Medicare Part D

Drug Price Negotiation Will Require New CMS Regulations, Staffing

Now that Medicare can negotiate the price of prescription drugs it purchases, the Biden administration needs to figure out how it will hash out deals with drugmakers. Experts tell AIS Health, a division of MMIT, that implementation of the long-sought negotiation program will come with plenty of challenges and pitfalls.

The administration will have to issue new regulations, hire hundreds of staff, determine which drug prices will be negotiated first and design the criteria that will select drugs for negotiation in the future.

Embedded ACO Pharmacists Produce Savings for BCBS of Rhode Island

While an unprecedented number of Medicare Advantage Prescription Drug plans earned a 5-star rating for 2022 largely because of flexibilities granted during the COVID-19 public health emergency, Blue Cross & Blue Shield of Rhode Island (BCBSRI) credits a performance-based pharmacist intervention model with dramatically improving its drug-related scores and contributing to a 5-star summary rating for both of its contracts.

For 2022, CMS allowed plans to use the better of the two years’ rating (2021 or 2022) for most measures because all contracts qualified for the “extreme and uncontrollable circumstances policy.” Plans will not have that flexibility for the 2023 star ratings due out this fall.

Part D Bid and Base Premium Will Drop in 2023; MA-PD Enrollment Surpasses PDP for the First Time in 2022

The monthly Medicare Part D base beneficiary premium for 2023 will be $32.74, a slight decrease from $33.37 in 2022, according to CMS. The Part D national average monthly bid amount continues to drop, from $38.18 in 2022 to $34.71 in 2023. Regional low-income premium subsidy amounts have increased over the past few years in most states, yet five states — New York, Illinois, New Jersey, Indiana and Kentucky — are projected to see a decline larger than 5% in 2023. South Carolina is projected to see the biggest jump, with its average subsidy amount going up from $31.12 in 2022 to $37.84.

BCBSRI Achieved Savings, 5-Star Rating With Help of Embedded ACO Pharmacists

While an unprecedented number of Medicare Advantage Prescription Drug plans earned a 5-star rating for 2022 largely because of flexibilities granted during the COVID-19 public health emergency, Blue Cross & Blue Shield of Rhode Island (BCBSRI) credits a performance-based pharmacist intervention model with dramatically improving its drug-related scores and contributing to a 5-star summary rating for both of its contracts.

For 2022, CMS allowed plans to use the better of the two years’ rating (2021 or 2022) for most measures because all contracts qualified for the “extreme and uncontrollable circumstances policy.” Plans will not have that flexibility for the 2023 star ratings due out this fall.

Part D Bid and Base Premium Will Drop in 2023; MA-PD Enrollment Surpasses PDP for the First Time in 2022

The monthly Medicare Part D base beneficiary premium for 2023 will be $32.74, a slight decrease from $33.37 in 2022, according to CMS. The Part D national average monthly bid amount continues to drop, from $38.18 in 2022 to $34.71 in 2023. Regional low-income premium subsidy amounts have increased over the past few years in most states, yet five states — New York, Illinois, New Jersey, Indiana and Kentucky — are projected to see a decline larger than 5% in 2023. South Carolina is projected to see the biggest jump, with its average subsidy amount going up from $31.12 in 2022 to $37.84.

Experts Predict Drug Price Reforms Will Have Modest Impact on Commercial Market

As soon as Friday, Congress is expected to pass Medicare prescription drug price reforms as part of the Inflation Reduction Act (IRA). [Editorial update: The House passed the legislation on Aug. 12, and President Joe Biden signed it into law on Aug. 16.] The reforms are less ambitious than previous versions of drug pricing legislation considered by the current Congress, but various experts and health care stakeholders are mounting vehement arguments about the reforms’ ultimate impact on prices.

Under the bill, HHS would be able to negotiate the price of a gradually increasing number of drugs starting in 2026, when 10 drugs will be eligible for negotiation. The bill would also limit out-of-pocket drug costs for Medicare Advantage and Part D beneficiaries to $2,000 per year, and repeal the so-called rebate rule in Medicare Part D. In addition, the proposal would bar Medicare Part B and Part D drug prices from growing faster than inflation. In a summary of the late version of the reconciliation bill, Senate Democrats estimated that the drug pricing reform program would save $288 billion over 10 years.

New Drug Pricing Bill Could Affect Millions of Medicare Beneficiaries

More than 1.4 million Medicare beneficiaries could see their medication costs plunge if the Senate passes a budget reconciliation bill that contains drug pricing reforms, Kaiser Family Foundation estimated.

The bill — put forward by Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin III (D-W.Va.) — will allow Medicare to negotiate some prescription drug prices starting in 2026 and require drug companies to pay rebates if drug prices rise faster than inflation starting in 2023. Between 2019 and 2020, half of drugs covered by Medicare Part D and 48% of drugs covered by Medicare Part B saw price increases greater than the rate of inflation (1.0%), according to a previous Kaiser Family Foundation analysis.

Part D Changes in Inflation Reduction Act Could Lead to Tighter Formulary Management

In a major win for Democrats facing midterm elections in the fall, the Biden administration this month passed the Inflation Reduction Act, a $430 billion-plus spending package that contained some of the president’s key priorities for climate, drug pricing and tax reform. While the legislation made headlines for allowing Medicare to negotiate the prices of certain drugs, industry experts say it’s changes to the Medicare Part D program that have the greatest potential to save seniors money and to force plans to rethink their management of the drug benefit.

The Inflation Reduction Act of 2022 (H.R. 5376) passed along party lines in both chambers and was signed into law on Aug. 16. It includes $369 billion to fight climate change, imposes a 15% corporate minimum tax and extends enhanced Affordable Care Act subsidies for another three years. Notable among the other health care provisions, the law requires CMS to negotiate the prices of prescription drugs, starting in 2026 with 10 Part D-covered drugs (including highest cost drugs and biologic agents, excluding “small biotech drugs” and certain orphan drugs to treat only one rare disease or condition). That number will increase to 15 in 2027 and 2028 — when Part B covered drugs may be included in the list of drugs subject to negotiation — and will rise to 20 agents in 2029 and beyond.

National Average Part D Bid Continues Downward Trajectory, but for How Long?

In its annual release of the Medicare Part D payment benchmarks and other bid-related information for the coming plan year, CMS on July 29 reported that the national average monthly bid amount will continue a years-long downward trend, dropping to a historic low of $34.71. At the same time, monthly premiums are expected to take a slight dip. While both pieces of information — released by CMS in an effort to help Part D sponsors finalize their premiums and prepare for open enrollment this fall — reflect positive trends and a competitive market, upcoming changes included in the recently passed Inflation Reduction Act of 2022 could start to reverse those trends in the future.

The national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone Prescription Drug Plan (PDP) and Medicare Advantage Prescription Drug (MA-PD) plan. Bids were submitted by PDPs and MA-PD plans in early June. CMS said it anticipates releasing the 2023 premium and cost-sharing information for 2023 Medicare Advantage and Part D plans in September.

Medicare Prescription Drug Price Negotiation Is Poised to Become Reality

It appears that for the first time, HHS will be able to negotiate prices of some prescription drugs in Medicare. The pharma industry has long resisted such efforts, and it remains to be seen what the impact of the legislation, if passed, will be on manufacturers’ drug discounts and rebates.
On Aug. 7, the Senate passed the Inflation Reduction Act of 2022 (IRA) 51-50 with Vice President Kamala Harris casting the deciding vote. The House is expected to vote on the bill Friday. If it passes as anticipated, President Joe Biden is projected to sign it into law shortly thereafter.