Medicare Advantage may add restrictions on drugs
Starting next year, Medicare Advantage plans will be able to add restrictions on expensive, injectable drugs administered by doctors to treat cancer, rheumatoid arthritis, macular degeneration and other serious diseases.
Under the new rules, these private Medicare insurance plans could require patients to try cheaper drugs first. If those are not effective, the patients could receive the more expensive medication prescribed by their doctors.
Insurers use such “step therapy” to control drug costs in the employer-based insurance market as well as in Medicare’s stand-alone Part D prescription drug benefit, which generally covers medicine purchased at retail pharmacies or through the mail. The new option allows Advantage plans, an alternative to traditional, government-run Medicare, to extend that cost-control strategy to these physician-administered drugs.
In traditional Medicare, which covers 40 million older or disabled adults, those medications given by doctors are covered under Medicare Part B, which includes outpatient services, and step therapy is not allowed.
About 20 million people have private Medicare Advantage policies, which include coverage for Part D and Part B medications. Some physicians and patient advocates are concerned that the pursuit of lower Part B drug prices could endanger very sick Medicare Advantage patients if they can’t be treated promptly with the medicine that was their doctor’s first choice.
Critics of the new policy, part of the administration’s efforts to fulfill President Donald Trump’s promise to cut drug prices, say it lacks crucial details, including how to determine when a less expensive drug isn’t effective.
“Do you have to lose vision before you are allowed to use” medication approved by the Food and Drug Administration? asked Richard O’Neal, vice president for market access for Regeneron, which makes Eylea, a medicine that is injected into the eye to treat macular degeneration. In 2016, Medicare paid $2.2 billion for Eylea prescriptions for patients in traditional Medicare, more than any other Part B drug, according to government data.
Medicare Advantage insurers spend about $12 billion on Part B drugs, compared to the $25.7 billion traditional Medicare spent in 2016 on such drugs. Insurers that adopt the step therapy policy can apply it only to new prescriptions — medicine a patient hasn’t received in the past 108 days.
The change in policy gives insurers a new bargaining tool: Pharmaceutical makers may want to compete by cutting prices to get their product on the plans’ list of preferred lists, allowing patients to receive the medicines without step therapy pre-conditions. That “strengthens their negotiating position with the manufacturers,” Medicare chief Seema Verma said when she unveiled the policy last month. It could also save patients money since they usually pay a portion of the Part B prescription cost. In addition, Medicare is requiring plans to share the savings with enrollees.
“Competition is a big factor in price concessions,” said Daniel Nam, executive director of federal programs at America’s Health Insurance Plans, an industry trade group. But insurers haven’t had much leverage to negotiate lower prices for these drugs without strategies like step therapy, he said.
Federal health officials told insurers in a memo last month that they could substitute a less expensive Part B drug to treat a medical condition the FDA has not approved it for, if insurers can document that it is safe and effective. Yet coverage for a Part D drug is usually denied for a condition that doesn’t have FDA approval, according to the Center for Medicare Advocacy, which helps beneficiaries with appeals.
Representatives of medical specialty groups recently met with Alex Azar, the secretary of the Department of Health and Human Services, to express their concerns. Dr. Stephen Grubbs, vice president of clinical affairs at the American Society of Clinical Oncology said Azar told them the new policy would not have a big impact on cancer treatment.
Patients and their physicians who encounter problems getting specific Part B drugs can appeal using the “process that we have throughout the Medicare Advantage program and Part D plans,” advised Verma.