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CMS Outlines 3 New Drug Pricing Models Targeting Wide Scope of Therapies


Targeting everyday chronic conditions to rare diseases that require costly, sometimes 1-time treatments, CMS Tuesday announced an intent to test 3 new models in an effort to lower drug prices and widen access to expensive, life-changing therapies for patients in Medicare and Medicaid.

Targeting everyday chronic conditions to rare diseases that require costly treatments, CMS Tuesday announced an intent to test 3 new models in an effort to lower drug prices and widen access across Medicare Part D, Medicare Part B, and Medicaid.

HHS said the proposal, released in a report, is in response to President Joe Biden's executive order in October, 2022, directing the Center for Medicare and Medicaid Innovation, now called the Innovation Center, to come up with ways to lower drug costs while ensuring high-quality care.

The 3 proposed models would create a list of generic drugs in Part D capped at $2; create outcomes-based agreements in state Medicaid plans; and change Part B reimbursement for therapies approved under the FDA's accelerated approval process, where therapies for diseases with high unmet need may not have their confirmatory trials finished by the date the drug makers originally said they would be.

The first model, called the Medicare $2 Drug List or the Medicare High-Value Drug List Model, would encourage Part D drug plans to offer a low, fixed co-payment for a standardized list of generic drugs that treat 150 chronic conditions, such as hypertension and hyperlipedemia. This model would be voluntary.

The second model, called the Cell and Gene Therapy Access Model, envisions state Medicaid agencies working with CMS to coordinate and administer multi-state, outcomes-based agreements with drug makers for certain cell and gene therapies, such as sickle cell therapies and hemophilia, as well as cancer.

This model could launch in 2026, CMS said.

The concept for the third model stems from concerns that some therapies being used on patients through an accelerated approval pathway (AAP) are not always being vetted with robust, final, clinical evidence.

Under the proposed Accelerating Clinical Evidence Model, CMS, working with the FDA, would develop payment methods for drugs approved under AAP in an effort to reduce Medicare spending on drugs that have no confirmed clinical benefit. CMS said it wants to "encourage timely confirmatory trial completion and improve access to post-market safety and efficacy data."

"As of May 2022, 104 out of the 278 drug applications approved through AAP have incomplete confirmatory trials, 35 (34%) of which have at least one trial past their originally planned confirmatory trial completion date," according to the HHS report. "From 2018 to 2021, Medicare and Medicaid together spent an estimated $18 billion on AAP therapies that were past their originally scheduled confirmatory trial completion date. Given the increasing number of AAP approvals, some experts are concerned the number of past-due trials may continue to increase."

CMS also outlined 3 areas that need additional research, with an eye towards possible future models, including for biosimilars, price transparency in precription drug pricing, and cell and gene therapy access for Medicare fee-for-service beneficiaries.

For biosimilars, 3 possible ideas for future research are:

  • aligning biosimilar cost-sharing and payment incentives for providers and beneficiaries
  • creating shared savings arrangements and/or payment bundles for therapeutic classes
  • adjusting payment methods to increase competition and promote investment in biosimilar development.

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