Insurers blast CMS proposal on point-of-sale Part D rebates

Insurers are vehemently pushing back on the CMS' attempt to require Medicare Part D plans to force pharmacies to pass on negotiated price concessions on to enrollees when the drug is purchased at the pharmacy.

Industry groups commented on a proposed rule from the CMS that would require pharmacies to pass on to Medicare beneficiaries the negotiated price concessions that pharmacy benefit managers negotiate with pharmacies and Part D plans.

The rule would redefine the "negotiated price," which is what a pharmacy must report to the CMS as the point-of-sale price for a Part D drug, as early as 2020. Price concessions would have to be included in the "negotiated price" under the rule. The price concessions are often assessed and collected retroactively.

The CMS has said the rule's goal is addressing how performance-based pharmacy payment arrangements affect negotiated prices.

Insurers say that they include retroactive fees to get pharmacies to adopt performance-based incentives in contracts.

The comment period for the rule closed Friday.

America's Health Insurance Plans, the insurance industry's leading lobbying group, said in comments on the proposed rule that the "negotiated price" change would raise "Part D bids, which will lead to higher premiums and reduce benefits."

Insurance giant Humana also wrote that a pharmacy fee allows for insurers to include performance-based contracting with pharmacies.

"We have found that our current performance-based contracts with pharmacies are effective tools for (incentivizing) effective pharmacy behavior," Humana wrote in its comments.

Insurers were also concerned about how to implement the new changes. "Part D sponsors or their PBMs would need to make a number of system modifications which would add to sponsor's administrative costs," the Alliance for Community Health Plans wrote.

But the rule wasn't all bad news for insurers. The industry was pleased with the CMS' decision to allow them to apply formulary management tools like step therapy to drugs in Medicare Part B. Insurers already use step therapy in private plans to manage costs.

"Allowing (Medicare Advantage) plans to manage the utilization of Part B drugs is a policy we have long supported, and we are pleased that it was formally proposed in regulation," Humana said in its comments to the regulation.

Insurers were also enthusiastic about a proposal to apply step therapy to drugs that reside in six "protected classes" in Medicare Part D. Currently an insurer must cover all drugs in the protected classes, which include antidepressants, antipsychotics and immunosuppressants.

But the CMS is now proposing flexibility for insurers to implement formulary management for protected class drugs.

Chief among the proposals is to allow insurers to apply step therapy and prior authorization for protected class drugs. It would also allow insurers to exclude a protected class drug from a formulary if a price increase exceeds inflation.

AHIP said that the proposals for protected classes and Part B "enable plans to negotiate lower prices on behalf of Medicare beneficiaries and taxpayers."

The pharmaceutical industry, however, pushed back strongly on the proposed changes to protected classes.

The Pharmaceutical Research and Manufacturers of America, the drug industry's top lobbying group, said in comments that weakening protected classes is unlikely to result in significant savings in Part D.

"Plan sponsors are already able to manage access to most drugs in the six protected classes," PhRMA said. "Although the administration contends that allowing insurers even more tools to manage utilization or exclude drugs from the six protected classes is necessary to constrain costs, clear evidence shows that the current level of formulary flexibility has been successful in both driving utilization of generics and keeping price growth in check."

PhRMA adds that the change to the protected class could hinder access to medications for patients, saying that patients already on medicines that are working would have to go through prior authorization or step therapy.

PhRMA on this point has an unlikely ally in several patient advocacy groups that are also concerned over the changes to protected classes.

The National Alliance on Mental Illness wrote that the change to protected classes could endanger access to vital medicines for beneficiaries living with mental illness.

"We believe these changes would leave many people without coverage of the specific drugs they need to effectively treat their mental health condition," wrote David Deutsch, executive director of NAMI's Ventura, Calif., chapter.