Part D Specialty Tier Should Be Reserved For Highest-Priced Drugs – BIO

Too many drugs will be subject to the maximum copay on Part D formularies if CMS allows plans to place all therapies with negotiated prices greater than $500 per month on the specialty tier, according to the Biotechnology Industry Organization.

In March 6 ¹ comments on the CMS ² draft formulary review guidelines for 2007, BIO highlights as a special concern CMS' proposal to lower the price threshold to $500 for drugs and biologics that may be placed on the specialty tier of formularies, thereby subjecting "many more patients" to the typically higher cost-sharing associated with that tier.

Plans currently allocate drugs with negotiated monthly prices of $2,000-$3,000 a month to the specialty tier, BIO estimated.

The CMS guidelines are intended to assist Part D sponsors in understanding the agency's standards for evaluating contract bids for 2007 (³ (Also see "CMS Extends “Substantially All” Policy In Draft Formulary Guidelines" - Pink Sheet, 27 Feb, 2006.), p. 24). Formularies must be submitted to CMS by April 17, and the final prescription drug plan bids are due by June 5.

The trade group maintained that it does not support the existence of the specialty tier, and questioned the "statutory authority" of such a tier.

However, "if CMS continues to allow this approach," BIO requests that the agency "substantially increase the threshold amount for the specialty tier in order to more appropriately limit the significant effect this tier has on patient access to critical therapies." CMS' rationale for permitting a specialty tier on formularies is in part to protect plans from the burden of having high-priced therapies on a preferred tier.

Coinsurance Should Be Capped At 25%

BIO urged CMS to ensure that the cost-sharing associated with the specialty tier be limited to 25%.

"Several plans have established specialty tier cost-sharing well in excess of 25% for 2006, contrary to CMS' 2006 instructions to plans," the group said. To alleviate potential confusion about CMS' intent in this area, BIO requests clarification of the statement in the guidelines that coinsurance "is limited to 25% in the initial coverage range (or actuarially equivalent for plans with decreased or no deductible basic alternative benefit design)."

BIO also expressed concern with the proposal that plans be permitted to place all therapies within a particular category or class in the specialty tier. "Allowing plans to exclude all therapies for treatment of a particular disorder from the preferred formulary tier certainly would seem to discourage the enrollment of certain groups of beneficiaries," the comments maintained.

CMS' decision to continue to require plans to cover "all or substantially all" drugs in six therapeutic categories was applauded by BIO. The agency has determined plans should continue to provide the broadest possible coverage for immunosuppressants, antidepressants, antipsychotics, anticonvulsants, antiretrovirals and antineoplastics.

"Substantially All" Eligibility Limits Opposed

However, BIO recommended changes to three aspects of the policy as it is articulated in the proposed guidance. First, the group objected to the proposal that only drugs that are on the market as of April 17, 2006 be subject to the "substantially all" policy.

The change would limit the number of new therapies that may be subject to the coverage policy in 2007. For the 2006 benefit year, CMS applied the policy to all therapies on the market as of Jan. 1, 2006; the agency is now proposing a cut-off date that is more than seven months shy of the start of the 2007 benefit period.

BIO requests that CMS establish Jan. 1, 2007 as the deadline for eligibility in the coming year or "at the very least," should "clarify that a post-April 17, 2006 formulary submission will undergo the same or preferably an expedited review process to achieve formulary position."

CMS currently requires pharmacy & therapeutics committees to make a decision on formulary inclusion for new drugs within 180 days of their release onto the market; BIO asks that CMS shorten the requirement to 90 days.

The comments also expressed support for CMS' decision to continue its approach to discouraging plans' use of drug utilization management tools for HIV/AIDS drugs. However, BIO registered concern that the guidelines seek input on utilization management techniques that might be appropriately applied to the six protected categories.

"We strongly urge CMS not to permit plans to impose additional utilization management tools on these six drug classes in a manner that will impede patient access," BIO said.

In a similar vein, BIO recommended the agency modify its statement that plans may not implement prior authorization or step therapy requirements "that are intended to steer beneficiaries to preferred alternatives within these classes for enrollees who are currently taking a drug."

The statement may be interpreted by plans as offering greater leeway for imposing utilization management in these classes when a patient is already stabilized on a drug, BIO suggested. Instead, CMS should reiterate the direction in its 2006 guidelines that for such patients, "plans may not use management techniques like prior authorization or step therapy unless a plan can demonstrate extraordinary circumstances."

Extended-release products should not be excluded from the "substantially all" requirements, even when an immediate-release drug is on formulary, BIO urged. "Sometimes, it is incremental innovation that makes a significant difference in patients' lives, which can improve patient compliance, safety and tolerability," the trade group observed.

As proposed, the policy would exclude extended-release products when the immediate-release version is included, as well as multi-source brands of identical molecular structure, products with the same active ingredient, and multiple dosage forms that do not provide a unique route of administration (e.g., tablets and capsules).

In order to ensure that formularies include new drugs or therapies for rare diseases, BIO seeks clarification that an assessment of the availability and tier position of such products "will be a critical component of the formulary process."

CMS' proposal to rely on the 2002 Medicare Current Beneficiary Survey and the recently released Office of Inspector General study on drugs used by Medicare/ Medicaid dual-eligibles may not capture all the drugs of concern to BIO members, the comments noted.

[Editor's note: This article appears courtesy of Medicare Drug Focus, a new publication from F-D-C Reports providing in-depth coverage of Part D implementation. Register for a 30-day, risk-free trial at ⁴ www.MedicareDrugFocus.com or call 800-332-2181.]