Starting in 2020, Medicare Part D drug plans will have more power to tailor which drugs can be used for different indications. The policy change could boost the number of drugs that Part D plans make available to beneficiaries, according to CMS, which issued the change in a memo Wednesday, Aug. 29.
The changes could offer more flexibility to drug plans and potentially lower prices for patients. Currently, drug plans are incentivized to limit more drugs on their formularies, because they have to provide coverage for every FDA-approved indication or patient conditions, even if a plan already covers a different drug for the condition.
“This action delivers on President Trump’s drug pricing blueprint by offering Medicare plans new tools to negotiate lower drug prices and offer patients better choices,” HHS Secretary Alex Azar said in a statement. “This is a significant step in modernizing the successful Medicare Part D program by giving plans the tools that serve patients well in the private sector.”
The new policy is known as indication-based formulary design and is already used in the private sector, according to CMS. The policy should provide Part D beneficiaries with more drug choices, the agency stated. CMS also suggested Part D plans will be able to negotiate lower prices for patients as a result of the policy, in line with a number of initiatives the Trump administration has laid out to lower overall prices.
If a drug plan limits formulary drug coverage, it is required to ensure other therapeutically similar drugs for the drug’s non-covered indications are covered. Beneficiaries will be able to see online which plans cover certain drugs by indication when making their choice for 2019 and 2020 plans. CMS will update the online tools for beneficiaries and plans will be required to explain the changes to enrollees.
“President Trump and Secretary Azar are working to get the best deal for American patients,” CMS Administrator Seema Verma, MPH, said in a statement. “By allowing Medicare’s prescription drug plans to cover the best drug for each patient condition, plans will have more negotiating power with drug companies, which will result in lower prices for Medicare beneficiaries.”
Part D sponsors begin their negotiations with drug manufacturers in the fall of 2018 for the contract year 2020.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."