CMS proposes second specialty tier for Medicare drugs


The Centers for Medicare & Medicaid Services’ latest maneuver to combat rising drug prices is the proposed addition of a second specialty drug tier for the Medicare Part D prescription drug benefit.

The proposal is part of a broader proposed update to Medicare Parts C and D for contract years 2021 and 2022.

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In a fact sheet highlighting various elements of the overall proposal, CMS noted that Part D plan sponsors and pharmacy benefit managers have been requesting the option to add a second “preferred” specialty tier that would “encourage the use of more preferred, less expensive agents, reduce enrollee cost sharing, and reduce costs to CMS.”

Currently, all pharmaceuticals with a cost greater than $670 are placed in a single specialty tier.

During a Feb. 5 press briefing, CMS Administrator Seema Verma described this change as “giving plans more negotiating power so they can lower prices for beneficiaries even further.”

Ms. Verma used a hypothetical example of two rheumatoid arthritis drugs to illustrate how the change will work. Currently, if both are over the $670 threshold, they would both be on the specialty tier with the same cost sharing. “Creating a second preferred specialty tier would allow for a different copay and fosters a more competitive environment that places Part D plans in a better position to negotiate the price of similar drugs and pass those savings onto the patient through lower cost sharing,” she said.

CMS is proposing to allow plans to implement a preferred specialty tier for the 2021 plan year.

The agency is also seeking to drive more generic drug use as a means of lowering costs.

Ms. Verma noted that, typically, even after a generic drug is launched, health plan sponsors prefer to drive patients to the brand name product, if they can secure a greater rebate from the manufacturer.

In a separate Feb. 5 blog post, Ms. Verma noted that when a brand was included on a formulary, the generic was also on the formulary 91.8% of the time. For the times in which the generic was not, it was typically because the wholesale cost of the generic was only 5%-15% lower than the brand wholesale cost.

In an effort to encourage use of generics, CMS is seeking comment on the development of measures of generic and biosimilar use in Medicare Part D that could be incorporated in health plan star ratings.

Some of the measures proposed in the blog post include the generic substitution rate, the generic therapeutic alternative opportunity rate (which measures the number of brand fills divided by the sum of the brand and generic fills when both are available), and the biosimilar utilization rate.

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