Print Friendly, PDF & Email

January 25, 2018

Submitted via

Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-4180-P

Re: CMS-4180-P: Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses

The Center for Medicare Advocacy (Center) submits the following comments in response to the Centers for Medicare & Medicaid Services’ (CMS) Notice of Proposed Rulemaking (NPRM) referenced above.  The Center’s mission is to advance access to comprehensive Medicare coverage and quality health care for older people and people with disabilities by providing exceptional legal analysis, education, and advocacy. We draw upon our experience in providing these comments.

High prescription drug prices force many Americans, including Medicare beneficiaries, to make challenging decisions about whether they need to ration or skip needed medications. Nearly one-in-four Americans report that they or another family member have cut pills in half, skipped doses, or not filled a prescription because of cost.[1] Older adults and people with disabilities rely on timely access to and administration of their medications.  An inability to afford and access their drugs will lead to worse health outcomes and higher costs, both for beneficiaries and for the greater health care system.

We agree with CMS’ general stated intent to make prescription drugs more affordable for both the Medicare program and its beneficiaries. Federal law which prohibits the Secretary from engaging in price negotiation with drug manufacturers puts the government and individual Medicare beneficiaries in a difficult position. We recognize the levers to control drug spending absent congressional action to, among other things, lift the bar on price negotiations, are very limited and CMS is exploring other options.

However, reducing the cost of drugs must be balanced with maintaining access for vulnerable beneficiaries (including, e.g., cancer patients, people with HIV, people with mental illness, and transplant patients who rely on medication to stay alive). CMS has proposed several changes to Medicare Advantage (MA) and standalone Part D prescription drug plans (PDPs) with the stated goal of supporting health and drug plans’ ability to negotiate lower drug prices and reducing out-of-pocket costs for enrollees.[2] While we agree that the problem of high and rising drug prices must be addressed, we disagree with the agency’s proposed approach, as it could disrupt or even prevent access to needed medications for people with Medicare.  We have significant concerns that these proposals will cause people to lose access to vital medication. 

As explained further below, we oppose the proposed changes. However, if CMS proceeds with such changes, beneficiary protections, particularly the appeals process, plan finder and transition fills must be strengthened, tested and reported on prior to implementation.

II. Provisions of the Proposed Regulations

  1. Providing Plan Flexibility to Manage Protected Classes

Currently, Part D prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs) are required to include on their formularies all of the available drugs in six categories known as the “protected classes”: anti-depressants, antipsychotics, anticonvulsants, immunosuppressants for transplant rejection, antiretrovirals and antineoplastics. The proposed rule would allow plans to limit coverage of these drugs through new utilization management (UM) strategies, such as requiring certain patients to undergo step therapy (ST, aka “fail first”) or obtain prior authorization (PA).

We oppose these proposed changes, with one narrow exception relating to anti-psychotics prescribed in nursing facilities, as discussed below.  The proposed rule runs counter to Congressional intent; the bipartisan protected classes policy was thoughtfully crafted as a necessary means to ensure that high need, complex beneficiaries have access to medications they need that are not easily substituted or when interruptions in drug therapies could have significant individual and public health consequences. For example, choosing the appropriate regimen for HIV treatment is necessarily individualized to patient- and virus-specific factors. Requiring an individual to demonstrate poor adherence or experience a serious adverse event on a regimen that is not recommended by the clinical provider, or delaying access to treatment by imposing unnecessary prior authorization hurdles, will severely harm beneficiaries. Similarly, not ensuring access to the full range of immunosuppressants for a transplant patient runs the dangerous and costly risk of rejection.

This proposal will allow plans to completely exclude protected class drugs from their formularies and add additional hoops for beneficiaries to jump through absent robust safeguards (high functioning exceptions, appeals, transition fills and formulary requirements).

This proposal will create barriers to life-saving medication.  The proposal would allow plans to use more stringent utilization management tools (PA for existing and new start drugs and ST, aka “fail first”, for all six classes) and drop medication from formularies for product hopping or cost increases that outpace CPI-U. Beneficiaries are already face access barriers and this would only make it worse.

