Significant Changes to Medicare Part D Proposed

February 3, 2014

The Centers for Medicare and Medicaid Services (CMS) has proposed major changes to Medicare Part D, says a report from law firm McDermott Will & Emery.

One of the biggest changes would involve changes to the "any willing pharmacy" requirements.

  • CMS has always interpreted a particular provision in the Medicare Part D law to require Sponsors to allow any pharmacy to join their networks, so long as those pharmacies were willing to meet the Sponsors' terms.
  • The program also allowed contracts with a small number of preferred pharmacies who generally agreed to lower prices in exchange for that preferred status.

The new proposal would prevent Sponsors from developing these exclusive preferred arrangements as they do currently.

  • Instead, all pharmacies would be able to contract under the preferred terms if they wish, and these arrangements would impose a price ceiling lower than the price floor of the standard contracts.
  • While CMS has said that Sponsors can still negotiate with pharmacies for even bigger discounts, it is questionable whether that will actually happen in practice.
  • If Sponsors are no longer able to guarantee preferential status, such a deal may not be worthwhile financially.

Other CMS proposals would affect mail-order pharmacies and limit the ability of Sponsors to incentivize the use of mail-order drugs. Additionally, CMS would remove immunosuppressant and antidepressant drugs from Protected Class status, meaning that Sponsors would not have to include all of the drugs from these classes in their formularies.

The proposal is a dramatic shift in drug administration and will require a great deal of planning from industry groups if the rule becomes final.

Source: "CMS Proposes Significant Changes to Medicare Part D Program's Administration," McDermott Will & Emery, January 23, 2014.

 

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