Center Comments on Drug Pricing (RIN 0991-ZA49)

July 16, 2018

Via Electronic Submission: Regulations.gov

U.S. Department of Health and Human Services
200 Independence Avenue S.W.
Washington, DC 20201

RE: RIN 0991-ZA49 Comments to HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs

The Center for Medicare Advocacy (Center) is pleased to provide comments on the HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. The Center, founded in 1986, is a national, non-partisan law organization that works to ensure fair access to Medicare and quality healthcare. At the Center, we provide education and advocacy on behalf of older people and people with disabilities to help secure fair access to necessary health care. We draw upon our direct experience with thousands of individuals to help educate policy makers about how their decisions affect the lives of real people. Additionally, we provide legal representation to ensure that people receive the health care benefits for which they are eligible, and the quality health care they need.

While we generally support reducing drug costs through both legislative and administrative means, we are concerned that many of the ideas in the RFI are not directed at the fundamental issue of high manufacturer prices. Instead, the proposals would likely shift significant costs from one payer to another, and the ultimate impact of each of the ideas may be, at best, no direct improvement for beneficiaries and, at worst, lead to an increase in out-of-pocket costs.

With respect to input in crafting prescription drug policies, HHS must include a diverse group of stakeholders before, during, and after implementation.  Beneficiary and stakeholder participation is critical for several reasons. By exploring the perspectives of people with Medicare, HHS can better design policies that meet the needs, abilities, and desires of affected populations. People with Medicare and their families and caregivers may be better able to identify participation barriers they might face and engaging stakeholders leads to more buy-in.

General Comments – Medicare

The Center has long advocated for fair drug pricing, not only to help Medicare beneficiaries afford needed drugs, but to help the Medicare program’s finances and expand access to affordable drugs for the broader population.  Even with drug coverage through Medicare Part D, many people struggle to – or simply cannot – afford their medications. Given that Medicare beneficiaries are severely impacted by the rising cost of prescription drugs, the health care needs of older adults and people with disabilities should be at the center of these efforts.

We are very concerned about proposals that, on balance, favor plan sponsors and their flexibility over beneficiary access. It is critically important for the agency to balance the goal of plan flexibility with ensuring beneficiary access and protections. The beneficiary should be the center and focus of the Medicare program.   Finally, any Part D cost savings realized with this blueprint could also result in disproportionally higher costs for Medicare Part A, Part B, and Medicaid.

Specific Comments – Medicare

Shifting Part B Drugs to Part D

We are very concerned about the impact of such a shift on all Part D beneficiaries, not just those directly impacted by a drug change. Depending on the scope of the change, movement to Part D could increase premiums for all beneficiaries and subject many beneficiaries to higher out-of-pocket (OOP) costs due to the benefit design of Part D.

In addition, such a shift would be operationally complex for beneficiaries and their Part D plans. We are also concerned beneficiaries could experience delays in receiving treatment. Another potential issue is that many beneficiaries do not have Part D. This policy attempts to address a problem (provider incentives to select a more expensive product) that may, in fact, not be a widespread issue.

Further, shifting Part B drugs to Part D could result in some beneficiaries having to “brown-bag” or “clear-bag” with their therapies—having them delivered to home or picking them up from a pharmacy and bringing them to their physician’s office. In these cases, the provider cannot confirm the chain-of-custody of the drug or verify that the drug was handled or stored appropriately, which could harm the beneficiary; for example, by leading to an adverse drug reaction, or a waste of drug needing to be thrown away. Therefore, in this case, even if the cost to the beneficiary is less, the total cost to the system could be more.  The impact of moving some drugs from Part B to Part D would not be uniform. We strongly encourage HHS to complete further analysis to ensure beneficiaries would not have increased out-of-pocket costs.

Eliminate cost-sharing on generic drugs for low-income beneficiaries

The Center strongly supports the elimination of cost-sharing on generic drugs for low income beneficiaries. As the administration suggests, this would encourage beneficiaries to utilize lower priced drugs, in addition to lowering out-of-pocket costs for beneficiaries. Low income beneficiaries are disproportionately impacted by cost-sharing. In one particular study, individuals with prescription drug co-payments in low-income areas were more likely to stop taking their medications then individuals in high-income areas.[1]

Further, we urge HHS to support increasing or removing the asset test for the low-income subsidy (LIS). The asset test unfairly penalizes low-income beneficiaries for putting aside modest savings for retirement and emergency expenses, forcing them to spend down their assets. Thus, many people with minimal income remain ineligible for this crucial cost-sharing assistance. This change would also simplify the application process for LIS, and thus reduce administrative costs. 

In addition, HHS should also support making funding for Medicare low-income outreach and enrollment permanent and increase the annual allocation. This funding is used to target beneficiaries who are eligible for LIS (and Medicare Savings Programs) but have not applied to the program.

Establish a beneficiary out-of-pocket maximum in the Part D catastrophic phase

The Center strongly supports establishing a beneficiary out-of-pocket (OOP) maximum, which could be established independent of other pieces of the five part proposal. Such a limit would reduce OOP costs for the 1 million beneficiaries who reach the catastrophic phase and do not have LIS. Research shows that mean OOP costs have increased significantly in the catastrophic phase – thus, an OOP maximum is a critical avenue to lower OOP costs for beneficiaries.[2] An OOP maximum would also allow beneficiaries to adequately plan their expenses for the coming year, as those with high OOP costs would know that their OOP costs are limited.

