Recently, the Inflation Reduction Act (IRA) is receiving a lot of attention, particularly for its provision that allows CMS to begin price negotiations for select drugs 9 (small molecules) or 13 (biologics) years after the drug’s launch. . However, the Centers for Medicare and Medicaid Innovation (CMMI) has proposed several payment models intended to address pharmaceutical costs, expenditures, and reimbursements. In fact, in 2023, CMS proposed 3 new models to reduce out-of-pocket (OOP) costs for Medicare and Medicaid beneficiaries. These previous initiatives are very well summarized in an article by Liu et al. (2024).
Most recently, in response to President Biden’s February 2023 executive order, CMMI proposed 3 new models related to drug pricing: (i) Medicare High Value Drug List, (ii) Therapy Access Model cellular and genetic (CGT), and (iii) Clinical evidence acceleration model.
- Medicare High Value Drug List. Medicare Part D sponsors would provide access to 150 high-value generic drugs that treat chronic diseases by ensuring they provide a standard set of ~150 drugs for no more than $2 each per month. These generics would not be subject to utilization management. Please note that it is voluntary for Part D plans to participate in this program.
- CGT Access Model. This model allows CMS (at the federal level) to negotiate with drug manufacturers on behalf of one of the state Medicaid agencies (SMAs) and also negotiate and administer “outcomes-based agreements.” Each SMA can decide whether it wants to participate in each agreement. This approach is currently being implemented for sickle cell gene therapies.
- Clinical evidence acceleration model. When the FDA grants accelerated approval to drugs based on data from clinical trials that use surrogate endpoints, CMS would pay lower reimbursement rates for these drugs until confirmatory trials are completed.
Prior to the development of these models, CMMI also proposed nine other drug pricing models. Three of these models were related to Medicare Part B drugs and five were related to Part D drugs. The last program was an externally funded program in Wyoming. Summaries of each of them are found in the following tables. None of the Part B proposals were implemented (0/3), but four of the Part D proposals were implemented (4/5).
The impact of the implemented programs was mixed. [Note that because no Part B model was implemented, there was no impact from those proposals.]
- The Enhanced Medication Therapy Management Model included 6 prescription drug plans (PDPs) and aimed to encourage greater use of MTM services (e.g., medication reviews, refill reminders, and medical education) to improve adherence and reduce adverse events. However, the model “…did not produce any clear effects on total medical expenditures or medication adherence.”
- The Part D Payment Modernization Model The goal was to incentivize Part D plans to reduce costs in the Part D catastrophic phase. The model imposed bilateral risk in the catastrophic phase, in which PDPs could share between 30% and 50% of savings below a target benchmark, but were responsible for 10% of the cost overrun. “The model was designed as a five-year demonstration, but was canceled after two years because only two health plans in the entire country participated, presumably due to concerns of excessive costs or logistical complexity.”
- The Part D Senior Savings Model reduced cost sharing to $35 per month and allowed Part D plans to share brand discounts in the coverage phase with beneficiaries. While this program greatly reduced the beneficiary’s direct cost, it has been replaced by the IRA, which also imposes a maximum cost-sharing of $35 per month for insulin and also revised the Part D benefit program.
- Demonstration of the Medicare Part D Medication Adherence Program was No implemented. He proposed that Part D beneficiaries receive a one-time $200 drug discount card.
- Medicare Advantage Value-Based Insurance Design (VBID) Model It is the only model in place. It allowed Medicare Advantage plans to restructure their benefit designs around VBID (lower cost sharing for high-value drugs and services) principles. Of the 11 participating MA plans, 3 used VBID for Part D drugs through “Part D Incentive and Reward Programs.” Did the program work? Liu et al. The article found that “beneficiaries of programs with interventions showed a 1.6% increase in 30-day medication refill rates and decreases in the likelihood of hospitalization (8.8%) or emergency department admission (5 %). However, this association was not observed for the same outcomes when matched comparators were compared to individuals in non-VBID plans, raising questions about whether the CMMI intervention was the cause of the observed differences.
The only externally funded program was a three-year grant to the Wyoming Population Health Institute. The program aimed to transform rural health care delivery through the creation of medical neighborhoods. The program included mail-order pharmacy services at no additional cost to low-income, uninsured, and underinsured Wyoming residents.
In short, while the IRA is grabbing the headlines today, the Liu et al. (2024) The article highlights that CMMI has been trying to impact pharmaceutical spending and out-of-pocket costs for beneficiaries for many years. To date, the success of these programs is mixed at best.
