We examine the CMS proposed rule, Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses.

View as webpage.

hpw - topbar hpw - topbar - diag hpw - topbar xce

Nov. 30, 2018


Forward to a Friend



View Archived Issues


Plan Flexibility Gets the Win: Medicare Proposed Rule Is Gift for Plans That Keeps Giving


Late Monday, as many were still recuperating from the effects of too much tryptophan and maybe getting some Cyber Monday shopping in (IT will never tell?), the Centers for Medicare & Medicaid Services (CMS) released a proposed rule, titled “Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses.” The proposal is a follow-up to the Administration’s American Patients First blueprint to increase competition, improve negotiation, lower drug prices, and decrease patient out-of-pocket costs for beneficiaries. Among the proposed rule’s “highlights”:

1. Add Exceptions to Restricted-Class Drugs

CMS plans to create 3 exceptions to the protected-class policy that would allow Part D sponsors to:

  • Use prior authorization (PA) and step therapy (ST) for protected-class drugs more widely
  • Exclude a protected-class drug from a formulary if the drug represents only a new formulation (that provides a unique route of administration) of an existing single-source drug or biological product, regardless of whether or not the older formulation remains on the market
  • Exclude a protected-class drug from a formulary if the price of the drug increases, relative to the price in a baseline month and year, beyond a rate of inflation (currently proposed as the Consumer Price Index—all Urban Consumer [CPI-U])

CMS estimates these changes will save Medicare $1.85 billion and $692 million for beneficiaries.

2. Requirements for Medicare Advantage (MA) ST for Part B Drugs

  • As a follow-up to CMS’ release of guidance in August allowing MA plans to use ST for Part B drugs in 2019 under certain circumstances (without stakeholder comment opportunity), the proposed rule codifies requirements for applying this utilization management (UM) tool beginning in 2020
  • CMS also proposes to shorten the MA adjudication time periods for organization determinations and appeals, similar to Part D processes

CMS estimates beneficiaries could save up to $17 million over the next 10 years in out-of-pocket costs and Medicare could save up to $425 million.

3. Consider Redefining Negotiated Price in a Subsequent Rule

  • CMS is exploring whether or not to redefine “negotiated price” as the lowest possible payment to the pharmacy. This modification to the baseline payment could start as early as 2020; it would include all pharmacy price concessions and any dispensing fees and would exclude incentive fees if these increase

Estimated savings would be up to $9.2 billion over 10 years from reduced cost-sharing (although offset by higher premiums) but would cost Medicare up to $16.6 billion. Manufacturers would save up to $5.8 billion over 10 years.

Although most of the proposed policies were expected, notably absent is the manufacturer rebate factor. It may be that this is in the works with a rule pending at the Office of Management and Budget, as suggested by CMS Administrator Seema Verma in Monday’s press briefing about the Part D proposed rule. However, there is concern among many policy stakeholders, particularly patient groups, that the proposed rule favors plan flexibility over beneficiary access.

A press release and fact sheet accompanied the release of the proposed rule. Comments are due to CMS by January 25.


Live Webinar: Summary From AMCP Foundation Research Symposium


Wednesday, December 5, 2018 | 2:00–3:00 PM ET

Xcenda is proud to continue collaboration with the AMCP Foundation as a research partner for its Trends in Health Care research report.

Xcenda’s Breanna Popelar, PharmD, MS, Assistant Director, Strategic Market Access & Insights, will join other speakers at an upcoming live AMCP webinar. This webinar will revisit the latest research and address potential impacts from healthcare disruptors that are placing pressure on a multitude of stakeholders. The summary report from the Research Symposium, as well as the Trends in Health Care research report, will be posted on the AMCP Foundation website.

Learn more >



HPW Rebuild


Legislative Bytes

  • Similar to the International Price Index Proposal…Sen. Bernie Sanders (S-VT) and Rep. Ro Khanna (D-CA) announced they will introduce the Prescription Drug Price Relief Act at the start of the new Congress. The bill would require the Secretary of Health and Human Services (HHS) to ensure Americans do not pay more for prescription drugs than the median price in 5 major countries: Canada, the United Kingdom, France, Germany, and Japan. If pharmaceutical manufacturers did not lower drug prices below that level, the federal government would approve generic versions of those drugs, regardless of any patents or market exclusivities in place.
  • Seventy-six organizations sent a letter to Rep. Gus Bilirakis (R-FL) and Rep. Ben Ray Lujan (D-NM) offering support for the CLINICAL TREATMENT Act (H.R. 6836). The bill would require Medicaid to cover the routine costs of care for patients with life-threatening conditions who are enrolled in clinical trials. Medicare and private and commercial payers are required to cover routine costs of care; however, Medicaid is not federally required to cover these costs, and coverage varies state by state.
  • Rep. Eric Paulsen (R-MN) introduced the Shared Accountability for Improved Patient Outcomes Act of 2018 (H.R. 7177) to accelerate the adoption of value-based payment and delivery arrangements among healthcare stakeholders intended to coordinate care, improve patient outcomes, share accountability, or lower costs.

