Trump's Drug Pricing Plans On Slow Walk? HHS To Solicit Comment On Policies

No big policy implementation expected to be announced during president's speech planned for next week. HHS will continue to gather feedback on various approaches to lowering drug pricing.

The Trump Administration is planning to announce action on prescription drug pricing as early as next week, but it seems unlikely that major changes impacting manufacturers are imminent.

HHS will release a request for information (RFI) from stakeholders on various drug pricing ideas, according to White House Deputy Press Secretary Hogan Gidley.

That suggests the department is not yet ready to move ahead with regulatory change that could restrict drug pricing practices. An RFI will take time to complete and may not necessarily lead to action, whether through regulation or launch of a demonstration project.

It's not clear what policies HHS might want to evaluate through an RFI. However, the Administration may want further input on how to redirect manufacturer rebates to help offset Medicare Part D beneficiary cost sharing at the point-of-sale.

An earlier RFI, issued in November 2017, generated conflicting comments on the feasibility of the policy. Although the Administration is still interested in it, the Centers for Medicare and Medicaid Services is not yet ready to proceed with implementation, according to Administrator Seema Verma. (Also see "Medicare Part D Rule Offers Modest Drug Price Savings, No Point-of-Sale Rebates" - Pink Sheet, 3 Apr, 2018.) 

HHS Secretary Alex Azar's recently-appointed senior advisor on drug pricing reform may help advance the policy or some version of it. Daniel Best is an expert on Part D contracting and brings the PBM perspective to his new role from years of working at CVS Health Corp.  (Also see "The Best Choice: HHS Lead On Drug Price Reform Brings Expertise In Part D Contracting" - Pink Sheet, 30 Mar, 2018.)

Drug Pricing Policies In Federal Budget Proposal

• Require Medicare Part D plans to apply "substantial" portion of rebates at the point-of-sale. Expected to cost Medicare $42.2bn over 10 years.
• Exclude manufacturer discounts from valuation of Part D beneficiary out-of-pocket costs in the coverage gap. Expected to save $47bn.
• Establish Part D beneficiary out-of-pocket maximum in catastrophic phase. Expected to cost Medicare $7.4bn
• Increase Part D plan formulary flexibility by allowing plans to cover only one drug per category/class and expanding utilization management tools. Expected to save $5.5bn.
• Eliminate cost-sharing on generic drugs for low-income Part D beneficiaries. Expected to save $210m.
• Leverage Part D plans' negotiating power for certain Medicare Part B drugs; no savings estimate.
• Inflation cap to restrict "abusive" Part B drug price increases; no savings estimate.
• Reduce Part B wholesale acquisition cost-based payments from WAC plus 6% to WAC plus 3%; no savings estimate.
• Improve manufacturers' reporting of Part B average sales prices to set more accurate payment rates; no savings estimate.
• Establish Medicaid demonstration project, including up to five states, allowing for establishment of closed formularies and for states to negotiate prices directly with manufacturers. Expected to save $85m.
• Clarify definition of single and multiple source drugs for classification under Medicaid drug rebate program to prevent gaming. Expected to save $319m.

Azar has several times supported the notion of authorizing entities like pharmacy benefit managers to negotiate prices for Medicare Part B drugs with manufacturers in a manner similar to what goes on in Part D.

The policy is likely to be very complicated to implement and CMS may seek advice on how to do it, including how to select the drugs it would target. One approach would be to identify categories that include drugs covered under both programs, such as rheumatology treatments, ADVI Director Linsday Bealor Greenleaf suggested in an interview. 

Azar has also endorsed a price inflation cap for Part B drugs that could address price increases in that market.

In Part D, Azar has supported establishing an out-of-pocket cap on beneficiary costs in the catastrophic phase of the Part D benefit, coupled with shifting more financial responsibility from Medicare to plans in that phase. Medicare currently covers 80% of costs in the catastrophic phase while plans cover 15%.

RFI Will Coincide With Trump Speech

The HHS announcement about an RFI will coincide with a speech by President Trump on drug pricing that is scheduled for April 26, although the date is subject to change, Gidley said.

In his speech, the President will refer to drug pricing policies endorsed by his 2019 federal budget proposal. (See box.)  The policies include several measures to lower drug costs in Medicare and Medicaid. (Also see "At Cross-Purposes? How Trump Budget's Part D Gap Discount Policy Aligns With New Law" - Pink Sheet, 12 Feb, 2018.)

Many of the policies would need to be implemented through legislation  – and it would be difficult to generate enough bipartisan support to get such measures through Congress at this point – or they could be the subject of payment demonstrations conducted under the auspices of the CMS Center for Medicare and Medicaid Innovation, ADVI's Greenleaf pointed out.

CMMI has broad authority to experiment with new models under Medicare because the law does not restrict the duration, geographic scope or number of beneficiaries covered by a demonstration, as long as it is not national in scope, she noted.

Last September, CMS released a request for information on how the reimbursement laboratory could approach demonstrations on value-base contracting for drugs in government-sponsored programs, signaling a new emphasis on using CMMI to lower drug costs. (Also see "Drug Payment Experiments Coming To Medicare, Medicaid" - Pink Sheet, 20 Sep, 2017.)

In response, the Pharmaceutical Research and Manufacturers of America expressed concern about a government entity establishing new payment models, urging that value-based initiatives be left to manufacturers to pursue on a voluntary basis.

Instead, CMMI could focus on eliminating regulatory hurdles to value-based contracting, such as Medicaid "best price" rules and anti-kickback concerns, PhRMA urged. (Also see "CMS Efforts On Value-Based Payments Should Focus On Removing Barriers, PhRMA Says" - Pink Sheet, 21 Nov, 2017.)