Report: Axing protected drug classes in Medicare Part D may not substantially lower spending

Medicare enrollment form and pen
Many Medicare beneficiaries who receive drugs in protected classes use generics, according to a new report. (Image: Getty/zimmytws)

Eliminating the protected classes of medications for Medicare Part D plans could give insurers more leverage to negotiate rebates, but may have a limited financial payoff, according to a new analysis. 

The Pew Charitable Trusts dived into the policy, which requires Part D plans to cover "all or substantially all" medications in six categories—antiretrovirals, immunosuppressants, antidepressants, antipsychotics, anticonvulsant agents and antineoplastics. Part D plans are only required to cover two drugs in other therapeutic classes. 

If the protected classes were removed, Part D insurers might have more leverage to negotiate drug rebates, according to the report, as they could exclude certain drugs from their formularies. However, a significant number of people who need drugs in these categories use generics, so actual drug cost savings could be limited. 

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Plus, Part D plans do have some ability to restrict drugs in these classes, according to the report, which could also impact how effectively eliminating the protected classes would cut down drug spending. 

RELATED: Who wins, who loses under 2018 changes to CMS' 340B drug discount program 

As policymakers target changes to drug coverage in an effort to lower costs and spending, they should also keep in mind that coverage changes in one area of Medicare can lead to higher patient spending elsewhere in the program, the Pew analysts said. 

"Lack of adequate access to medications can in some circumstances increase costs to other Medicare programs through increased hospitalizations from complications or increased physicians visits to manage medication," according to the report.  

The Centers for Medicare & Medicaid Services is considering a number of policy changes aimed at reducing drug prices and spending, including a potential new payment model. One approach the agency is considering is a model where patients would be charged more depending on how successful the drug is for certain conditions. 

Meanwhile, Democrats have over the past year reignited the debate on whether Medicare should be allowed to directly negotiate drug prices

Tackling drug prices and spending is a major focus for the Trump administration, one that Department of Health and Human Services Secretary Alex Azar has said is one of his top concerns at the department. 

HHS unveiled a number of plans aimed at reducing drug prices, including a proposal to push insurers to share drug rebates more directly with patients. UnitedHealthcare announced this week that it will do so beginning in 2019.