The proposed rule says Part D plans can’t do UM in the same manner that commercial plans do (p. 62157).  Available evidence demonstrates otherwise.  For example, a study on anticonvulsant shows more restrictive Part D formularies than commercial plans for this protected class.[3] A more recent study demonstrates that plans are already using UM in the protected classes at a significant rate.[4]  Among other things, the study finds that: tiering is the most frequently employed UM, although prior authorization is also frequently used for protected class drugs; across the six protected classes, plan sponsors employ UM tools at least 40% of the time; the average Part D beneficiary is enrolled in a plan that places drugs from the protected classes on high tiers (non-preferred or specialty) 73% of the time; nearly 60% of the time, beneficiaries are enrolled in plans where drugs in the protected classes require coinsurance; and prior authorization (PA) is required for nearly half of the brand drugs (49%) in the protected classes.

If this proposal is finalized, it will negatively impact individuals with chronic conditions, but would be catastrophic for HIV/AIDS patients.  According to the AIDS Institute, “[t]his proposal runs contrary to current US government HIV treatment guidelines, which state that prior authorizations for HIV drugs ‘result in fewer prescriptions filled and increased nonadherence…. and have substantially reduced timely access to medications.’”[5]  Further, ST is “unheard of for people with HIV due to risk of developing resistance to entire class of medication and potential side effects.”[6]

New Formulations

The NPRM contains a proposal to allow plans to drop new expensive formulations when a manufacturer pulls an old, cheaper formulation off the market “(product hopping”).  This proposal appears to punish beneficiaries for the bad behavior of manufacturers seeking to maximize profit. While we agree this practice is a problem, it should be addressed between CMS and the manufacturer in a way that holds beneficiary harmless, potentially through antitrust litigation.  New drug formulations could be scientifically determined to have superior adherence, safety and/or efficacy, even without unique routes of administration. Rather than allowing plans to decide, coverage of such critical drugs should be based on individual, evidence-based assessments.  In short, CMS must ensure that its attempts to penalize bad actors do not end up harming beneficiaries.

Pricing Threshold for Protected Class Drug Formulary Exclusions

CMS also proposes to allow plans to exclude a protected class drug if the price of the drug were to increase above a certain threshold over a certain period of time. While we agree that such cost increases are extremely concerning, this is a piecemeal and arbitrary approach that could disrupt beneficiary access to needed medications.  The proposed formula as it is currently structured is not adequate. Plans can game a year window very easily.  For example, they can raise the cost of a drug astronomically one year (it then gets excluded) and then not at all for several years following (it gets included).

Formulary exclusion is not the only way to address the rising prices for drugs. We urge CMS and Congress to work with a variety of stakeholders on a comprehensive plan to address rising prices and skyrocketing out-of-pocket costs.  This should be a more targeted approach looking at drugs that are increasing by massive margins (e.g. EPI-PEN and insulin).  CMS should also investigate how this could be effectuated through a rebate or a tax, not through formulary exclusion.[7]

There is insufficient evidence of potential cost savings generated by the proposals, particularly in light of the serious access problems likely to be faced by beneficiaries.  The proposed rule claims that protected classes are driving up cost of drugs for program and beneficiaries. MedPAC, however, says protected class drugs are increasing at the same rate as all Part D drugs, and have even decreased in recent years due to generic use.[8]  Moreover, it is unclear that the proposal would actually lower drug prices. Research by Avalere Health[9] and Pew[10] suggest that the opportunity for savings may be limited, given the already prevalent use of generics in the protected classes. While we appreciate the need to control drug pricing increases, CMS must not do so by impeding access to urgently needed medications.

