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Alliance for Aging Research on First 10 Part D Drugs Subject to Medicare Price-Setting: Today is Not a Reason to Celebrate

Published August 29, 2023

This morning, the Centers for Medicare and Medicaid Services (CMS) announced the first 10 Part D drugs to be subject to Medicare price-setting. Sue Peschin, MHS, President and CEO at the Alliance for Aging Research, issued the following statement in response:

“Staging a celebration to announce the first 10 Part D drugs subject to CMS’ government price-setting in the Medicare program is macabre and misleading. Instead of improving affordability for older adults, CMS’ announcement signals the start of a chain reaction of rationing and switching doctor-prescribed medications that will negatively impact clinical care for millions of Medicare beneficiaries starting in 2026 and beyond.

We have opposed every Medicare price-setting proposal since 2019 because their value frameworks combine analyses of both cost-effectiveness and budget impact. Such frameworks favor the financial interests of payers (i.e., the Medicare program and Part D plans) and depend on rationing beneficiary access in order to reach projected Congressional Budget Office (CBO) savings. This is not opinion; previous analyses of the proposed CMS demonstration for International Reference Pricing, the Trump Administration’s Most Favored Nation model, and H.R. 3. all showed that beneficiary access to medications would be reduced as price-setting or price-matching took effect.

The IRA version of this policy is no different. While political messaging claims price negotiation will help to reign in high drug prices, the process instead captures drugs that serve large numbers of beneficiaries at modest cost rather than drugs that induce sticker shock. For example, oral anticoagulants used to prevent stroke in people living with atrial fibrillation may be found cost-effective, but since a large volume of patients are prescribed the drugs CMS’ model includes those drugs as prime targets for price-setting.

The government’s lack of transparency about its price-setting methodology deeply concerns us, and we hope federal lawmakers take notice. Though CMS will not use the quality-adjusted life year (QALY), its June 2023 guidance on its drug negotiation program hints at similar assessments that have a shared discriminatory foundation, such as the equal value of life years gained (evLYG) metric. However, as noted by the National Council on Disability—an independent federal agency—the evLYG measure neither mitigates nor addresses the inherent biases of the QALY and fails to help improve patient access to new therapies.

Moreover, while the IRA guarantees formulary inclusion for all 10 drugs, it does not guarantee formulary placement for any. Due to misaligned incentives for pharmacy benefit managers (PBMs) and insurers, some plans may opt to give preferred formulary placement to more expensive drugs for which PBMs can claim a greater rebate—as seen with the launch of rheumatoid arthritis biosimilars earlier this year.

Starting in 2026, Medicare beneficiaries and family caregivers will need to check their Part D plan’s formulary during Open Enrollment to ensure their prescribed medications are still on the preferred tier. If their plan has switched formulary tier placement for a medication, beneficiaries may need to pay more out-of-pocket to stay on it, switch to a preferred drug in the same class, or switch to a new plan. Part D plans are also likely to restrict access to selected drugs through utilization management practices, such as prior authorization and step therapy. Currently, CMS has only pledged to ‘monitor’ utilization management by Part D plans, but they have not promised to create guardrails to protect patient access.

Additionally, if plans narrow access to certain medicines due to dynamics introduced by government price-setting, older patients who are stable on a given medication may lose access and be forced to switch to an alternative medicine that is not optimal for their unique circumstances. This is because CMS allows Part D plans to switch a beneficiary’s medication—called ‘non-medical switching’ since the practice excludes the beneficiary’s healthcare provider—in order to save costs. Non-medical switching is confusing to patients at best and may result in life-threatening adverse outcomes for patients at worst.

While CMS mentions health equity as one of its strategic pillars, the impact of Part D price-setting will hit Medicare beneficiaries in underserved rural communities and communities of color the hardest. Price-setting may also result in disease-specific communities working against each other as advocacy groups fight to protect cherry-picked treatments from rationing.

Older adults have spent their whole lives paying for the Medicare program. The promise of the IRA was to reduce the price of prescription drugs at the pharmacy counter, not decrease the availability of them. Older Americans need and deserve access to the full range of therapies their healthcare providers prescribe for them—not only those that federal bureaucrats and actuaries select for them.”

If you are a member of the media and want to learn more or interview Alliance staff on this issue, email Katie Riley, Vice President of Communications, at [email protected].

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