CMS: Medicare Advantage Can Use Step Therapy for Part B Drugs

Alicia Ault

August 08, 2018

The federal government said it is giving Medicare Advantage plans the ability to require step therapy for Part B drugs, labeling it as a way to drive down drug costs by motivating pharmaceutical companies to come to the negotiating table.

Step therapy — often used by private insurers — requires a patient to try a cheaper or more cost-effective therapy first.

The new Centers for Medicare & Medicaid Services (CMS) policy reverses a previous prohibition and would begin in 2019.

It would be optional for Medicare Advantage plans, which enroll about 19 million beneficiaries (a third of all beneficiaries). It would apply only to new prescriptions starting in January. Medicare enrollees would have the choice to go to an Advantage plan that did not use step therapy or to go back to fee-for-service.

Physicians who participate in Medicare Advantage, however, may find it tougher to prescribe the therapy of choice.

When asked on a call with reporters whether CMS had discussed the decision to institute step therapy with physicians, CMS Administrator Seema Verma responded, "This type of authority that we're giving the health plans is something that is going on in the private market, so physicians are very familiar with this." She also noted that physician and patients could appeal any step therapy decision.

Ted Okon, executive director of the Community Oncology Alliance, said that physicians should be worried. "Every #physician #MD should be alarmed by what @HHSGov @CMSGov has just done by allowing middlemen the power to dictate what treatment patients should get first," he tweeted soon after the policy was announced. "This won't be in patients' best interests but in the financial interests of the middlemen. Very, very scary!"

The pharmacy benefits management industry said it was pleased with the new policy. "Today's announcement by the Administration to include greater use of PBM [pharmacy benefit managers] tools in Medicare Part B through Medicare Advantage Prescription Drug Plans is an important step toward reducing costs for the program and beneficiaries," said the Pharmaceutical Care Management Association in a statement.

Discounts for Being First?

Under step therapy, if the less expensive medication does not work, the patient can move up to the next-more-expensive drug. According to the new policy, Medicare Advantage plans that also offer a Part D drug plan can require patients to start step therapy with a less costly medication from Part D.

Requiring a patient to try a less costly drug first might spur more competition among drug makers, which would vie to get into that first position, said Verma. Step therapy will also encourage Advantage plans "to direct patients to high-value medications," said Verma.

Dan Best, senior advisor to Health and Human Services (HHS) Secretary Alex Azar for Drug Pricing Reform, said Advantage plans spend about $12 billion on Part B drugs and that the new policy could help cut 15% to 20% off that bill if the private experience were replicated by the Medicare plans.

Part B medications are administered by a physician (who receives the average sales price plus 6%) and include, for instance, pneumonia vaccines, injectable osteoporosis drugs, erythropoiesis-stimulating agents, blood clotting factors, oral cancer drugs, transplant therapies, and other injectable and infused medications.

In some cases, less costly biosimilars or other generics might be available. The policy might also pit Part D therapies against Part B drugs.

Patient-Centered Care

In an exclusive interview about the new policy with Bloomberg News, the HHS secretary pointed out, for instance, that the rheumatoid arthritis injections Humira (adalimumab; AbbVie Inc) and Enbrel (etanercept; Amgen In.) are covered under Part D, while Johnson & Johnson's Remicade (infliximab) is an infusion and thus is covered under Part B.

Medicare Advantage plans will still be required to cover all medically necessary Part B drugs, and beneficiaries can ask for an exception if they believe they need direct access to a drug that would otherwise  be available only after they had tried an alternative drug.

The plans that offer step therapy have to tie it to new patient-centered care coordination services that include discussing medication options, providing educational material and information about medications, and implementing adherence strategies. Beneficiaries who participate in the coordination — and who end up with a less costly medication — are eligible to receive up to half the savings gleaned on their drug.

Most likely, those savings would be passed on through gift cards, said Verma.

"President Trump promised better Medicare negotiation and lower drug prices for the American people. Today, we are taking an important step in delivering on that promise," said Azar, in a statement. 

Not so fast, said Peter Maybarduk, director of Washington, DC-based Public Citizen's Access to Medicines Program. "Even if Medicare Advantage plans for Part B somehow reduced their costs from $12 billion to zero, that still would produce less in savings than the government simply negotiating prices directly for the $100 billion Part D program," he said, in a statement. "Trump still is failing to deliver on his promise, and Azar still is protecting Big Pharma."

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