CMS NEWS

FOR IMMEDIATE RELEASE
May 16, 2019

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CMS Takes Action to Lower Prescription Drug Prices and Increase TransparencyFinal rule modernizes the Medicare Advantage & Medicare Part D programs

Today, the Trump Administration finalized improvements to Medicare Advantage and Medicare Part D, which provide seniors with medical and prescription drug coverage through competing private insurance plans. These changes will ensure that patients have greater transparency into the cost of prescription drugs, so patients can compare options and demand value from pharmaceutical companies.

“The improvements we are making to Medicare Advantage and Medicare Part D deliver on the promises in the President’s blueprint to provide more negotiating tools and more transparency for patients,” said HHS Secretary Alex Azar. “They are significant steps toward a Medicare program, a drug pricing marketplace, and a healthcare system where the patient is at the center and in control.”

“Under President Trump’s leadership, CMS is delivering on price transparency, because patients have a right to know the cost of their healthcare services before they receive them,” said CMS Administrator Seema Verma. “Today’s rule requires Part D plans to adopt tools that provide clinicians with information that they can discuss with patients on out-of-pocket costs for prescription drugs at the time a prescription is written. By empowering patients with information on the cost of their prescription drugs, today’s rule will ensure that pharmaceutical companies have to compete on the basis of price. This effort builds on new requirements for hospitals to disclose chargemaster prices and other agency initiatives to promote price transparency.”

After an implementation period, Part D plans will be required to provide access to such a tool that is integrated into clinicians’ electronic prescribing or electronic health records (EHR) systems. CMS is encouraged that some plans are already offering these tools, but today’s policy will require all plans to provide clinicians with access to price information for different prescription drugs. Getting more information on out-of-pocket costs for prescription drugs to patients and their clinicians early in the process is critical, as there should be no surprises at the pharmacy counter.

To further promote transparency, after an implementation period today’s rule will also require the Explanation of Benefits document that Part D enrollees receive each month to include information on drug price increases and lower-cost therapeutic alternatives. As a result of these changes, patients and their clinicians will be able to better understand the cost of prescription drugs and seek out high-value options, helping to increase patient adherence and improving health outcomes.

CMS is also codifying a policy that enables beneficiaries to select a Medicare Advantage plan that negotiates prices for physician-administered medicines when beneficiaries are first starting on the medicines. By strengthening a plan’s ability to negotiate with prescription drug companies, this policy will ensure that plans can better deliver value for a patient’s medical needs. Many physician-administered medicines are biologics, which are some of the most expensive therapies in use today. Lower-cost biosimilars are coming to market to compete with biologics, and this policy is part of the Trump Administration’s broader strategy to foster innovation in biosimilars in order to drive competition in the market for physician-administered drugs.

In addition, today’s rule implements in Part D legislation signed by President Trump to prohibit “gag clauses,” which keep pharmacists from telling patients about lower-cost ways to obtain prescription drugs. These efforts to promote transparency on the price of prescription drugs complement a series of other changes towards this important goal, including a final rule issued by CMS last week to require pharmaceutical companies to disclose the list price of prescription drugs in direct-to-consumer television advertisements.

In the proposed rule, CMS announced that the agency was considering a policy to ensure that beneficiaries pay the lowest cost for the prescription drugs they pick up at a pharmacy, after taking into account back-end payments from pharmacies to plans. Although CMS is not implementing this policy for 2020, the agency appreciates the over 4,000 comments that were received on this issue. CMS is continuing to carefully review these comments as we continue to consider policies that would lower prescription drug costs, address challenges that independent pharmacies face, and improve the quality of pharmacy care.

Also in the proposed rule, CMS proposed facilitating negotiations for discounts for drugs in Part D’s “protected” therapeutic classes. The agency appreciates the feedback received on this issue and has chosen not to finalize the proposed changes to its protected classes policy at this time, but rather is codifying existing policy. However, the administration remains concerned that prescription drug companies are offering seniors in Medicare substantially smaller discounts for protected class drugs than are offered in the commercial market. Seniors in Medicare are paying more than commercially insured beneficiaries, and CMS will continue to execute on President Trump’s Blueprint to lower prescription drug prices and address this problem.

For a fact sheet on the final rule, please visit: https://www.cms.gov/newsroom/fact-sheets/medicare-advantage-and-part-d-drug-pricing-final-rule-cms-4180-f.

The final rule (CMS-4180-F) can be downloaded from the Federal Register at: https://www.federalregister.gov/documents/2019/05/23/2019-10521/modernizing-part-d-and-medicare-advantage-to-lower-drug-prices-and-reduce-out-of-pocket-expenses.