HHS Takes Cues From The Private Sector With Latest Move To Cut Medicare Drug Prices

Evie Fordham | Politics and Health Care Reporter

The Department of Health and Human Services (HHS) is taking cues from the private sector with a policy change announced Wednesday that is designed to cut Medicare Part D drug prices starting in 2020.

The Centers for Medicare and Medicaid Services (CMS), which is part of HHS, is adopting “indication-based formulary design,” according to a Wednesday press release. Medicare Part D is changing how it covers drugs on its “formulary,” or list of prescription drugs that it covers, to “address the challenge of high drug costs for seniors and government programs.”

Under the current policy, a Part D plan must cover every drug on its formulary for every patient condition that the drug is approved to treat. But under the changes CMS announced Wednesday, Part D plans can “tailor” formularies so that each covered condition is matched with the drug that makes the most sense.

“This policy … is used in the private sector and will enable Part D plans to negotiate lower prices for patients,” stated the CMS press release.

In order to meet anti-discrimination requirements, CMS must ensure there are “therapeutically similar” drugs for every condition Part D covers.

Although the policy change will not take effect until 2020, CMS announced it Wednesday because “Part D plan sponsors and prescription drug manufacturers begin negotiations in the fall of 2018 for formulary placement in Contract Year 2020,” according to the press release.

Potential downsides of the policy change could be bogged-down drug approval processes that might hinder patient access, according to Axios(RELATED: Democratic Doctors Running As First-Time Congressional Candidates Push Medicare Expansion, Even Medicare-for-all)

“This action delivers on President Trump’s drug pricing blueprint by offering Medicare plans new tools to negotiate lower drug prices and offer patients better choices,” HHS Secretary Alex Azar stated in the press release. “This is a significant step in modernizing the successful Medicare Part D program by giving plans the tools that serve patients well in the private sector.”

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