CMS to test new payment models for lowering prescription drug prices

The Centers for Medicare & Medicaid Services (CMS) is testing three new payment models aimed at lowering the cost of prescription drugs and ensuring that more patients have access to them.

In a February 14 announcement, CMS said the new models have been developed in response to President Biden’s “Lowering Prescription Drug Costs for Americans” Executive Order. The order complements the provisions of the 2022 Inflation Reduction Act designed to lower the cost of prescription drugs. The models being tested are:

• The Medicare High Value Drug List model, under which Medicare Part D plans would be encouraged to offer a low, fixed co-payment across all cost-sharing phases of the Part D standardized list of generic drugs that treat chronic conditions. Patients picking plans that participate in the model will have more certainty that their out-of-pocket costs for these generic drugs will be capped at a maximum of $2 per month per drug.
• The Cell and Gene Therapy Access model, under which state Medicaid agencies assign CMS to coordinate and administer multi-state, outcomes-based agreements with manufacturers for certain cell and gene therapies. Its goal is to help Medicaid beneficiaries gain access to potentially life-changing, high-cost specialty drugs for illnesses like sickle cell disease and cancer.
• The Accelerating Clinical Evidence model, in which CMS, in consultation with the Food and Drug Administration, would develop payment methods for drugs approved under the accelerated approval process. The goal is to encourage timely completion of confirmatory trials of new drugs and improve access to post-market safety and efficacy data, thereby reducing Medicare spending on drugs with no confirmed clinical benefit.

“HHS [the U.S. Department of Health and Human Services, which oversees CMS] is using every tool available to us to lower health care costs and increase access to high-quality, affordable health care,” said Secretary Xavier Becerra said in the announcement. “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 testing process will take place through the CMS Innovation Center. Liz Fowler, PhD, JD, CMS deputy administrator and director of the Innovation Center said, “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.”