HPW Rebuild


Raise a Pint to Collaboration: Manufacturers and UK Agree to Fast-Track/Price Deal


Last Friday, a new pricing agreement was reached between the United Kingdom’s Department of Health & Social Care (DHSC), which administers the National Health Service (NHS), and the Association of the British Pharmaceutical Industry (ABPI).

Under the 2019 Voluntary Scheme for Branded Medicines Pricing and Access, manufacturers will pledge to limit sales growth of branded drugs to NHS by no more than 2% in any of the next 5 years or manufacturers will refund NHS. The ABPI estimates the agreement will save NHS $1.2 billion in 2019.

In exchange, participating manufacturers’ drugs will be fast tracked by the National Institute for Health and Care Excellence (NICE) up to 6 months earlier, including non-cancer medicines, to be in line with cancer medicine appraisals.

Participating manufacturers would rebate NHS at 9.6% above the agreed level, with an exemption of 3 years for novel drugs and additional exemptions for smaller manufacturers. Non-participating manufacturers will be subject to a statutory scheme characterized by a lack of stability, wherein NHS may revise pricing at any time.

Health Policy Weekly typically does not cover ex-US policy news, unless it has direct impact on the US market. However, the agreement demonstrated the flexibility of each side and the ability of a government to negotiate what it views as a fair price rather than instituting price controls. Such activities may have greater relevance on the US market in the future pending the potential implementation of the international pricing index (IPI) model.


Michigan Joins Sooners Better Late Than Never on Medicaid Value-Based Arrangements


Michigan became the second state to secure approval from CMS to negotiate outcomes-based contracts with manufacturers, wherein failure to meet certain benchmarks would trigger higher rebates from the manufacturer.

In June, CMS granted approval to Oklahoma Medicaid to negotiate supplemental rebate agreements involving value-based purchasing arrangements with manufacturers, with a guarantee this will not result in a new “best price” for manufacturers.

Oklahoma Medicaid has discussed such contracts with 20 manufacturers and currently has contracts for 2 long-acting antipsychotics, an injectable antibiotic, and an epileptic drug.

In a speech at the Biopharma Congress, CMS Administrator Verma announced the approved amendment in Michigan, stating, “New payment arrangements are needed and could take various forms—including drug payments over time only if the patient achieves certain clinical outcomes; drug payments through a shared savings approach based on the drug’s impact on a patient’s total cost of care; and drug payments under a subscription approach, with an upfront fee in exchange for as many doses as clinically necessary.”

Given the incentive to reduce cost, we expect more states to explore similar arrangements and follow Oklahoma’s and Michigan’s lead.


CMS Reports on Telehealth Services for Beneficiaries


In response to a directive of the 21st Century Cures Act, CMS released a report providing information on Medicare beneficiaries whose care may be most improved by access to telehealth services. Medicare currently covers telehealth services; however, current law limits separate Medicare payment for telehealth services to a small percentage of the Medicare patient population. The CMS report addresses the types of high-volume services that could be suitable for telehealth.

The report identified 19 additional high-volume services that may be suitable for telehealth delivery, such as:

  • Therapeutic exercise to develop strength, endurance, range of motion, and flexibility
  • Emergency department visit, problem with significant threat to life or function
  • New patient office or other outpatient visit, typically 30 minutes
  • Emergency department visit, problem of high severity
  • Hospital discharge day management

While there are still statutory barriers to expanding telehealth for Medicare fee-for-service, most stakeholders agree the technological approach offered through telehealth services can bring medical care into areas with limited access to quality care.


Information Buffet (AKA, Other Stuff That Caught Our Attention)


We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:

