Medicare Pharmaceuticals

Potential CMS changes to Medicare formulary design

Today at the Academy of Managed Care Pharmacy (AMCP) 2019 Annual Conference, I attended a session titled “Medicare Formulary Updates Impact. How will proposed recent rulemaking affect formulary design? Some answers are below.

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CMS 2020 draft call letter

  • Improved access to opioid reversal agents. The CMS 2020 draft call letter would place opioid reversal agents (naloxone) on generic tiers or Select Care Tier ($0 or low cost-sharing).  If plans don’t do this, plans risk having their formulator rejected.
  • Part D Opioid overutilization policy.  Part D plans will be required to have a Drug Management Program (DMP) for opioids by Jan 2022.  Non-opioid pain management can be offered as a Part C supplemental benefit. Part D plans are recommended to offer Medication Therapy Management (MTM) services to beneficiaries at risk of adverse events due to opioid overutilization.  Further, medication-assisted treatment (MAT) are expected to be placed in preferred formulary tiers.
  • Vaccines.  CMS expects part D plans to offer these at $0 out-of-pocket cost or very lost cost haring.
  • Generic and biosimilar medicines. Part D is encouraging an explicit generic tier with more favorable cost sharing than a brand.  However, some brands get placed into a generic tier due to contracting strategy (i.e., read, high rebates).  CMS may require brands to be on higher brands. 

Modernizing Part D and Medicare Advantage to Lower Drug Prices and Out of Pocket Payments

The proposed rule came out in November 2018 has a number of provisions that could affect formulary design.

  • Protected classes.  Current protected classes include (i) antidepressents, (ii) antipsychotics, (iii) anticonvulsants, (iv) immunosuppresants for treatment of transplant rejection, (v) antiretrovirals, and (vi) antineoplastics. However, the proposed rule would allow for prior authorization and step therapy for protected drug classes if there are multiple treatment options for a given drug. 
  • Indication-based formulary design and utilization management for protected class.  Prior authorization and step therapy may be permitted for drugs for their non-protected class.
  • New formulation of existing single-source drug/biological product.  In this case, step therapy and prior author are permitted if new treatments are just a new formulation of an existing drug.
  • Excessive price increase provision.  If price increases beyond the Consumer Price Index (CPI-U), sponsors may exclude drug from protected class. Although not stated in the session, clearly this would reduce price increases over time, but may also drive up the price at launch.
  • Some history. Memo “Prior Authorization and Step Therapy for Part B Drugs in Medicare Advantae” as the name indicates allows for prior authorization and step therapy for Part B drugs.  This reverses a September 2012 memo “Prohibition on Imposing Mandatory Step Therapy for Access to Part B Drugs and Services
  • Additional details. Patients, however, can appeal the step therapy restrictions. Step therapy may require patients to have the first step to be a Part D drug or another Part B drug.  However, the step restriction would have to result in the patient not paying any higher price for the treatment. A medically necessary exception to the step therapy follows the Part D rules if (i) other treatments are not effective or (ii) there are serious adverse events.
  • If cost savings, the shared savings need to be pass-through as rewards/incentives (e.g., gift card, lower cost sharing). 

Indication-based formulary design

Currently, Part D plan sponsors must cover a formulary drug for every FDA-approved indication.  Indication-based formulary design allows for formulary status of a drug to vary based on indication.   For instance, if there is a drug that treats disease A and disease B, previously, Part D plans had to cover the drug for both diseases.  For indication-based formulary designs, a plan could cover the drug for disease A, but not disease B as long as there is an alternative treatment for the excluded indication (Disease B in my simple example).

Indication-based formulary design can move to more closely link formulary design and value. However, indication-specific pricing is likely to be administratively burdensome and confusing for patients.

The session had much more detail, but was interesting throughout.


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