Federal health agencies have selected three new models that aim to lower drug prices and fulfill President Biden’s executive order targeting drug costs. The models will be tested through the CMS Innovation Center.
Biden directed his administration to lower drug prices in Executive Order 14087, “Lowering Prescription Drug Costs for Americans.” Coupled with provisions in the Inflation Reduction Act of 2022 (IRA), CMS could have significantly more power to negotiate and lower drug prices for many Americans. The IRA gave CMS the ability to negotiate drug prices for Medicare for the first time in history, and the Department of Health and Human Services (HHS) recently released its timeline for implementing the first round of drugs that will be targeted.
“HHS is using every tool available to us to lower healthcare costs and increase access to high-quality, affordable healthcare,” HHS Secretary Xavier Becerra said in a statement. “We are full steam ahead in delivering the cost savings from the President’s Inflation Reduction Act of 2022, and people on Medicare are already feeling the benefits. But as President Biden has made clear, we must build on the new prescription drug law with further action, which is why HHS is implementing these new projects to bring down prescription drug costs.”
The three models selected by Becerra meet the criteria thresholds for affordability, accessibility, and feasibility of implementation. The models include the Medicare $2 Drug List; the Cell and Gene Therapy Access Model; and the Accelerating Clinical Evidence Model.
The Medicare $2 drug list model involves chronic conditions such as high blood pressure and high cholesterol. Many patients with such conditions experience a variance of cost-sharing for generic medications that can have significant benefits. The model will encourage Medicare Part D prescription drug plans to offer a low, fixed co-payment across all cost-sharing phases of the Part D drug benefit for a standardized Medicare list of generic drugs that treat chronic conditions. Patients ideally will pick plans with a $2 cap for out-of-pocket expenses per drug for generic drugs.
The Cell and Gene Therapy Access Model aims to reduce the huge cost of cell and gene therapies, which are emerging areas of medicine that can cost upwards of $1 million. The model has state Medicaid agencies assign CMS to coordinate and administer multi-state, outcomes-based agreements with manufacturers for certain cell and gene therapies. This enables Medicaid beneficiaries to gain access to these life-saving therapies and high-cost specialty drugs.
The accelerating clinical evidence model directs CMS to develop payment methods for drugs approved under accelerated approval, in consultation with the Food and Drug Administration (FDA), to encourage timely confirmatory trial completion and improve access to post-market safety and efficacy data. “This would reduce Medicare spending on drugs that have no confirmed clinical benefit,” HHS said.
Beneficiary advocates, healthcare providers, prescription drug manufacturers and more all contributed by offering input on the models to the CMS Innovation Center.
“These selected models will test strategies to make it easier for Medicare patients to afford and access needed prescriptions at $2 or less, help expand access to cutting-edge cell and gene therapies for people with Medicaid, and help ensure drugs already on the market are safe and effective,” CMS Deputy Administrator and Director of the CMS Innovation Center Liz Fowler, PhD, JD, said in a statement. “We look forward to working on these models and helping to lower drug costs for Americans with Medicare and Medicaid.”
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."