Statement from HealthHIV and the National Coalition for LGBT Health regarding the Centers for Medicare and Medicaid Services (CMS) payment model affecting physician-administered Medicare Part B drugs and biologics
November 24, 2020
The Trump administration’s most recent—and likely last—key administrative action taken to cost-contain (certain) physician-administered Medicare Part B drug prices has been set into motion.
This latest Interim Final Rule (IFR) comes on the heels of a previously Advanced Notice of Proposed Rulemaking that was issued back in October 2018, which aimed to lower Medicare Part B payment for certain drugs using International Reference Pricing (IRP) as a guide. IRP, in short, is a formulaic reimbursement model that ties prescription drugs in the U.S. to (generally lower) prices charged in other countries.
But Friday’s IFR changes the calculation even further—giving way to foreign drug pricing benchmarks, Quality-Adjusted Life Years (QALY) controls (on acute and chronic care patients), and importing a Most Favored Nation (MFN) model that also necessitates purchasing drugs at the lowest possible price.
Beyond the obvious “apples-to-oranges” cost-benefit analysis that already puts vulnerable Part B populations second in the patient protection versus affordability equation, the IFR raises a whole host and range of other (America-last) policy-defining issues. They include, but are not limited to: adverse, unintended impacts on the qualities of care Part B patients may face when seeking access to essential (but “too costly”) therapies; and taxing providers with not only seeing patients, but also negotiating, purchasing, and submiting reimbursements for their services (under Buy-and-Bill processes)—all during the COVID-19 public health emergency period. Something we can ill-afford.
If it withstands legal challenges by patient protection groups, this MFN Model would represent the first significant action in implementing foreign price controls through international reference pricing on Medicare Part B prescription drugs. The IFR will likely face significant challenges both procedurally and on substantive grounds.
It is slated to go live starting November 27th with a phased-in, full-year implementation on January 1, 2021. The public comment period is 60-days.
More Background and Perspectives on the Interim Final Rule (IFR)
The Trump Game Plan
In the latest attempt to lower prescription drug costs in the U.S., the outgoing Trump Administration this past Friday issued a controversial Centers for Medicare & Medicaid Services (CMS) payment model affecting physician-administered Medicare Part B drugs and biologics.
The policy, which was delivered on an Interim Final Rule (IFR) basis with a 60-day Comment Period, uses what’s referred to as the “Most Favored Nation” model, or MFN for short, to help reduce drug prices.
CMS Administrator, Seema Verma, said November 20th that the latest MFN model will be implemented in the hopes of providing Americans with “the same low prices” on prescription medications available in other countries.
And therein lies much of the problem.
Congress has already banned Medicare from negotiating directly with drug makers on what prices CMS can pay for Medicare prescriptions. So, what the MFN model does, in essence, is bypass any opportunities the Trump administration could (have) use(d) to help lower the costs of health care overall—relying on international drug pricing competition for guidance on how best to reduce only the patient’s drug costs.
By tying Medicare Part B drug reimbursements to artificially low prices (like China does in dumping steel on the U.S. market), Americans seeking out-of-pocket health care savings might soon find themselves blocked from certain specialty medications that are perceived as too costly for Part B providers to prescribe.
You heard that right
And while this rule—after the 60-day public comment period—might get amended, appended, or even thrown out by patient protection and pharmaceutical industry lawsuits, it rolls out nationally any day now.
What was once seen as a demonstration project across certain regions of the country—to test, prove its efficacy through trials—now, for the sake of political expediency begins to roll out Friday. And without even approximating how this might (will) affect qualities of care for Medicare patients on Part B. All in an era where the focus ought to be on rolling out the COVID-19 vaccination plan.
A domino effect
Many of those Most Favored Nation countries the White House cites as “best-practices” examples often limit patient access to—and ultimately utilization of—many specialty medications, like high-priced MS, oncology, and antivirals, because of rules like this.
But, under the MFN model, CMS will test (yes, test) paying manufacturers based on the MFN price for some 50 Medicare Part B drugs and biologics with the highest Medicare Part B spending. These 50 drugs and biologics cover approximately 73% of all Medicare Part B drug spending, despite accounting for fewer than 10% of the full complement of Medicare Part B drugs.
And while demonstration projects may seem like a good dose of treatment as prevention, the Trump administration further seeks to tie Quality-Adjusted Life Years (QALY) attributes to any of the 50 medications high-cost populations are using “over there”.
In essence, CMS is banking on how nations in Austria or South Korea best determine—or actuate—someone’s circumstances (health traits) against the price (and use) of a particular drug. What that doesn’t factor in is that not all populations are similar in how they consume (seek out) individualized, ongoing care and prevention services—let alone whether an MS, hematology, or oncology patient is “worth” it to CMS.
Imbedded within the Interim Final Rule is a shared burden affecting providers, known as the Buy-and-Bill process. In eliminating the complex vendor model (and thereby centralized, group negotiating power) that underpinned the initial model the Trump administration floated back in October 2018, providers will now need to purchase (themselves) those 50 Part B drugs from a pharmaceutical wholesaler or specialty distributor directly. And, after administering the drug, the provider can submit a claim for reimbursement and for any other medical services provided.
To that is the significant burden of liability. Providers are already doing so much (often limited to 15-minute consultations with patients) and now have to become negotiators and their own vendor and representative.
