Obama Administration Halts Attack on Medicare Drug Plans

In an abrupt about-face, the Obama administration halted its ill-timed effort to launch an overhaul of the Medicare Part D program and announced it would not pursue changes in some key rules as proposed earlier this year. CMS had issued a proposed rule January 10 to drop “protected” class status for antidepressants and immunosuppressants in 2015, and for antipsychotics the next year, and to limit the number of Part D plans an insurer can offer in each Medicare region. Insurers and pharmacy benefit managers (PBMs) backed the reduction in protected drug classes as a way to gain leverage in negotiating lower prices from manufacturers.

But patient groups lined up with pharma companies in claiming that the protected classes are important in ensuring access to critical therapies. The National Pharmaceutical Council (NPC) noted in comments to CMS that individuals can have very different responses to treatments, and that it can be dangerous to require a patient to switch to a different immunosuppressant when doing well on current treatment.

The even bigger controversy arose from the proposal to limit “preferred” pharmacy networks negotiated by plans. Here, insurers and PBMs cried foul, but pharmacists mounted a national campaign to protect “patient choice.” The critical issue for pharma is that the proposal opened the door for CMS to “revisit” the “non-interference” clause for Part  D, which blocks CMS from “interfering” in negotiations between plans and manufacturers or pharmacists.

CMS principal deputy administrator Jonathan Blum tried to make the case before the House Energy & Commerce Health subcommittee on February 26 that these changes were needed to hold the line on Part D spending; that too many plan choices confuse seniors; and that protected classes encourage over-prescribing and block negotiations for lower prices. But even leading Democrats expressed amazement that CMS was proposing such contentious changes now, when it’s still struggling to fix exchanges, and when Part D universally is praised as highly successful. Former Merck executive Ian Spatz advised CMS in a Health Affairs blog to take notice when hundreds of interested parties “hate what you are doing.”

The administration evidently responded to that advice – and to similar demands from hundreds of interest groups and from Senators on both sides of the aisle, and announced on March 10 that it would drop further consideration of these key changes. In a letter to Congress, CMS administrator Marilyn Tavenner said that given all the complaints and the “complexities of these issues,” the agency would drop further action on proposals to lift the protected class definition on the three drug classes, to alter preferred pharmacy networks, to reduce the number of plans a sponsor may offer, or to set new “clarifications” to the non-interference provisions. And CMS will “engage in further stakeholder input” before advancing changes in these areas in the future.

The agency will proceed with some of its other proposals related to fraudulent prescribing, patient privacy and consumer protections. But the hot-button topics are off the table for now, and CMS can return to the more pressing task of fixing all the problems in launching insurance exchanges and expanding health care coverage.