Medicare Part B

As CMS engages in the initial round of Inflation Reduction Act (IRA)-mandated drug price negotiations with manufacturers, one of the agents on the list of Medicare Part D drugs to be negotiated has certain aspects that make it a not-so-straightforward candidate. Stelara (ustekinumab) from the Janssen Pharmaceutical Companies of Johnson & Johnson has particular qualities that could result in unintended consequences, asserts one industry expert.

Stelara is unique among the first drugs to be negotiated in that it is available in both subcutaneous and intravenous formulations. The human interleukin-12 and -23 antagonist is approved for subcutaneous use for the treatment of people at least 6 years old with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy and people at least 6 with active psoriatic arthritis. It also is approved for the treatment of adults with moderately to severely active Crohn’s disease and adults with moderately to severely active ulcerative colitis, for whom treatment is initiated with a single intravenous dose, followed by subcutaneous maintenance dosing.

The growing use of biosimilars has reduced spending in the Medicare Part B program, but there are opportunities to further reduce costs — through greater use of more affordable biosimilars and through the implementation of different payment policies, according to a study published by the HHS Office of Inspector General (OIG).

The OIG analyzed the average sales prices, utilization and costs of 21 biosimilar drugs and their reference biologic products in the Medicare Part B program between 2015 and 2021. The agency found that overall use rate of biosimilars in Part B jumped from 18% in 2015 to 62% in 2021. While the adoption of biosimilars has lowered both the prices of biologics and biosimilars, Part B spending could have been reduced by $179 million in 2021 if the five biosimilars that cost less than their reference products — epoetin alfa, infliximab, bevacizumab, rituximab and trastuzumab — had been used at the same rate as the most widely used biosimilar, filgrastim.

In its latest report to Congress, the Medicare Payment Advisory Commission (MedPAC) asserted that the federal government now pays approximately 22% more for Medicare Advantage enrollees than it would if they were enrolled in traditional fee-for-service (FFS) Medicare, for projected higher spending of $83 billion in 2024. That figure came in slightly below projections provided at a January meeting but higher than MedPAC’s previously estimated differences in spending, largely because it accounted for favorable selection. And while the commission said it “strongly supports the inclusion of private plans in the Medicare program,” it maintains that the current payment system is ripe for reform.

According to MedPAC’s latest Report to the Congress: Medicare Payment Policy, released March 15, the federal government in 2023 paid MA plans roughly $455 billion for serving approximately 31.6 million enrollees — 52% of Medicare beneficiaries with both Parts A and B coverage.

The growing use of biosimilars has reduced spending in the Medicare Part B program, but there are opportunities to further reduce costs — through greater use of more affordable biosimilars and through the implementation of different payment policies, according to a study published by the HHS Office of Inspector General (OIG).

The OIG analyzed the average sales prices, utilization and costs of 21 biosimilar drugs and their reference biologic products in the Medicare Part B program between 2015 and 2021. The agency found that overall use rate of biosimilars in Part B jumped from 18% in 2015 to 62% in 2021. While the adoption of biosimilars has lowered both the prices of biologics and biosimilars, Part B spending could have been reduced by $179 million in 2021 if the five biosimilars that cost less than their reference products — epoetin alfa, infliximab, bevacizumab, rituximab and trastuzumab — had been used at the same rate as the most widely used biosimilar, filgrastim.

As CMS engages in the initial round of Inflation Reduction Act (IRA)-mandated drug price negotiations with manufacturers, one of the agents on the list of Medicare Part D drugs to be negotiated has certain aspects that make it a not-so-straightforward candidate. Stelara (ustekinumab) from the Janssen Pharmaceutical Companies of Johnson & Johnson has particular qualities that could result in unintended consequences, asserts one industry expert.

