CMS Rolls Out 3 Medicare Drug Savings Models

The models were authorized under an executive order by President Joe Biden to 'complement' drug cost-savings provisions in the Inflation Reduction Act.

The Biden administration on Tuesday unveiled three drug cost-savings models for Medicare enrollees, including a plan to offer Medicare Part D enrollees about 150 generic drugs for $2 a month.

The models, authorized under an executive order by President Joe Biden, "complement" drug cost-savings provisions in the Inflation Reduction Act, Health and Human Services Secretary Xavier Becerra says.

"HHS is using every tool available to us to lower healthcare costs and increase access to high-quality, affordable health care," Becerra said.

"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 picked for testing by the Centers for Medicare & Medicaid Services' Innovation Center are:

• The Medicare $2 Drug List for chronic conditions such as high blood pressure and high cholesterol. Under this model (the Medicare High-Value Drug List Model), CMS says Part D plans would be encouraged 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.
   
• The Cell and Gene Therapy Access Model addresses an emerging – but often prohibitively expensive -- area of drug development that can cost upwards of $1 million. Under this model, state Medicaid agencies would ask CMS to administer multi-state, outcomes-based agreements with drugmakers for certain cell and gene therapies.
   
• The Accelerating Clinical Evidence Model would develop payment methods for drugs approved under accelerated approval, in consultation with the Food and Drug Administration and would also reduce Medicare spending on drugs that have no clinical benefit.

Innovation Center Director Liz Fowler said the 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."  

Fowler told reporters at a media availability Tuesday that the models likely would not take effect until at least 2025.

"Realistically, 2023 Open Enrollment, we've already started down that road," Fowler said. "We haven't even started working with the model yet. And for 20224, the Inflation Reduction Act provisions are still going into effect and so we'll need to make sure that the incentive model is operationally feasible in light of those changes."