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Health Affairs Blog, August 14, 2018
Rachel E. Sachs (Academic Fellow Alumna)


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From the post: 

Last Tuesday, the Centers for Medicare and Medicaid Services (CMS) took its latest action in the area of drug pricing. CMS gave Medicare Advantage (MA) plans the ability to use step therapy, in which a patient may be required by their insurer to try a less expensive drug before moving on to a more expensive drug, for physician-administered Part B drugs. This is one of the more significant actions the administration has taken on drug pricing to date, but there are also potential concerns about this move, and its rollout sheds light on the administration’s drug pricing strategy more generally.

The introduction of step therapy into MA plans has the potential to lower drug prices in those plans. In short, if the insurer has the ability to prefer one drug over others for the treatment of a particular condition and to require patients to begin on that drug, manufacturers may compete for their drug to obtain that preferred status. CMS’ announcement also permits MA plans that administer Part D plans to cross-manage across those plans, using a Part D drug as the “preferred” drug for purposes of Part B negotiation. CMS seems to be more optimistic about the scale of the potential savings than are analysts in the field, but providing MA plans with more leverage against pharmaceutical companies will likely reduce prices, although perhaps more so in some therapeutic areas than others. [...]

Check out the full post at the Health Affairs blog!

health care costs health law policy insurance medicaremedicaid pharmaceuticals rachel sachs regulation