CLSA Expresses Concerns with Administration’s Medicare Part B Overhaul

By Jenny Nieto 
December 18, 2018

In October, the Administration unveiled a plan with the intention to lower Medicare Part B costs and medication list prices over 5 years. Specifically, the proposal will set certain Part B drug prices based on an “International Pricing Index” (IPI).  As you may know, therapies covered under Part B are typically those that are injected or infused by a physician or healthcare provider. The proposal also includes reintroducing the Competitive Acquisition Program (CAP), which previously failed to increase competition or lower healthcare costs and was abandoned in 2008, and moving away from the current average sales price plus 6% reimbursement scheme (“ASP+6”) to a flat rate for reimbursement.  Notably, while the demo would roll out to only half of the country, the price drops will purposefully affect the ASP and Medicaid Best Price for everyone, leaving non participating providers without adequate reimbursement for the drugs they purchase.  (See the 61-page Advance Notice of Proposed Rulemaking (ANPRM) here, and a fact sheet available here.)

What this means is that instead of encouraging Medicare beneficiaries to work closely with their physicians to select treatments based on evidence and best practices, this proposed “International Pricing Index” model would import foreign-based price controls, regardless of value or innovation. This model would impose decisions made in countries such as Greece, Japan or Slovakia on approximately half of all independent physicians and hospital providers, as well as their patients. Compounding these concerns, the experiment also interjects new middlemen between physicians and patients – vendors that would impose requirements dictating treatment for patients with cancer, autoimmune disorders and other complex, life-threatening conditions. The proposal would restrict access in the short-term, and reduce incentives for medical advancement in the long-term, ultimately posing serious risks to vulnerable Medicare beneficiaries. Innovation in California’s life sciences sector will also suffer as the model would disrupt biopharmaceutical investment in research and development. Foreign price controls already hinder investment in biopharmaceutical R&D.

CLSA recognizes the significant threat this proposal could cause to innovative biomedical researchers and therapeutic innovators as well as the risk to patient access to therapies, and as such we are engaging thoughtfully and meaningfully to this proposal.

In response, CLSA recently cosigned a letter led by the Part B Access for Seniors and Physicians (ASP) Coalition, expressing concerns about the Administration’s recent proposal to implement an unprecedented Part B demo that could harm Medicare beneficiaries. The letter was sent to bipartisan House & Senate Leadership with an impressive 339 cosigners from across the patient, provider and life sciences communities. CLSA was pleased to support this multi-stakeholder effort, which expresses support of efforts to “strengthen the United States’ health care system through patient-centered reforms that embrace competition, foster the provider-patient relationship, and value transformation” and forcefully details numerous ways the ANPRM is inconsistent with these goals.  This letter is posted on our website.

Additionally, CLSA is currently drafting detailed comments responding to the ANPRM on the creation of an International Price Index and additional reforms to Medicare Part B. These will be finalized and submitted to the Administration before year’s end.

To add your voice to the discussion and weigh in with concerns about this dangerous proposal, visit our grassroots advocacy portal to send a letter to your federal legislator – click here to TAKE ACTION!

By way of additional background, a summary of the Part B proposal is below.

In summary, the proposal outlines the following:

  • Creates an “International Pricing Index” against which US prices will be assessed.
  • Medicare will set Part B payments at a “Target Price” based on the discounts manufacturers offer in other countries – this is estimated to result in “roughly a 30% savings in total spending” for selected Part B drugs in the model
  • Phase-in: The model will be phased in over 5-years
  • Participation: The model will launch in 50% of the country, with the “opportunity to scale up over time”
  • Participants: IPI Model participants would include physician practices and hospital outpatient departments (HOPDs) that furnish the model’s included drugs in the selected model geographic areas. Participation would be mandatory for these participants. CMS is considering whether to also include durable medical equipment (DME) suppliers, Ambulatory Surgical Centers (ASCs), or other Part B providers and suppliers that furnish the included drugs in the model.
  • Payment: Provider payment would change from the current ASP add-on payment to a “set payment amount for storing and handling drugs that would not be tied to drug prices”
  • Products: The IPI model proposes to initially focus on single source drugs and biologicals, and the model will include drugs that HHS “identifies from international pricing data.”  HHS notes that the model “could over time include multiple source drugs and Part B drugs provided in other settings.”
  • Vendors: CMS intends to use a “number of private sector vendors” to supply the drugs, take on the financial risk of acquiring drugs, and bill for the drugs.  Medicare will pay vendors based on the Target Price, and vendors would have “flexibility to offer innovative delivery mechanisms,” such as electronic ordering.

Questions? Please contact Jenny Nieto, CLSA’s Vice President of Federal Government Relations & Alliance Development (