- The Centers for Medicare and Medicaid Services on Tuesday said it will allow Medicare Advantage plans to use step therapy for certain physician-administered drugs in Medicare Part B next year, aiming to curb drug costs.
- Step therapy allows plans to steer patients to the most preferred therapy, moving them to other therapies only if necessary. Dan Best, CMS senior advisor for drug pricing reform, said on a call the policy could save 15% to 20% of the $12 billion spent annually by MA plans on Part B drugs.
- But an expert at Cowen Washington Research Group says the idea is unlikely to reduce drug spending overall, predicting the impact will be limited to certain classes of drugs depending how aggressive plans are.
The effort echoes President Donald Trump's drug pricing pledge to leverage pharmacy benefit manager-style negotiation and rebates in the Medicare Part B program. CMS announced it is rescinding its prohibition on the practice, saying more than half of the savings generated from the move will be required to be passed to consumers.
"PBMs will have an important role in developing any of these policies, they are already experienced in administering this in the Part D side, they are likely involved in the appeals process for beneficiaries protections and have experience there," said Sean Dickson, an officer at The Pew Charitable Trusts Drug Spending Research Initiative, in an interview with Healthcare Dive.
"It would be simplest to use their expertise to administer this type of program on the Part B side," he continued.
The policy change may be a pilot for future changes to the larger Part B program, and the MA space is a natural area for testing, Dickson said.
Perhaps not surprisingly, insurers and PBMs appear to be on board. The Pharmaceutical Care Management Association said that the decision would help bring PBMs into Medicare Part B, where they "currently don't play any meaningful role."
Humana, one of the largest individual MA payers with more than 3 million members, also praised the move in a statement to Healthcare Dive.
Aetna, now seeking approval for its merger with CVS, recently suggested step therapy as one way to lower costs for Part B drugs in a comment on Trump's blueprint in July.
"Based on our experience with Medicare Advantage and Part D plans, we believe that one of the primary problems with Part B drug prices is the lack of authority for plans to appropriately manage their use," Aetna wrote.
Not all stakeholders are on board, however. Consumer group Public Citizen immediately slammed step therapy as an idea that could put patients at risk of not getting the best treatment for them and does little to reduce actual drug prices. Other critics could include patient advocates and oncologists hesitant about any incursion into care decisions, a pharmaceutical lobbyist tells Healthcare Dive.
Step therapy could place pricing pressure across a manufacturer's broader portfolio in scenarios where certain physician-administered treatments may be cheaper than their oral equivalents by forcing manufacturers to offer more rebates on the Part D side to avoid favoring a Part B drug, according to Dickson.
"If a manufacturer has a really strong product in the physician-administered space that is driving a lot of its revenue and the plan says that we're going to privilege a competitor unless you offer discounts on both your physician-administered drug and other oral drugs in your portfolio that are administered to the Part D side of the benefit, that could push prices down overall," Dickson said.
Leerink analyst Geoffrey Porges identified Regeneron's Eylea (aflibercept) and Amgen's Neulasta (pegfilgrastim) as two drugs most exposed to increased competition as a result of CMS' move.
Step therapy could also lead to savings stemming from increased biosimilar use, a market in which FDA Commissioner Scott Gottlieb has pushed for more competition. The FDA chief has lambasted PBMs, insurers and branded drugmakers for allegedly blocking biosimilars from entering the market, saying that payers and third parties have engaged in "Kabuki drug-pricing constructs."
"Looking at the initial price of biosimilars, we know that those launch prices for biosimilars are not marked reductions from the original biologic, but that signals an intent to compete on price and we might see more competition in that space now that the ability to use step therapy is an option," Dickson said.