Patient groups rattled by new Medicare power to negotiate lower drug prices

Patient groups rattled by new Medicare power to negotiate lower drug prices
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A new federal policy intended to drive down drug prices could have a negative effect on patients, particularly those with chronic conditions, according to health advocates.

The policy announced Tuesday by the Department of Health and Human Services will give some private insurers the option to require patients try cheaper drugs before turning to more expensive ones, regardless of what their doctor prescribes.


The change applies only to Medicare Advantage Part B, which covers drugs administered in doctor's offices, but could affect more than 20 million Americans enrolled in Medicare Advantage plans.

The administration is framing the policy as a way to give insurers more power in negotiations with drug companies, saying that if an insurer can require a patient to use a cheaper drug instead of a more expensive one, companies might be compelled to drop their prices more.

“It gives the plans the ability to negotiate better deals with the manufacturers,” said Seema Verma, administrator of the Medicare program, in a press call with reporters Tuesday. “It may help them negotiate better discounts, encourage drugmakers to lower costs and encourage patients to choose high value medications.”

Plans that participate in the program will also be required to pass more than half of any savings along to patients, either through lower premiums or gift cards.

But opponents of the policy — called “step therapy”— call it “fail first.”

“Consumers may have to go through one or more drugs before they can get a particular treatment they really need,” said Ellen Albritton, a senior policy analyst at Families USA, a left-leaning health-care advocacy organization based in Washington. “This policy, instead of really getting at the heart of the matter of lowering high drug prices, is putting up more barriers between patients and the drugs they need to stay healthy and live.”

The initiative also isn’t popular with drugmakers.

The step therapy concept has longed faced opposition from drug companies, which benefit when patients spend more on drugs.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said it has “serious concerns” with the new policy, arguing the program could delay patients’ access to needed medicines.

The policy, which takes effect Jan. 1, applies only to new prescriptions. Patients who are already receiving drugs through Part B won’t see a change to those prescriptions.

Plans that participate in step therapy must disclose to enrollees that covered drugs might be subject to the new rules. Patients will be allowed to switch to a different plan through March 31 if they’re unhappy with the changes.

The new policy is likely to have the biggest impact on those with chronic health conditions since Part B covers drugs that treat rheumatoid arthritis and some cancer therapies.

“Going through cancer treatment is hard enough,” said Chris Hansen, president of the American Cancer Society Cancer Action Network. “Cancer patients should not be forced to ‘fail first’ on a drug that is known not to work for them before they are allowed to take the recommended treatment.”

The administration said plans that choose to implement step therapy next year must allow enrollees to request an exception in order to access a more expensive drug. That might be necessary if a patient finds that the cheapest drug covered by the plan isn’t working or has bad side effects.

Those requests will be examined within 72 hours in most cases, the administration said, adding that a patient can appeal a decision if denied. The administration also said it will monitor appeals activity to ensure requests are being appropriately evaluated.

David Mitchell, president of Patients for Affordable Drugs, and a patient with incurable but treatable blood cancer, said he understands the concerns patients might have about step therapy.

But insurers can require a patient take a cheaper drug only if it’s scientifically proven to be as effective as a more expensive option, he said.

“I understand because I have a disease that will kill me if not treated correctly,” Mitchell said. “But if science says drugs are equally effective, I’m OK starting with the cheaper one.”

Mitchell said he thinks the policy will give health insurance plans leverage over drug companies. While Patients for Affordable Drugs has been critical of the administration’s approach to lowering drug prices, he thinks this policy is a good first step.

“You have to give credit where credit is due,” he said. “Just because you don’t get everything you want, if it’s moving in the right direction, we want to encourage that.”