New CMS Proposal Includes Prior Authorization and Step Therapy for Part D Drugs

The proposed rule would allow plans to make broader use of prior authorization and step therapy for drugs—including drugs in protected classes—that are covered under Part D.
Kelly Davio
November 27, 2018
As part of the Trump administration’s blueprint to lower drug prices and reduce out-of-pocket spending for patients, CMS this week issued a proposed rule aimed at reducing the cost of Part D drugs.

Under the proposed rule, Part D sponsors would be allowed to exclude drugs from formulary if they represent only new formulations of existing single-source drugs or biologics, and they also are allowed to exclude drugs if their prices exceed a certain threshold over a specified look-back period. These provisions, says CMS, will allow plans to negotiate better prices for drugs, and could save the government $1.85 billion—and save enrollees $692 million in cost-sharing—by 2029.

Furthermore, the rule allows plans to make broader use of prior authorization and step therapy for drugs—including drugs in protected classes—that are covered under Part D.

CMS has already allowed step therapy for Part B drugs, which are physician-administered therapies (including biologics such as infliximab, rituximab, and other infused products). The newly announced proposed rule would create a similar policy for self-administered Part D drugs (including biologics such as pegfilgrastim, etanercept, and adalimumab). 

Under the proposal, only new patients would be subject to step therapy for their Part D therapies, and step therapy requirements would have to be reviewed and approved by a plan’s pharmacy and therapeutics committee. Additional requirements stipulate that plans must continue to cover at least 2 drugs per class.

According to a CMS blog post authored by HHS Secretary Alex Azar and CMS Administrator Seema Verma, step therapy for Part D drugs could include a beneficiary starting treatment with a low-cost biosimilar before receiving a costlier biologic. 

“Some say that allowing step therapy and prior authorization would restrict access to prescription drugs. However, these changes protect patient access, as the Part D program is embedded with strong patient protections,” wrote Azar and Verma. “CMS reviews plan formularies to guard against discriminatory practices, and the agency has in place an expedited appeals process for cases in which a physician recommends an exception to prior authorization or other forms of management.”

Provider groups were quick to respond to CMS’ proposal; the Community Oncology Alliance (COA) issued a statement saying that the push to use step therapy is driven by financial interests, not by the best interests of those receiving medical treatment. 

“Patients are left at the whim of insurance and pharmacy benefit manager middlemen who are more concerned with their profit margins than patient outcomes, side effects, and wellbeing,” COA’s president, Jeff Vacirca, MD, FACP, said in a statement. “Treatment decisions are made by nameless and faceless corporate bureaucrats who are often not board certified in the diseases they are making coverage decisions over,” he added.

Other provisions of the proposal include requiring explanations of benefits to include drug pricing information, requiring plans to adopt real-time benefit management tools that can inform prescribers when lower-cost therapies are available, prohibiting so-called gag clauses in pharmacy contracts, and redefining baseline payments to pharmacies as a means to reduce cost-sharing and out-of-pocket costs for beneficiaries. 

CMS will accept comments on the proposed rule until January 25, 2019.

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