On April 2, 2018, the Center for Medicare and Medicaid Services (CMS) released a pre-publication version of a final regulation impacting both the Medicare Advantage (MA) and Medicare Part D prescription drug benefit programs. The provisions of the rule will be effective for the 2019 plan year.

Update: CMS released the final version of the rule in the Public Inspection desk of the Federal Register on April 6, 2018 and is available here. The final rule is scheduled to be published in the Register on April 16, 2018.

While the Trump Administration made public statements celebrating the rule for tackling high drug prices, there are no provisions included in the rule that are expected to radically impact prices for some of the highest-cost drugs. Instead, the rule aims to allow plan sponsors to drop coverage of brand-name drugs faster once a generic alternative is available or make other mid-year changes to encourage the use of newer, less expensive therapeutic alternatives. While this change is likely to bring relief to some beneficiaries, the impact is not expected to be dramatic.

The rule also includes implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA) with respect to opioids. The new rules will enable plan sponsors to use “lock-in” programs to restrict beneficiaries to certain prescribers and pharmacies in an effort to reduce misuse of opioids, and also make other program policy changes intended to stem the opioid abuse epidemic.

Plans May Remove Brand-Name Drugs with Newly-Approved Alternatives from Formularies Faster

• Starting in 2019, plans will be able to drop a branded drug from formulary, or move it to a higher cost-sharing tier immediately, without advanced beneficiary notice, and at any time during the plan year, so long as the plan replaces the drug with a therapeutically-equivalent newly-approved generic drug on the same or lower cost-sharing tier.
• CMS will reduce current beneficiary notice requirements for mid-year formulary changes, regardless of generic entry to 30 days (from the current 60 days). Many branded manufacturers rely on this notice requirement to maintain some market share after gaining a new competitor (whether a single-source therapeutic competitor or a generic competitor).

Meaningful Difference Requirements Eliminated, Uniformity Requirements Altered

• CMS is eliminating the meaningful difference requirement beginning with MA bid submissions for contract year (CY) 2019.
• CMS is also finalizing changes to uniformity requirements in MA plans. MA organizations will be able to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer lower deductibles for beneficiaries that meet specific medical criteria.

Agency Silent on Comments on Point-of-Sale Rebate and Price Concession Calculation

• One unresolved issue from the last Part D regulation was the calculation and application of manufacturer rebates and price concessions at the point-of-sale (POS).
• CMS used the proposed rule as an opportunity to solicit information and comments on potential policy approaches for solving this issue.
• The final rule did not discuss the comments received in response to this request.

Cost Sharing Reductions for Biosimilars Aims to Save $10 Million in 2019

• CMS had proposed changes to the definition of a generic drug to include biosimilars with respect to LIS cost sharing and non-LIS catastrophic cost sharing policies.
• Under the new policy, beneficiaries would be subject to lower cost sharing levels. CMS estimated that this proposed policy change could result in a minor 5% shift to follow-on biological products, saving $10 million in 2019.
• In order to avoid confusion over whether CMS was equating biosimilar and interchangeable biological products to generic drugs, the agency will instead establish a maximum copayment for biosimilar and interchangeable biological products that is equivalent to the maximum copayment for generic drugs.

Lock-In Programs Coming to Part D in 2019, LIS Loophole to Close

• Under authority established by the Comprehensive Addiction and Recovery Act of 2016 (CARA), CMS will allow Part D plan sponsors to establish drug management programs for beneficiaries considered at risk for abuse of drugs identified as “frequently abused drugs.”
• The programs could include “lock-in” restrictions that limit beneficiaries from receiving prescriptions for certain products from certain provider(s) or pharmacy(ies).
• Plans will be required to provide beneficiaries notice that they were being placed in such a program, and allow the beneficiary to appeal the restrictions. Beneficiaries with a cancer diagnosis, those in hospice and those in a long-term care facility would be exempt from drug management requirements.
• CMS will maintain a list of “frequently-abused drugs.” CMS will include all opioids, with the exception of buprenorphine when the drug is used for medication-assisted treatment (MAT), and injectables. In response to feedback from stakeholders, CMS will also classify benzodiazepines as “frequently abused drugs.”
• Additionally, beneficiaries meeting the following clinical guidelines must be reviewed for placement in the program:

1. Use of opioids with an average daily morphine-equivalent dose (MED) >90 mg for any duration during the most recent six months; AND
2. Three or more opioid prescribers and three or more opioid-dispensing pharmacies; OR
3. Five or more opioid prescribers, regardless of the number of opioid-dispensing pharmacies.

• Sponsors may review beneficiaries that meet the following supplemental criteria to OMS:

1. Use of opioids (regardless of average daily MME) during the most recent six months; AND
2. Seven or more opioid prescribers OR seven or more opioid-dispensing

• Prescribers within a group practice and a chain of pharmacies that share real-time electronic data would be considered a single prescriber/pharmacy under the guidelines.
• Before placing a beneficiary in a lock-in program, plan sponsors would be required to engage in specified case management activities.
• Plan sponsors must also obtain the agreement of at least one opioid prescribers before entering the beneficiary into case management (and exception would be made for prescribers that are unresponsive).
• Beneficiaries would have 30 days after notification to provide additional information relevant to the determination.
• Programs would need to be documented in writing and approved by the sponsor’s Pharmacy & Therapeutics (P&T) Committee and reviewed and updated as appropriate.

LIS Enrollment Loophole Would Close Under Proposal

• Under the new rules, LIS beneficiaries in case management would be ineligible for a special enrollment period which enables the beneficiary to switch Part D plans up to 12 times a year. Additionally, plans would have greater ability to share data on beneficiaries with one another in an attempt to prevent this type of behavior.

 

Long-Delayed Physician Enrollment Requirement Replaced With ‘Preclusion List’

This rule finalizes CMS’ proposal to eliminate the prescriber and provider enrollment requirement and replace it by creating a “preclusion list.” The list would include certain individuals and entities in the following categories:

• Are currently revoked from Medicare, are under a reenrollment bar, and CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program; or
• Have engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable and CMS determines that the underlying conduct is detrimental.

Fraud Prevention Activities May Be Included in Medical Loss Ratio Calculations

• Plans have complained that CMS does not adequately allow the plans to count fraud prevention activities as a “quality improvement activity” even though fraud prevention is an important function designed to protect the plan, government, and beneficiaries.
• In response to these concerns, CMS is finalizing changes related to fraud activities and the MLR that will enable plans to count more of the costs as a quality improvement activity.
• Additionally, CMS will finalize their proposal that Medication Therapy Management (MTM) programs that are offered by Part D sponsors also qualify as QIA and therefore, will be included in the MLR calculation.

If you have questions about how this rule could impact you or your company, reach out to Melissa Andel, Director of Health Policy, at melissa@appliedpolicy.com or 202-558-5272.