Insurers say the Centers for Medicare and Medicaid Services' proposal to stop pharmacy benefit managers from clawing back fees from pharmacies goes against Medicare law, setting the stage for potential legal action if CMS finalizes the policy.
But litigation might also go forward if CMS doesn't finalize the policy, given that pharmacy trade groups sued the Health and Human Services Department in 2021 over the definition of negotiated prices for Part D drugs, which currently excludes price concessions that can't reasonably be determined at the point of sale.
The case was stayed after CMS proposed changing the definition in January but it could be resumed if CMS decides not to go through with the policy change.
Part D plans can make performance-based adjustments to negotiated prices after the sale of a drug—sometimes weeks or months afterwards. CMS' proposal, announced in January, would require sponsors to apply all price concessions from network pharmacies to the point of sale so beneficiaries can share in the plans' savings. Comments on the proposal were due Monday.
CMS suggested changing the negotiated prices definition to minimize clawbacks in an earlier proposed rule but didn't finalize the policy after pushback from Part D sponsors and pharmacy benefit managers.
However, in the 2023 proposed rule, CMS cites data that shows pharmacy price concessions grew more than 107,400% between 2010 and 2020. Much of this growth occurred once performance-based arrangements became more popular, CMS said. Price concessions are now the second-largest category of post-sale compensation received by plans and benefit managers—after manufacturer rebates.
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Less than 2% of plans have passed price concessions through to beneficiaries in recent years, according to the proposed rule. CMS acknowledged that plans may have a competitive advantage if they don't pass these savings through so they can charge lower premiums.
The National Community Pharmacists Association and the American Pharmacists Association—plaintiffs in the ongoing case against the current negotiated price definition—both support the policy idea in the 2023 proposal but think CMS needs to take it further.