Furthermore, evidence shows that increased formulary restrictions like those proposed in this rule can negatively impact beneficiary access and adherence to necessary medications, which would drive costs up for the rest of the program.  According to some analysts, profit maximizing Part D plans have no incentive to keep people healthy; rather their incentive is to deny and shift costs to A and B.[11] For example, patients with schizophrenia who relapse may have five times greater annual costs than patients who do not relapse; the same study also found that medication non-adherence was a significant factor in predicting relapse.[12]

Beneficiary protections are not currently robust enough to ensure beneficiary access, and would be even less sufficient under diminished protected class safeguards proposed under the rule. Significant overhaul of consumer protections must be undertaken before any of these proposed changes can implemented.  The proposed rule cites existing expedited exceptions and appeals process, formulary transparency and review, transition notice and supply as protections to ensure access even with increased formulary restrictions.  In short, both our experience and external evidence demonstrate that these protections fall short.

The proposed rule states that the “expedited coverage and appeals process is mature and has proven workable” (p. 62158). To the contrary, the Part C and D appeals system is in dire need of repair. “Workable” is not sufficient and our experience is that beneficiaries often aren’t getting the medications they need under the current system.

The Part D formulary exceptions and appeals process will be especially critical as a number of protected class drugs may be completely excluded from formularies under this proposed rule.  Transparency surrounding appeals data must also improve. As noted by MedPAC, “[a]fter examining Part D’s exceptions and appeals process, we found insufficient data to evaluate how well the process is working for beneficiaries to gain access to needed medications.”  Further, the “plan-reported and IRE data are incomplete and should be interpreted with caution. Not all Part D plan data must be reported, and some that are reported do not pass data validation requirements. Due to the low number of appeals that proceed to the IRE step and issues with the data reported, IRE data are not available or not validated for most plans (74 percent in 2015).”[13]

Part D appeals data we do have isn’t comforting. CMS audits have found that Part D plans have difficulties in the areas of coverage determinations, appeals, and grievances. CMS has repeatedly expressed concern that some Part D sponsors reject claims inappropriately and are not fully compliant with transition-fill requirements. The agency has applied civil and monetary sanctions against several plan sponsors for failure to comply with regulations in areas such as formulary requirements, coverage determinations, and exceptions and appeals processes.  Such lapse must be cured regardless of any future erosion of protected class rules.

Protect Nursing Home Residents from the Inappropriate Prescribing of Antipsychotic Drugs

While CMS generally offers insufficient evidence that protected class policy negatively impacts beneficiary welfare, the rule does cite the current overuse of antipsychotics “for sedation or lack of safety edits” (p. 62156).   One area in which we support the use of some utilization management within the protected classes concerns the inappropriate prescribing of anti-psychotics in the long-term care setting.[14] 

While the Center supports the current rules surrounding protected categories of drugs under Medicare Part D, we have ongoing significant concerns about the inappropriate prescribing of antipsychotic drugs in the long-term care setting, and urge CMS to impose stronger requirements on Part D plans to protect such individuals. Whether or not antipsychotic drugs remain a protected class for Medicare beneficiaries who have a medical need for such drugs is a separate issue from the need to protect nursing home residents from the inappropriate prescribing of antipsychotic drugs.  Establishing long overdue protections for residents does not depend on changing the rules for antipsychotic drugs for people for whom they are medically necessary.

There is no question that antipsychotic drugs are medically inappropriate for the vast majority of nursing home residents who receive them.  The Inspector General conclusively documented in 2011 that hundreds of thousands of residents received antipsychotic drugs and that 83% of the claims were for off-label conditions, including 88% for conditions specified in the black-box warning given to antipsychotic drugs by the Food and Drug Administration (FDA).[15]  The American Geriatric Society’s Beers List of drugs that are inappropriate for older people includes antipsychotic drugs.[16]  The Senate Special Committee on Aging held a hearing in 2011 on the misuse of antipsychotic drugs in nursing homes, Overprescribed: The Human and Taxpayers’ Costs of Antipsychotics in Nursing Homes (Nov. 30, 2011).[17]  

CMS is aware of the problem of the pervasive misuse of antipsychotic drugs in nursing homes and already has the tools to address it.  CMS expressed concern in a 2014 proposed rule, which was never made final, that the use of antipsychotic drugs for nursing home residents “is, in many cases, unwarranted and in others, possibly dangerous.”[18]  CMS also recognized in the proposed rule that “Coverage under Part D is not available for drugs that are not used for a medically-accepted indication” and that “Prior authorization requirements to determine medically-accepted indications should be limited to those drugs for which it is reasonably foreseeable that use for non-medically-accepted indications are likely to occur.”[19] CMS must apply its knowledge and these principles to protect residents.