Increase Part D plan formulary flexibility

We have significant concerns with HHS’ proposal to increase formulary flexibility, by adjusting the requirement to cover at least 2 drugs per category and class, and to use utilization management tools within the six protected classes.[3] We strongly support the existing policy requiring all Part D sponsors to cover 2 drugs per category and class and all drugs within the 6 protected therapeutic classes of clinical concern. Altering these protections could lead to overly restrictive formularies that could limit beneficiary access to vital, life-saving medications.

General Comments – Medicaid

The Center is also concerned about the Medicaid program and the millions of Americans who rely on it for their health and well-being.  The Medicaid Drug Rebate Program (MDRP) is highly successful in significantly reducing Medicaid prescription drug costs, while ensuring access to needed prescription drugs for low-income individuals and families who rely on Medicaid today.  It is thus achieving the intent of the Drug Rebate Program, when it was enacted in 1990, to make prescription drugs much more affordable for state Medicaid programs and low-income beneficiaries by ensuring that Medicaid gets among the largest discounts, and thus among the lowest effective prices, available to any payer.  Medicaid obtains rebates that are far larger than those in Medicare Part D and in private insurance.  We would encourage HHS to improve and strengthen the Medicaid Drug Rebate Program, not weaken or undermine it.

HHS should reject any policy proposals that would have the effect of weakening or undermining the Rebate Program, which would result in higher state Medicaid drug costs, such as proposals to allow some states to opt out of the Rebate Program, repeal Medicaid drug rebate improvements included in the Affordable Care Act and eliminate or weaken the Rebate Program’s “best price” requirement.  HHS should also reject Medicaid drug pricing policy proposals that could have harmful effects on access to needed prescription drugs among low-income beneficiaries, including millions of children and families and people with disabilities.

General Comments – Affordable Care Act

The Affordable Care Act (ACA) did much to expand the population of consumers with insurance and a prescription drug benefit. All qualified ACA plans must include access to prescription drugs as one of the ten Essential Health Benefits (EHBs). The ACA also made is easier for Medicare beneficiaries to access prescription drugs by reducing the donut hole’s cost-sharing burden.

The ACA is the law of the land, and the Administration is legally obligated to implement the law. We have consistently raised concerns about action the Administration has taken to undermine the ACA and adversely impact the care of millions of consumers. Most concerning have been cutting the ACA enrollment period in half; slashing funding for enrollment assistance; refusing to participate in enrollment events; shutting down www.healthcare.gov during critical times; refusing to pay cost-sharing reductions; and allowing sale of inadequate insurance plans such as short-term limited-duration insurance.

We have serious concerns about any plans that could weaken the ACA’s guaranteed consumer protections, raise costs and destabilize the market. All endeavors to weaken ACA essential health benefits (EHBs) requirements- especially access to prescription drugs – must be rejected. ACA requires insurers to cover essential health benefits which include access to prescription drugs. These benefits are critical for the health and well-being of millions of consumers, including people who are older or have disabilities.  Before the ACA, consumers often did not have prescription drug coverage that is now covered as an EHB.

General Comments – Innovation, Access and Pricing   

In addition to any administrative action, legislation is required to meaningfully address prescription drug costs.  We support the Improving Access to Affordable Prescription Drugs Act (S. 771) that, among other things, would increase industry transparency, allow the Secretary of HHS to negotiate Medicare prescription drug prices and reward innovative drug development.

We have been strongly urging Congress to restore Medicare prescription drug rebates. Medicaid rebates have already proven to be successful in lowering drug prices and increasing government savings. Restoring Medicare rebates, as outlined in the above-referenced bill, is a reasonable solution to growing costs and leaves little uncertainty in determining its effectiveness.

Finally, we offer the following principles excerpted from the Center’s Comments on Prescription Drug Pricing Reform submitted to the Senate Finance Committee.[4]

Value

The concept of value must be paired with the need for patient access. Nevertheless, patient access adds little value when the prescription drug is equally or less effective than competing drugs and higher in cost. Adopting policy relating to the use of cost-effectiveness research could open access to information that would allow for measuring a prescription drug’s value, factoring in effectiveness and price, in the treatment of illnesses. In this context, we also believe a greater examination should be undertaken to ensure that the price of a breakthrough prescription drug is not being arbitrarily inflated based on market exclusivity rather than the value that a drug actually brings to a patient’s treatment. Lastly, we are supportive of policy that interprets the value of prescription drugs without factoring in marketing costs.

Market Exclusivity

Greater examination of market exclusivity and incentives for innovation can be aided by greater transparency of the development costs of prescription drugs. With pharmaceutical companies pointing to research and development costs as the driver of prescription drug prices, increasing transparency will allow consumers to have a better understanding of the reasoning behind a given drug’s pricing. Consequently, better informed clinicians, providers, health care advocates, and patients will then be in a position to exert pressure on pharmaceutical companies to lower prescription drug prices when justified. 

Although we strongly support promoting the development of innovative treatments, the reward of market exclusivity demands greater scrutiny and focus as to what value a drug actually has in treating patients. In this aim, we urge the adoption of tools that increase the transparency of prescription drugs. Greater transparency will not only help answer questions regarding the role that value plays in prescription pricing but, also, will lead to more informed consumers.

Research and Development

Pharmaceutical companies often receive federal funding for researching and developing new prescription drugs. In combination with allowing the HSS Secretary the authority to negotiate Medicare drug prices, the government should be allowed to leverage federally funded research and development to lower prescription drug prices. It is unreasonable to allow pharmaceutical companies to receive taxpayer funds for the research and development of their drugs and, at the same time, allow them to price the public out of seeking treatment through the use of those drugs. 

Conclusion

We appreciate the opportunity to submit these comments. For additional information, please contact David Lipschutz, Senior Policy Attorney (licensed in CA and CT), at dlipschutz@medicareadvocacy.org, or 202-293-5760.