Health insurer groups speak out against Medicare Part D policy proposal

While health insurers generally support the proposed rule for Medicare Advantage and Part D, they say one proposal “misses the mark” in its bid to tackle high drug prices. 

Currently, Part D plan sponsors use savings they negotiate with drug companies and pharmacies to reduce costs for all beneficiaries through lower premiums. But the Centers for Medicare & Medicaid Services has issued a "request for information" to solicit feedback about requiring plan sponsors to apply these rebates toward point-of-sale prices. 

This approach, according to (PDF) America’s Health Insurance Plans, ignores the root cause of high drug prices: “excessive list prices for drugs and excessive price increases that are set solely by and fully within the control of manufacturers.”

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AHIP argued that because most Part D prescriptions are generic drugs and only a portion of branded drug manufacturers offer rebates, CMS’ proposal would benefit only a small minority of beneficiaries.

More importantly, AHIP said, such a policy would actually end up costing Medicare beneficiaries more.

The Alliance of of Community Health Plans (ACHP) made a similar point, noting (PDF) CMS’ own projections suggest the policy would raise beneficiary premiums, increase government spending and increase revenues for drug manufacturers.

“The financial effects combined with administrative complexities, operational burdens on our member plans and other potential consequences of the point-of-sale approach lead us to urge CMS not to move forward,” the group said. 

Not all organizations are unhappy with the proposal, however.

The Pharmaceutical Research and Manufacturers of America (PhRMA) submitted a comment letter that said it “strongly supports” CMS’ move to pass negotiated rebates onto patients. 

Currently, even when pharmacy benefit managers and insurers negotiate discounts for branded products, Part D beneficiaries are increasingly subject to coinsurance tied to an undiscounted price, PhRMA said. 

“We believe this single policy change could yield lower out-of-pocket costs immediately (upon taking effect) for millions of beneficiaries while also generating multibillion dollar savings to the federal government over a 10-year window,” the trade group added.