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A recent decision from The Centers for Medicare & Medicaid Services (CMS) that allows Medicare Advantage (MA) plans to add restrictions on expensive drugs for serious diseases is drawing increasing public scrutiny.
The new rules, released by CMS earlier in August, are part of Trump administration’s bigger strategy to cut pharmaceutical costs. In a nutshell, starting next year, Advantage, the private Medicare plans, could require newly diagnosed patients to try cheaper drugs first (step therapy), before deciding if they need a more costly option if the initial treatment is ineffective.
Some physicians and patient advocates argue that seriously ill patients might lose the battle with their disease while waiting for the right treatment.
“Do you have to lose vision before you are allowed to use medication approved by the Food and Drug Administration,” questioned Richard O’Neal, an executive at Regeneron, a biotech company that makes medicine to treat macular degeneration.
Step therapy requires a patient to start with the most cost-effective drug option.
Until now, insurers were allowed to use step therapy as a cost-saving strategy only for two categories of patients: those covered by employer-based insurance and those with Medicare Part D prescriptions, which includes drugs you fill at a pharmacy or purchased through the mail.
Under the new regulations, those restrictions will extend to life-saving, yet more expensive drugs used for treating serious diseases like cancer, rheumatoid arthritis, or macular degeneration. In traditional Medicare, these drug were covered under Medicare Part B. Step therapy though was not allowed; a 2012 Obama-era policy legally prohibited Medicare Advantage plans from negotiating lower Part B drug prices for their enrollees.
By revoking that policy, CMS aims to lower drug prices for many of the 20 million people on MA plans. Patients could potentially save money since they usually pay a portion of the Part B prescription costs. In addition, Medicare is requiring plans to share the savings with enrollees.
CMS’ announcement also gives MA plans more bargaining power with pharmaceutical corporations. Drug makers will want to offer a better price for their drugs, that won’t put them on a higher formulary tier that will require step therapy. MA plans spend about $12 billion a year on Part B drugs.
The change is estimated to save between 15 percent to 20 percent per year, explained Dan Best, who develops drug pricing strategies for the U.S. Department of Health and Human Service (HHS).
Many seriously ill patients simply cannot afford to wait until a cheaper treatment proves to be ineffective so they can receive approval for the one their doctor first recommended. David Daikh, President of the American College of Rheumatology (ACR) said this policy change is “a gross affront to America’s sickest Medicare patients – individuals living with diseases like inflammatory arthritis and cancer – who depend on timely access to safe, affordable, and high-quality treatments.”
A couple representatives from medical specialty groups expressed their concerns in a recent meeting with Alex Azar, the secretary of the Department of Health and Human Services. Medicare Chief Seema Verma said patients have the option to request an exception to step therapy. However, the process is so arduous that it discourages people from even trying and they end up paying out of pocket for their treatment.
First, their requested must be backed by their doctor with extensive documentation. Then, insurance companies have up to 72 hours to respond, but they often don’t abide by this deadline. If denied the exemption, patients can file an appeal. This adds up to the time a person goes without their treatment; for critically ill people, every hour without medication is an ordeal. What’s more, patients are rarely successful in their endeavor. Last year, of the 3,498 cases, just 1 in 10 beneficiaries won decisions fully or partially in their favor, according to Medicare statistics.
What other experts are saying
Widely known as “fail first’ policies, this practice also raises ethical concerns regarding the doctor-patient relationship.
Even policy analysts question the effectiveness of CMS’s new rules. John Leppard, senior editor and healthcare analyst of Washington Analysis wrote in a note to clients, “we are skeptical that the full extent of these potential savings (predicated on experience in commercial markets) will be realized.” Rick Weissenstein of Cowen Washington Research Group pitched in saying that “it is unlikely this will significantly reduce drug spending overall.”
Industry players are also not fond of CMS’ move. PhRMA, the country’s leading pharmaceutical researcher company, said the new guidance “prioritizes the interests of middlemen while increasing out-of-pocket costs for some patients.”
The Trump administration is “protecting Big Pharma,” thinks Peter Maybarduk, director of Public Citizen’s Access to Medicines Program. According to Maybarduk, the government would save more by negotiating prices directly for the $100 billion Part D program.
Other health experts added that the new regulation would need major improvements in order to work. Step therapy might be a good fit for treating dermatologic or gastrointestinal conditions for which short-term failure with the first-step drug poses extremely little risk on a patient’s long term recovery. Things get tricky for more serious diseases such as cancer; there are no clear guidelines to determine when a less expensive drug isn’t effective.
Since step therapy has been legally forbidden in Medicare Advantage through the 2012 memo, the Trump administration’s action can be appealed in court.