This afternoon, CMS Administrator sent a note to Medicare Advantage Plans rescinding a 2012 policy that prohibited the use of step therapy with Part B drugs. The new guidance includes the following directives:
- Step therapy is now a permitted utilization management tool under Medicare Advantage for Part B drugs
- Step therapy can include use of biosimilars before reference biologic
- Medicare Advantage plans that use step therapy must couple it with a care coordination program
- Medicare Advantage plans will be required to pass at least half of the amount saved onto beneficiaries in the form of a rewards program
- Medicare Advantage plans may choose to manage a class of drugs holistically between Part D and Part B by requiring use of a Part D drug before one offered through Part B
The point of permitting step therapy as a utilization management tool is, according to Alex Azar’s comments to the press today, a way to increase the Medicare Advantage plans' leverage when it comes to negotiating prices with drug manufacturers. He openly admits that the result could be the introduction of rebates into Part B – a policy that seems at odds with his Agency’s aggressive moves to limit the use of rebates in Part D. He sidestepped the inconsistency by calling it a “separate question.”
We will note that allowing savings to be passed on to Medicare Advantage enrollees will limit the effect of rebates to some degree were they to be adopted.
The policy change is not likely to affect drugs with single indications and with few or no alternatives in either Part B or Part D. Azar made this point in interviews today when he noted that MA plans may choose not to use step therapy for oncology drugs. He does, however, note that drugs for Rheumatoid Arthritis like Humira and Enbrel from ABBV and AMGN are covered under Part D while Remicade is covered under Part B. He called Rheumatoid Arthritis drugs a “typical example” of what the policy is meant to address.
The change in policy also creates an opening for the merging of Part B and D drugs into a single drug benefit. There are a few drugs that are already reimbursed under both programs and this policy change will blur the lines even more. Congress would eventually have to get involved but the more a combined benefit becomes a foregone conclusion, the more likely that is to happen.
We have noted on many occasions that while PhaRMA has played a significant part in highlighting the role of Pharmacy Benefit Managers and Wholesalers in the widening gap between gross and net price, no one should mistake this administration as a friend of the drug industry. To that point, the fact sheet that accompanied today’s announcement referenced the revival of the Competitive Acquisition Program in Part B. Look for that in the coming days/months/weeks.
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Emily Evans
Managing Director
Health Policy
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