A $2 Medicare drug list is among three models being tested by CMS

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The Centers for Medicare and Medicaid Services is testing three models to lower the price of drugs, including having a $2 Medicare drug list for about 150 low-cost generics.

The Medicare $2 Drug List includes prescriptions for chronic conditions such as high blood pressure and high cholesterol. 

There are many relatively inexpensive generic medications that have significant clinical benefits, but cost-sharing can vary widely across insurance plans based on the specific formulation a doctor prescribes, CMS said. This means patients may experience unexpected changes in their cost-sharing and end up paying more.

Under the voluntary Medicare High-Value Drug List Model, Part D plans would be encouraged to offer a low, fixed copayment across all cost-sharing phases of the Part D drug benefit for a standardized Medicare list of generic drugs that treat chronic conditions. Patients picking plans that participate in the model will have more certainty that their out-of-pocket costs for these generic drugs will be capped at a maximum of $2 per month per drug.

The second model, the Cell and Gene Therapy Access Model, addresses an emerging area of new drug development that has a high price tag. These therapies can cost upwards of $1 million, according to CMS.

Under this model, state Medicaid agencies would assign CMS to coordinate and administer multi-state, outcomes-based agreements with manufacturers for certain cell and gene therapies. As new therapies come to market, this would help Medicaid beneficiaries gain access to potentially life-changing, high-cost specialty drugs for illnesses like sickle cell disease and cancer.

CMS does not make payment decisions when it thinks about coverage, said CMS Administrator Chiquita Brooks-LaSure, during a press briefing on Tuesday.

The third, Accelerating Clinical Evidence Model, addresses drugs that are approved before they have established evidence of improvement in a clinical endpoint, which is called accelerated approval. 

CMS would develop payment methods for drugs approved under accelerated approval, in consultation with the Food and Drug Administration, to encourage timely confirmatory trial completion and improve access to post-market safety and efficacy data. This would reduce Medicare spending on drugs that have no confirmed clinical benefit, CMS said.

There is a distinction between this model and decisions made by CMS in the case of Alzheimer drug coverage, Brooks-LaSure said.

There's been controversy over decisions made by CMS over coverage of Alzheimer's drugs such as Aduhelm. Last year, CMS limited Medicare beneficiaries' access to the drug to those participating in clinical trials.

WHY THIS MATTERS

The three models selected by Health and Human Services Secretary Xavier Becerra for testing by the CMS Innovation Center meet the selection criteria thresholds of affordability, accessibility, and feasibility of implementation, CMS said. 

They follow through on input solicited from a variety of sources, including beneficiary advocates, healthcare providers, prescription drug manufacturers and others. The Innovation Center looks forward to additional input as these models are further developed, CMS said.

In addition to the three selected models, Becerra has identified additional areas for research with the potential to lower prescription drug costs. The CMS Innovation Center is also looking for feedback on these ideas.

THE LARGER TREND

The three models are outlined by Becerra in "A Report in Response to the Executive Order on Lowering Prescription Drug Costs for Americans."

On October 14, 2022, President Biden issued the executive order directing Becerra to consider testing by the CMS Innovation Center of new healthcare payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs.

The models are a response to the executive order, President Biden's promise to lower drug prices, and the Inflation Reduction Act of 2022, that is allowing Medicare to negotiate drug prices and cap insulin cost to $35 a month for Medicare beneficiaries.

Starting this year, drug companies that raise their prices faster than inflation will have to pay Medicare a rebate.

The models may lead to lower cost-sharing for commonly used drugs and support value-based payment that promotes high-quality care, CMS said.

ON THE RECORD

"HHS is using every tool available to us to lower healthcare costs and increase access to high-quality, affordable health care," said HHS Secretary Xavier Becerra. "We are full steam ahead in delivering the cost savings from the President's Inflation Reduction Act of 2022, and people on Medicare are already feeling the benefits. But as President Biden has made clear, we must build on the new prescription drug law with further action, which is why HHS is implementing these new projects to bring down prescription drug costs."

"Prescription drug prices in the United States are the highest in the developed world, resulting in affordability and access challenges," said CMS Administrator Chiquita Brooks-LaSure. "The prescription drug law is making lifesaving prescription drugs more affordable for millions of people who have Medicare, and through the selected models, the Innovation Center will lower prescription drug costs and improve access for people with Medicare and Medicaid, ranging from $2 access to certain generic drugs to better deals for expensive new therapies."

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org