The recently released Medicare Payment Advisory Commission’s (MedPAC) report to Congress recommends restructuring the Medicare Part D benefit and allowing plans greater flexibility to implement formulary and utilization management tools to control costs. Unfortunately, MedPAC’s latest Part D reform proposals would be bad for patients by focusing on reducing government costs, not addressing beneficiaries’ needs. Below are three reasons why.
- First, MedPAC’s approach to redesigning the Part D benefit would disproportionately impact drugs for complex conditions and undermine future investments in innovation. MedPAC’s recommendation for at least a 30 percent manufacturer discount in the catastrophic phase would shift an unbounded financial liability to manufacturers, representing a substantial increase in total liability of nearly $110 billion when compared to the current Coverage Gap Discount Program. This would disproportionately impact therapeutic areas that treat devastating illnesses such as cancer, multiple sclerosis, epilepsy, complex mental illness, and Hepatitis C. A 30 percent manufacturer liability in the catastrophic phase could shift research away from new treatments for the Medicare population and towards treatments for younger populations with private insurance.
- Second, MedPAC’s recommendations to increase plan flexibility to manage drug utilization in the six protected classes and to add an additional specialty tier are unnecessary and potentially harmful to patients. Evidence shows that the current six protected classes policy is striking the right balance of access to treatments for patients and plan flexibility. In fact, a recent analysis demonstrates that plans have powerful negotiating tools that they are already employing to exclude a significant number of drugs from their formularies, manage utilization, and drive patients to fill prescriptions for drugs in the protected classes with lower-cost generic products. Furthermore, the implementation of a second specialty tier is likely to result in confusion for beneficiaries and unlikely to improve access or meaningfully reduce program costs.
- Third, MedPAC’s recommendations fail to improve access to and affordability of medicines for beneficiaries who actually need to use their Part D insurance benefits. MedPAC’s recommendations would leave cost sharing unchanged for 98 percent of non-low-income Part D beneficiaries, missing an important opportunity to improve access to and affordability of medicines for beneficiaries. This approach to Part D redesign does not address plans’ continued use of rebate dollars to lower premiums instead of beneficiary cost-sharing at the pharmacy counter. Additionally, recent proposed legislation on prescription drug pricing recognizes a need to lower patient cost sharing below the catastrophic phase of the Part D benefit by both directly lowering coinsurance as well as by allowing qualifying Part D beneficiaries to smooth out-of-pocket costs by paying overtime but MedPAC has adopted neither of these bipartisan ideas.
Improvements to Medicare Part D must be done the right way with targeted and measured reforms that preserve the key features and incentives that have made the program a success, while protecting and improving beneficiary access to needed medicines, passing along rebate savings directly to patients at the pharmacy counter and making beneficiaries costs more predictable. Learn more here.
Tom Wilbur is Director of Public Affairs at PhRMA focusing on federal advocacy priorities including Medicare and intellectual property. Prior to joining PhRMA, Tom worked in politics and on Capitol Hill, most recently responsible for communications and strategy for U.S. Rep. Fred Upton and the House Energy and Commerce Committee. Tom is a proud Michigander and outside of the office enjoys reading, running, hiking, golfing, live music, and spending time with family and friends.
Topics: Part D