering this in the Part D side, they are likely involved in the appeals process for beneficiaries protections and have experience there. It would be simplest to use their expertise to administer this type of program on the Part B side," Sean Dickson, an officer at The Pew Charitable Trusts Drug Spending Research Initiative, told Healthcare Dive.
The policy change may be a pilot for future changes to the larger Part B program, and the MA space is a natural area for testing, Dickson said. The effort will generate evidence for a future rollout of efforts such as the administration's interest in using a competitive acquisition program.
Perhaps not surprisingly, insurers and PBMs appear to be on board. The Pharmaceutical Care Management Association said that the decision would help bring PBMs into Medicare Part B, where they "currently don't play any meaningful role."
"Today’s announcement by the Administration to include greater use of PBM tools in Medicare Part B through Medicare Advantage Prescription Drug Plans is an important step toward reducing costs for the program and beneficiaries," PCMA said in a statement.
Humana, one of the largest individual MA payers with more than 3 million members, also praised the move.
"We applaud CMS' action to leverage competition to lower drug costs for our Medicare Advantage members and look forward to working with physicians to promote high quality, cost-effective care," the company told Healthcare Dive in a statement.
Aetna, now seeking approval for its merger with CVS, suggested step therapy as one way to lower costs for Part B drugs rather than moving certain drugs from Medicare Part B to Part D in a comment on Trump's blueprint in July.
"Based on our experience with Medicare Advantage and Part D plans, we believe that one of the primary problems with Part B drug prices is the lack of authority for plans to appropriately manage their use," Aetna wrote.
Step therapy could place pricing pressure across a manufacturer's broader portfolio in scenarios where certain physician-administered treatments may be cheaper than their oral equivalents by forcing manufacturers to offer more rebates on the Part D side to avoid favoring a Part B drug, according to Dickson.
"If a manufacturer has a really strong product in the physician-administered space that is driving a lot of its revenue and the plan says that we're going to privilege a competitor unless you offer discounts on both your physician-administered drug and other oral drugs in your portfolio that are administered to the Part D side of the benefit, that could push prices down overall," Dickson said.
Leerink analyst Geoffrey Porges identified Regeneron's Eylea (aflibercept) and Amgen's Neulasta (pegfilgrastim) as two drugs most exposed to increased competition as a result of CMS' move.
Step therapy could also lead to savings stemming from increased biosimilar use, a market in which FDA Commissioner Scott Gottlieb has pushed for more competition. The FDA chief has lambasted PBMs, insurers and branded drugmakers for allegedly blocking biosimilars from entering the market, saying that payers and third parties have engaged in "Kabuki drug-pricing constructs."
"Manufacturers develop a biosimilar with the intent of competing with the branded drug basically on price," Dickson said. "Looking at the initial price of biosimilars, we know that those launch prices for biosimilars are not marked reductions from the original biologic, but that signals an intent to compete on price and we might see more competition in that space now that the ability to use step therapy is an option."
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