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Three ways Medicare drug costs might drop again before AEP

Three ways Medicare drug costs might drop again before AEP

As the Inflation Reduction Act helps Medicare beneficiaries with lowered drug costs, the Biden administration looks for more ways keep the momentum. Three unique pricing models may be implemented as early as AEP 2023. Each CMS proposal takes a different approach to lowering drug prices in the Medicare market. 

$2 Medicare drug model
This model would encourage Part D sponsors to set a standard $2 copay for a list of about 150 generic drugs. Sometimes called the Medicare High Value Drug List, it will be crafted with some of the most common conditions in mind, like high cholesterol and high blood pressure. Beneficiaries should enjoy cheaper drugs under this model. Providers would also have the freedom to prescribe listed drugs with the peace of mind that their beneficiary can afford it regardless of  Medicare plan or formulary.  This $2 copay would remain through all Part D coverage phases.  

Cell gene therapy access model
Another medical advancement riddled with cost barriers is cell and gene therapy. These often single-course treatments, while price prohibitive, have the potential to treat or even cure life threatening diseases like sickle cell anemia and cancer. Those on Medicaid or Medicare might not be able to access these therapies and drug associated because of cost. This plan would allow CMS to arrange for outcome-based payments (OBPs)   with the manufacturers of the drugs used in these therapies. Meaning, the more success a drug or therapy has with its patients, the more incentives will be paid out to the manufacturer. 

Accelerated clinical evidence model
Last but not least, the FDA and CMS would build upon an already established program, the Accelerated Approval Program (AAP). Drug trials that are admitted into the AAP are deemed likely to discover a  new drug or treat an ailment differently, but have not yet finished advanced clinical trials. If the drug does end up getting approved after confirmatory clinical trials within this program, then CMS will adjust the payment amounts for these drugs. This will give drug companies an incentive to quickly and accurately complete clinical trials, allowing new drugs the enter the market. 

As of now, drugs admitted into this program tend to be more costly to produce and have more sporadic results due to those costs. This gives both the government and private insurers less of a reason to add those drugs to their formularies. Providing incentives to boost the development of effective drugs should change that dynamic – and having a wider variety of effective drugs at their disposal can help providers and patients cut costs.

But what about…
CMS won’t stop there, however. Plans to tackle prescription drug pricing transparency, fee-for-service cell and gene therapy, and biosimilar adoption acceleration are all in the works. 
These three plans are not without their flaws, however. Some kinks are still getting ironed out in all three programs  while others are just not CMS’s problem to solve. “The FDA decides whether or not the product is safe…[CMS] makes a decision about whether it should be covered for the Medicare program” says CMS administrator Chiquita Brooks-LaSure. 

According to CMS, the $2 drug program could go into effect as early as AEP  2023. At least, that’s the goal. Agents and brokers who work with Medicare beneficiaries will want to keep an ear out for the Medicare High Value Drug List, when it will start, and what drugs will end up on it. Those whose Medicare decisions are steered by a specific drug or the fear of a high priced gene therapy might be able to open their search up to include plans that might not have previously been an option. The agent with that knowledge is sure to find the best fit for their client.