Alex Azar to resurrect Medicare Part B price bidding program

As part of President Trump's drug pricing initiative, the Department of Health and Human Services is planning on bringing back a Bush-era Part B bidding program.

HHS Secretary Alex Azar announced May 14 that the agency plans to propose a program to merge some Part B drugs with Part D, where their prices could be negotiated, a major goal of Trump's plan to lower drug prices. 

"We will be issuing a request for proposal to make new use of an alternative system for buying Part B drugs, a Competitive Acquisition Program," Azar said in a speech.  "We believe there are more private sector entities equipped to negotiate these better deals in Part B, and we want to let them do it."

Such a program has been used before with poor results. 

Under the original short-lived Competitive Acquisition Program, which ran from July 2006 to 2008, the Centers for Medicare & Medicare Services was responsible for contracting with vendors that would provide certain physician-administered drugs and collect Medicare reimbursements and patient coinsurance for those drugs.

The agency paid the vendors based on rates included in the vendors' bids. Providers who voluntarily enrolled in the program agreed to obtain their drugs from a participating vendor and bill for the administration of the medication. 

The CMS postponed the program on Dec. 31, 2008, due to contractual issues with potential vendors. The program was also plagued with low physician enrollment, and the one vendor in the program, Bioscrip, had little leverage to negotiate prices, according to MedPAC (PDF). 

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During a briefing with reporters following his speech, Azar said the market has changed over the past 10 years and the industry is ready for a reboot.

"We believe the market is developed sufficiently in terms of the power and scale of group purchasing organizations, specialty pharmacies, distributors, specialty distribution and pharmacy benefit managers that there are now plenty of players in the space compared to when this was tried over a decade ago who could actually execute a program like this well, secure, substantial discounts and work effectively with physicians and hospitals for whom the buy and bill model doesn't make sense," he said.