An eye for an eye
All that aside—keeping the do-no-harm mantra in mind—if you were asked one simple question, to put a monetary value on a friend or family members’ life, what would be your answer? Most assuredly, you’d project out one word—limitless. In fact, who could possibly persuade you otherwise?
CMS believes they should. In fact, they’ve already put a very discrete price tag—or QALY—on lives relative to the cost of 50 of those pills and biologics, starting November 27th with a phased-in implementation starting January 1, 2021.
Happy Thanksgiving and New Year’s, America.
Come Black Friday, if the Part B drug is seen as too costly in say, Japan, CMS might soon eliminate altogether that drug from its preferred formulary in benefit of a lower-priced one.
And while that might not immediately (or even inherently) be seen as bad (price control)—if, in fact, you’ve got access to at least one drug from a similar class available to you on the formulary—in all reality, what CMS is doing is putting the purchasing power of the federal government directly between you and your doctor. And thereby limiting treatment choice and decision-making.
A tooth for a tooth
Maybe you’ve tried the other “lower-priced drug”. Maybe it has certain side-effects that actually reduces your adherence rate, which reduces your quality of life; but with the new rule, you’ll end up forced into taking it—or paying out-of-pocket for the one that’s shown to work for you. Worse yet, you may forego treatment altogether.
Medicare, as a national health insurance system, for those aged 65-plus, disabled, or at end-stage renal disease wasn’t primed for that kind of federal dictum when it was first created. It was meant as a stop-gap, entitlement plan with the patient not affordability on either bookends.
But the U.S. government is now going to be doing exactly what Pharmacy Benefit Managers have been doing to millions of patients on employer-sponsored health plans all along—tiering higher-priced drugs into multiple levels that either force co-pays higher; or eliminate them altogether.
And, then what happens if the federal (or state) government eliminates co-pay cards that count toward your deductible?
Imagine the unintended consequences
The MFN model payment will soon include two parts: one, a drug payment amount that will phase in the lowest price in other similar countries by blending it with the average sales price; and, two, a flat add-on amount per dose that will be the same for each model drug.
While Part D was not included in the interim final rule, CMS Administrator Seema Verma said that the agency is “currently developing something on that and you’ll hear more about that later.”
You’ll hear more about that later
Ouch! Now that this is rolling out nationally from the get-go, real concerns are bubbling up from patient protection groups everywhere about what impact this will have on the qualities of care from Medicare. Not to mention the cascading effect it will have on other programs, as CMS Administrator Seema Verma intimated about Part D.
Imagine CMS projecting out—or simply “testing” other aspects of Part B services—like they’re doing now, without any notice of proposed rule-making, to include cost-benefit and QALY analyses on services, like: laboratory and diagnostic tests, influenza and pneumonia vaccinations, blood transfusions, renal dialysis, outpatient hospital procedures—or worse, expanding it to COVID-19 vaccines or therapeutic treatments.
The Butterfly (bandage) effect
Medicare-participating 340B hospital outpatient departments will now have to take part in the Trump administration’s MFN payment litmus test for Medicare Part B drugs. This rule, “[t]o the extent these entities receive payment under the model that is lower than their current Medicare payment, [may be left with] fewer resources available for their 340B program activities.”
Under 340B (a statute program under the Veterans Health Care Act of 1992), “covered entities” can purchase drugs at steeply-discounted 340B prices for their program eligible patients. They often use their supplemental rebate dollars to offset patient costs at writ. Why this matters to this ruling, is that not all hospitals are obligated to pass the discount savings onto their patients; nor are they required to report how they served low-income or vulnerable populations.
The law protects specified community clinics and hospitals (also "covered entities")—as well as federal HIV service program grantees (Ryan White CARE Program)—from drug price increases and gave them access to price reductions.
And for AIDS Service Organizations (ASOs) that rely on access to the same 340B program to leverage program income to offer non-medical case management supportive services, like food and housing, that, too could be one of those ill-gotten (un)intended consequences stemming from this new rule.
Stakeholders also are awaiting the Trump administration’s 340B binding administrative dispute resolution final rule. Friday’s rule is just one hastily-tipped over domino in Trump’s faulted health care system game.
And because of that politization of medicine, some products are going to be unavailable because of the price and providers lack of interest to fight for each product. In fact, 19% of Part B access is estimated to be eliminated; and with access so goes utilization, ongoing care and retention, adherence—and ultimately—health outcomes. All to save a buck? Well… 30 cents on the dollar, that is.
A symbolic but consequential change
And while, this new rule is seen to Republicans as an important—if not symbolic—changes for drug pricing reform, it’s disappointing to see it done in the final days of the Trump administration; days that will create serious legal jeopardy for the rule’s future implementation. Had they released these proposals years ago (when they had control of both houses of Congress), the Administration could have had sufficient time to finalize them through the standard administrative process, with sufficient public and stakeholder input to offset any unintended consequences.
Consequences like limited patient-provider decision-making. Limited formularies. Less choice in determining the course of your treatment. And with your provider acting as not just your doctor, but group drug negotiator, buyer and biller, it all gets suspect.
In an uncertain time of COVID-19, rather than working with (the new or old) Congress—or the President-elect’s office, for that matter—the outgoing administration seems hell-bent on doing everything it can to discourage the development of new treatments, cures, and immunologics through last-minute rules and executive orders.
We suggest going back to the Biden-table this Thanksgiving and having a real conversation over the high-cost of health care.