  • CMS launched its Procedure Price Lookup tool to help Medicare beneficiaries compare cost differences on certain surgical procedures. See the press release and CMS Administrator Verma’s blog post for more information.
  • The Food and Drug Administration (FDA) announced the approval of TRUXIMA (rituximab-abbs), biosimilar to Genentech’s RITUXAN (rituximab). Produced by Celltrion and marketed by Teva, TRUXIMA is the first biosimilar approved for the treatment of relapsed or refractory, low grade, or follicular non-Hodgkin’s lymphoma—specifically in adult patients with the CD20+ B-cell variety. Celltrion did not seek approval for RITUXAN’s autoimmune indications, and the FDA did not grant extrapolated approval for them. TRUXIMA is the 15th biosimilar approved by the FDA, with 5 available on the market.
  • A Maine Superior Court Justice ordered Maine Gov. Paul LePage (R) to carry out the Medicaid expansion voters approved more than a year ago through a ballot measure. LePage soon will be ending his time as governor, but the judge ordered the expansion to begin December 5, as reported by the Portland Press Herald.
  • CVS Health announced it completed the acquisition of Aetna; the combined company will operate as “CVS Health,” with Aetna operating as a standalone business.
  • Drugstore owner Walgreens Boots Alliance and health insurer Humana are in preliminary discussions to take equity stakes in each other, as reported by The Wall Street Journal.
  • The Galen Institute released a paper providing implications for healthcare financing and delivery if the US government supplanted employers as the financer of medical care for most workers and their families (ie, “Medicare for All”).
  • Your weekly dose of ICER activity:
    • The Institute for Clinical and Economic Review (ICER) issued a Final Evidence Report and Report-at-a-Glance assessing the comparative clinical effectiveness and value of 3 therapies for long-term prophylaxis against hereditary angioedema (HAE) attacks: TAKHZYRO (lanadelumab-flyo), HAEGARDA (C1 Esterase Inhibitor Subcutaneous [Human]), and CINRYZE (C1 esterase inhibitor [human]). See the press release for more information.
    • ICER released an Evidence Report that found the following 5 biologic treatments for uncontrolled asthma would require more than a 50% price discount to reach common thresholds for cost-effectiveness: DUPIXENT (dupilumab), XOLAIR (omalizumab), NUCALA (mepolizumab), CINQAIR (reslizumab), and FASENRA (benralizumab). See the press release for more information.


It’s that time again...open enrollment for the insurance exchanges. As we have done each year, we will compare weekly enrollment in the current and previous years for the 39 exchanges that use the HealthCare.gov platform for the 2019 benefit year, including the federally facilitated exchanges, state partnership exchanges, and some state-based exchanges.

Comparison of 2018 and 2019 Weekly Open Enrollment Snapshots for HealthCare.gov





“I plan to take what we’ve learned from our hearings, and ask leading health care policy experts, including economists, doctors, nurses, patients, hospital administrators, state regulators and legislators, governors, employers, insurers, and health care innovators, for specific ideas on how the federal government can reduce the cost of health care.”

– Senator Lamar Alexander (R-TN), part of the opening statement for the hearing, “Reducing Health Care Costs: Improving Affordability Through Innovation

Source: “Alexander: Washington Should Get Out of the Way of Private Sector Innovation to Reduce Health Care Costs,” November 28





In the second quarter of 2018, 9 drug codes met CMS’ price substitution criteria by exceeding the 5% threshold for 2 consecutive quarters or 3 of the previous 4 quarters.

The Social Security Act mandates that the Office of Inspector General (OIG) compare average sales prices (ASPs) with average manufacturer prices (AMPs). If OIG finds that the ASP for a drug exceeds the AMP by a certain percentage (currently 5%), the Secretary of HHS can substitute the ASP-based payment amount with a lower calculated rate. Through regulation, CMS outlined that it would make this substitution only if the ASP for a drug exceeded the AMP by 5% in the 2 previous quarters or 3 of the previous 4 quarters.

No price substitution actions have been taken so far.

Source: “Comparison of Average Sales Prices and Average Manufacturer Prices: Results for the Second Quarter of 2018,” OIG, November 15


ASHP Midyear Clinical Meeting and Exhibition | Personnel Placement Services

December 2–5 | Anaheim, California
Xcenda is proud to participate at this year’s Personnel Placement Services at the 2018 ASHP Midyear Clinical Meeting and Exhibition December 2–5 in Anaheim, California. Xcenda consultants will be on hand to meet and interview pharmacy candidates for our fellowship programs in Health Outcomes, Market Access, and Medical Communications. Meet Xcenda at PPS booth #7783. Learn more


2018 San Antonio Breast Cancer Symposium

December 4–8 | San Antonio, Texas
Xcenda is proud to be presenting a poster titled, Evolving Treatment Patterns in Hormone Receptor-Positive, HER2-Negative Metastatic Breast Cancer, at this year’s San Antonio Breast Cancer Symposium. This symposium is designed to provide state-of-the-art information on the experimental biology, etiology, prevention, diagnosis, and therapy of breast cancer and premalignant breast disease to an international audience of academic and private physicians and researchers. Contact us to set up a meeting at the symposium. Learn more


Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.


Jennifer Snow
Vice President,
Reimbursement and
Policy Insights,

Scott Shields
Associate Director,
Health Policy



Amy Grogg, PharmD
Senior Vice President | Commercialization Solutions | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Commercial Consulting | Xcenda


Milda Kaitz | Jenna Kappel | Scott Shields | Tammy Washington | Stephen Wilson


Laurie Kozbelt | Ellen Olson | Tia O’Brien


Nov. 30, 2018


Forward to a Friend



View Archived Issues



Connect with AmerisourceBergen:   AmerisourceBergen.com   I  AmerisourceBergen Insights  |   LinkedIn   I  Twitter  

Connect with Xcenda:   Xcenda.com   I   LinkedIn   I  Twitter