CMS may narrow its focus on drug costs to Part B

IV drugs
New data shows that spending on physician-administered drugs grew much faster than for retail drugs. (Getty/bee32)

The Trump administration has touted its focus on drug prices, unveiling several policy initiatives over the last year aimed at reducing costs.

In 2019, it may begin narrowing its focus to Part B, according to analysts.

Recent spending data released by the agency alongside comments suggest that the Centers for Medicare & Medicaid Services (CMS) will target Part B drug spending over Part D, Bernstein analysts wrote in a note to investors on Monday.

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The analysts pointed to healthcare spending data published by CMS actuaries last week that showed retail prescription drug costs grew just 0.4% in 2017, reaching more than $333 billion. But the Medicare Payment Advisory Commission noted (PDF) last week that outpatient spending growth has been driven largely by Part D drugs, increasing 8.4% per beneficiary from 2016 to 2017. Price increases and new drugs were largely to blame.

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The Trump administration has already signaled its intent to reform Part B pricing, unveiling its International Pricing Index model in October with a proposal officials say would save $17 billion over the course of a five-year pilot.

In a blog post last week, newly appointed HHS senior adviser for drug pricing reform John O'Brien highlighted the concerns around Part B prices, suggesting that Americans spend 80% more on physician-administered drugs than patients in other countries spend.

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Lower growth in drug costs could temper the impetus for broader drug pricing action, Bernstein analysts wrote. And CMS may be positioning its priorities with a new Congress.

“It suggests CMS will focus on Part B reform in 2019,” they wrote. “The recent muted Part D proposals suggest that as well.”

CMS has previously floated the idea of Part D catastrophic coverage reforms that would shift more risk to insurers when beneficiaries reach $5,000 in out-of-pocket costs. The administration has also proposed allowing Part D plans to negotiate prices of “protected class” drugs and give plans more freedom to base coverage on indication.  

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