More big questions about this new policy
The biggest surprise of Sunday’s executive order, besides the timing of course, was the Trump administration’s decision to extend the most-favored nations policy to Part D, the portion of Medicare that covers drugs picked up at the pharmacy.
Part D, which is managed by private insurance plans and middlemen, is much more complicated than Part B, where doctors buy drugs directly and then bill Medicare for those drugs. In Part D, plans don’t bill Medicare for each drug a patient takes, they’re paid based on a per-member basis.
We still don’t know how the Trump administration plans to implement the Part D policy, since the administration hasn’t released any formal regulations explaining its ideas, but here are our biggest questions so far, and the best answers we’ve gathered in the last 24 hours.
Part D, which is managed by private insurance plans and middlemen, is much more complicated than Part B, where doctors buy drugs directly and then bill Medicare for those drugs. In Part D, plans don’t bill Medicare for each drug a patient takes, they’re paid based on a per-member basis.
We still don’t know how the Trump administration plans to implement the Part D policy, since the administration hasn’t released any formal regulations explaining its ideas, but here are our biggest questions so far, and the best answers we’ve gathered in the last 24 hours.
How will Medicare enforce the most-favored nations price?
Given Medicare doesn’t directly reimburse insurers for each drug a senior takes, it’s still unclear how Medicare will ensure that it pays the “most-favored nations price” for certain drugs.
Already, there are two theories emerging among health policy wonks. The first, and seemingly least disruptive to the overall system, is that the Trump administration could set a maximum price for which Part D plans could pay for a drug.
The second, is that HHS will “carve-out” certain drugs covered under the most-favored nations policy and have the government directly pay for those drugs, rather than using the current system of insurers and middlemen.
How many drugs will be impacted?
The new most-favored nations executive order says that HHS will create a most-favored nations pricing plan for “Part D prescription drugs or biological products where insufficient competition exists.”
Already, that’s leading some to question how many drugs will be subject to the new rules.
It all hinges on how widely HHS defines “insufficient competition.” If HHS says any drug that doesn't have generic competition could be impacted, that could impact a big swath of drugs, including some blockbusters like Celgene’s Revlimid and Janssen’s Xarelto.
Can this new policy and Trump’s rebate rule coexist?
Trump’s last-minute changes left some policy watchers scratching their heads, since Trump has already started to embark on a major drug pricing overhaul in Part D. Last month, he issued an executive order that would eliminate the system of rebates that insurers and middlemen negotiate with drug makers in the program.
Given Medicare doesn’t directly reimburse insurers for each drug a senior takes, it’s still unclear how Medicare will ensure that it pays the “most-favored nations price” for certain drugs.
Already, there are two theories emerging among health policy wonks. The first, and seemingly least disruptive to the overall system, is that the Trump administration could set a maximum price for which Part D plans could pay for a drug.
The second, is that HHS will “carve-out” certain drugs covered under the most-favored nations policy and have the government directly pay for those drugs, rather than using the current system of insurers and middlemen.
How many drugs will be impacted?
The new most-favored nations executive order says that HHS will create a most-favored nations pricing plan for “Part D prescription drugs or biological products where insufficient competition exists.”
Already, that’s leading some to question how many drugs will be subject to the new rules.
It all hinges on how widely HHS defines “insufficient competition.” If HHS says any drug that doesn't have generic competition could be impacted, that could impact a big swath of drugs, including some blockbusters like Celgene’s Revlimid and Janssen’s Xarelto.
Can this new policy and Trump’s rebate rule coexist?
Trump’s last-minute changes left some policy watchers scratching their heads, since Trump has already started to embark on a major drug pricing overhaul in Part D. Last month, he issued an executive order that would eliminate the system of rebates that insurers and middlemen negotiate with drug makers in the program.
Whether the two ideas can coexist is still anybody's guess, but Ross Margulies, an attorney at Foley Hoag, put forth the most convincing argument STAT has heard for how they could.
He explained that Trump’s most-favored nation policy is limited to drugs where there’s insufficient competition and drug makers almost always negotiate rebates for drugs where there is competition and they’re vying for formulary placement. That means those two policies might not clash.
“We expect little overlap in terms of the actual drugs being targeted if both policies were to go into effect,” Margulies said.
He explained that Trump’s most-favored nation policy is limited to drugs where there’s insufficient competition and drug makers almost always negotiate rebates for drugs where there is competition and they’re vying for formulary placement. That means those two policies might not clash.
“We expect little overlap in terms of the actual drugs being targeted if both policies were to go into effect,” Margulies said.
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