Public Policy Alert

The Trump Administration has announced a new payment model to address Medicare Part B drug pricing by linking Medicare Part B prices to international drug prices, creating private sector vendors to negotiate drug prices and reducing reimbursement for provider administration of Part B drugs and biologics.  

The proposed regulation would allow Medicare to establish an "international pricing index" that would be used as a reference to set prices paid for drugs through Medicare Part B. Currently, Medicare Part B payment for outpatient drugs in physician  offices, hospital outpatient departments and certain other settings is based on drug manufacturers' average sales prices plus a six percent add-on payment to cover the cost of giving medications to patients. CMS is now proposing regulations that would allow it to lower the overall prices of these drugs, when the ASP is higher than prices paid in countries around the world with similarly advanced economies. As to included drugs, CMS envisions that the model would initially focus on single source drugs and biologicals, but could over time include multiple source drugs and Part B drugs provided in other settings. The HHS is expected to release a more comprehensive proposed rule in April.
Under another key provision of this proposed model, drugs would be sold to vendors instead of directly to doctors or hospitals, as is the current practice.   
This five-year Medicare demonstration project covering half the country will be overseen by the Center for Medicare and Medicaid Innovation (CMMI), which was created under the Affordable Care Act. CMS will accept public comments until Monday, December 31, 2018. The proposal does not require Congressional action. If approved, the demonstration project would go into effect in late 2019 or early 2020 and operate for five years. 
This announcement came after HHS released a government study that compared Medicare spending for 27 Part B physician-administered drugs to the prices of those drugs in sixteen other developed economies -- Austria, Belgium, Canada, the Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden and the United Kingdom.  The report claims that, "prices and reimbursement rates for Part B drugs are significantly higher for U.S. providers than purchasers outside the U.S."  The report does acknowledge that there are significant "limitations" in the data used in international price comparisons, specifically that the formulation of drugs, their dosage and strength may vary from country to country and that foreign drug prices do not reflect rebates offered by drug manufacturers in the United States.  

BioNJ is currently analyzing this proposal and is strongly opposed to any attempt to control drug prices based upon international health care systems that limit access and have a potential detrimental impact on access to innovative, life saving drugs essential to the health of Patients. We will keep Members informed along the way.    

Click here for the announcement.

Please contact John Slotman, BioNJ's Vice President, Government Affairs, at  or 609.890.3185 with questions.
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