Stelara is unique among the first drugs to be negotiated in that it is available in both subcutaneous and intravenous formulations. The human interleukin-12 and -23 antagonist is approved for subcutaneous use for the treatment of people at least 6 years old with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy and people at least 6 with active psoriatic arthritis. It also is approved for the treatment of adults with moderately to severely active Crohn’s disease and adults with moderately to severely active ulcerative colitis, for whom treatment is initiated with a single intravenous dose, followed by subcutaneous maintenance dosing.

Physician-administered drugs could catch some windfall due to the Inflation Reduction Act’s Medicare Part D redesign.

Much time and energy has been focused on thinking about how drug pricing, rebating and Part D plan design may shift due to changes set to finish taking effect in 2025, including new caps on enrollee out-of-pocket spend and more liability falling on plans rather than taxpayers.

But a “sleeper issue here is what all of this is going to mean for Medicare Part B drugs,” said Avalere’s Kesley Lang on a January webinar on the health policy outlook for the new year.

To help overwhelmed seniors make better Medicare Advantage plan comparisons, the Medicare Payment Advisory Commission (MedPAC) nearly a year ago began discussing the concept of standardizing a limited number of common supplemental benefits in MA. During its September public meeting, MedPAC agreed to devote a chapter of its June 2024 report to standardizing select MA benefits, while several commissioners echoed previous sentiments about striking a balance between standardization and flexibility.

At its November 2022 public meeting, the independent congressional agency considered two different approaches: (1) standardizing a limited number of common supplemental benefits, such as dental, hearing and vision, and (2) standardizing Medicare Parts A and B services, whereby plans use a limited number of benefit packages. But some commissioners at the time expressed concern about potentially hampering MA plan innovation.

The House is reportedly poised to vote soon on legislation that consolidates a host of previously introduced health care measures — including a step toward site-neutral payment reform. Aimed at stopping “price gouging” by hospital outpatient departments (HOPDs), those provisions are enthusiastically supported by payers but opposed by the hospital industry, which argues that they would result in payment reductions.

The legislation also would codify existing regulations that lay out new price transparency requirements for health plans and hospitals, and it would implement modest PBM reforms.

CMS revealed on Aug. 29 the list of the initial 10 drugs that will be subject to drug price negotiations in the Medicare program starting in 2026. However, even before the agency’s announcement, several pharmaceutical companies and other stakeholders filed lawsuits seeking to curtail the negotiation program’s implementation.

During a KFF webinar on Sept. 12, a Medicare policy expert and two attorneys discussed the legal challenges and potential ramifications.

Zachary Baron, associate director of the Health Policy and the Law Initiative at Georgetown University’s O’Neill Institute, said that if courts rule in favor of the drug manufacturers, there could potentially be changes in how Medicare reimburses hospitals and providers, among other consequences.

The Center for Medicare Advocacy and the Community Legal Services clinic at the University of the Pacific, McGeorge School of Law filed a class action lawsuit (Case 2:23-cv-01932-DB) against HHS on Sept. 8 on behalf of Medicare beneficiaries who have lost coverage of certain Medicare Part B drugs. Plaintiffs were receiving the Janssen Pharmaceutical Companies of Johnson & Johnson’s Stelara (ustekinumab) in an outpatient clinic, where the agent was administered by health care professionals and covered under Part B as an agent provided “incident to” a physician’s service due to disabilities that prevent them from self-administration. In October 2021, HHS denied coverage of Stelara under Part B because it had determined that the drug is “usually self-administered by the patient.” HHS did not notify patients about the change, and it did not require providers to issue a notice. One plaintiff had four injections of more than $40,000 each, while another had two injections of about $58,000 each, before they realized that they were responsible for the full cost of the drug. Plaintiffs are seeking “timely, adequate notice” be required when a Part B drug that has been furnished incident to a practitioner’s service is added to the self-administered drug (SAD) list, as well as a modification to Medicare allowing beneficiaries who cannot self-administer a medically necessary drug due to a disability to be able to receive Medicare-covered medications administered by a health care professional, among other requests.