Portfolio

What is your perspective on Part D redesign?
Currently (July 2024) there is a significant focus on lowering the out-of-pocket (OOP) costs of prescription drugs, however, it is not entirely clear who pays less within the drug supply chain. The goal is to reduce the prices that patients pay (i.e., close the donut hole), but what does that mean further upstream? If you increase the manufacturer’s contribution, then manufacturers have fewer dollars to spend on research and development (R&D), which results in a concentrated focus on pipeline products that are more certain to provide a good return on investment. This in turn disincentivizes innovation and the pursuit of therapies to address rare diseases.

 

That said, much still needs to be done to improve the cost for patients without stifling innovation and squeezing manufacturers. Innovative solutions that can remedy the upstream effects on manufacturers while preserving access for patients need to be explored. Additionally, shifting a larger burden to payers, by default, leads to an increase in premiums or shifts in tiering so the payers can recoup the additional expenses and/or inhibit access in order to control costs. Meanwhile, we do not foresee additional appropriations being made to increase Medicare's contribution.

 

It is worth noting, the Part D plan design highlights 4 players in drug costs but there are many more throughout the supply chain - mainly PBMs. An interesting opportunity lies in value-based contracting when it is done right. As always, promoting greater transparency and accountability among Medicare Part D plan sponsors helps ensure that beneficiaries receive value for their premiums. This could involve increasing oversight of plan formularies to prevent discriminatory practices or incentivizing plans to negotiate lower drug prices and pass savings onto beneficiaries.

Have you ever worked on policy proposals related to protected class status? Do you see future risk around elimination of protected class status?
I have extensive experience related to Medicare Advantage and Part D drug pricing call letters and rules. This includes providing overviews on the Part D benefit and how it applies to a manufacturer's therapy, and assessing the implications of certain changes in deductibles, copays, or co-insurance on utilization and OOP obligations. I have also analyzed the implications of proposed policy changes on pricing, tiering, and utilization.

 

With respect to anti-depressives and anti-psychotics and with the extreme focus that is being put on mental health right now, eliminating the protected class status would undermine the messaging calling for better access to mental health services and therapies. While components of “revenge politics” may always be at play, it is unlikely that protected class status would be eliminated in the near term. Eliminating protected status could allow plans more leverage to negotiate larger rebates from manufacturers in exchange for preferential formulary placement. However, curbing access in this way threatens patient well-being and could increase medical costs elsewhere in Medicare. The long-term impacts of such a change require careful consideration before implementation. Removing protected class status could also undermine efforts to promote parity between mental health and physical health coverage within Medicare Part D. Ensuring equitable access to mental health medications is critical for addressing the complex needs of beneficiaries with mental illnesses and improving overall health outcomes.

What are some of the big trends you see with respect to formulary design?Formulary design plays a crucial role in shaping the accessibility and affordability of prescription drugs under Medicare Part D. In recent years, there has been a trend towards more restrictive formularies, characterized by the inclusion of preferred drugs and utilization management tools like prior authorization and step therapy. These strategies aim to control costs by encouraging the use of lower-cost medications and promoting more efficient prescribing practices. However, this trend towards restrictive formularies has raised concerns about potential access barriers, especially for beneficiaries with complex medical needs or rare conditions. While formulary management strategies can help contain costs, they must strike a balance between cost control and ensuring access to medically necessary treatments. Plans should rely more on evidence-based formulary development rooted in objective drug value assessment rather than solely cost containment.

 

Moreover, the emergence of high-cost specialty medications has prompted some plan sponsors to adopt innovative formulary designs, such as value-based pricing arrangements and indication-based formularies. These approaches tie reimbursement for certain drugs to their demonstrated clinical effectiveness or specific indications, aligning payment with patient outcomes and promoting the use of cost-effective therapies. Looking ahead, formulary design trends may continue to evolve in response to changes in drug pricing, healthcare delivery models, and regulatory requirements. Plan sponsors are likely to explore new strategies for managing drug costs while optimizing patient outcomes and satisfaction.