We urge that Part D rules be amended to:

  • Require plans to implement prior authorization rules for antipsychotic drugs for nursing home residents.  Plans know which plan participants are in nursing homes.
  • Require plans to implement medication therapy management for all nursing home residents who receive antipsychotic drugs.

B. Prohibition Against Gag Clauses in Pharmacy Contracts (423.120(a)(8)(iii)

We support codification of “Know the Lowest Price Act” of 2018 which prohibits network pharmacies from restricting their network pharmacies from informing Medicare beneficiaries that they may be able to receive their drug for less by paying cash rather than through their plans cost sharing.

E. Medicare Advantage and Step Therapy for Part B Drugs

We are opposed to CMS’ policy changes allowing MA plans to utilize step therapy on Part B drugs (first in 2018 sub-regulatory guidance, and now to be codified in this proposed rule). While we recognize that CMS is trying to establish more detailed guidelines and safeguards in this proposed rule, this policy will limit beneficiaries’ access to Part B drugs, including in the treatment of life-threatening conditions like cancer.  As noted by the American College of Rheumatology, writing in opposition to giving MA plans such authority, “[u]tilization management techniques like step therapy prevent and delay important treatments for rheumatic disease patients, which can result in irreversible joint or organ damage. At the same time that medical research is showing that early institution of effective treatment prevents such damage, CMS is instituting a policy that will makes it much more difficult for patients to get this treatment in time.”[20]

CMS suggests that the Part D appeals and exceptions process would be sufficient to protect consumers from the proposed rule’s potential access issues. However, as discussed above, the appeals process is deeply flawed, rendering it an inadequate safeguard. As MedPAC commented in 2018, “[b]eneficiary advocates, prescribers, plan sponsors, and CMS have all noted frustrations with Part D coverage determinations, exceptions, and appeals processes.”[21]

Similarly, as CMS is aware, the Department of Health and Human Services (DHHS) Office of Inspector General (OIG) issued a report in September 2018 entitled “Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials” (OEI-09-16-00410).[22] Among the report’s findings are that when beneficiaries and providers appealed preauthorization and payment denials, MA plans “overturned 75 percent of their own denials.” However, OIG found that during the time period analyzed, “beneficiaries and providers appealed only 1 percent of denials to the first level of appeal.”

In an explanation of why the OIG conducted this study, the agency states:

“[a] central concern about the capitated payment model used in Medicare Advantage is the potential incentive for [Medicare Advantage Organizations, or MAOs] to inappropriately deny access to services and payment in an attempt to increase their profits. An MAO that inappropriately denies authorization of services for beneficiaries, or payments to health care providers, may contribute to physical or financial harm and also misuses Medicare Program dollars that CMS [Centers for Medicare & Medicaid Services] paid for beneficiary healthcare. Because Medicare Advantage covers so many beneficiaries (more than 20 million in 2018), even low rates of inappropriately denied services or payment can create significant problems for many Medicare beneficiaries and their providers.”

As summarized in the report’s conclusion,

“MAOs may have an incentive to deny preauthorization of services for beneficiaries, and payments to providers, in order to increase profits. High overturn rates when beneficiaries and providers appeal denials, and CMS audit findings about inappropriate denials, raise concerns that some beneficiaries and providers may not be getting services and payment that MAOs are required to provide. These findings are particularly concerning because beneficiaries and providers rarely use the appeals process designed to ensure access to care and payment, and CMS has repeatedly cited MAOs for issuing incorrect or incomplete denials letters, which can impair a beneficiary’s or provider’s ability to mount a successful appeal. Additionally, because audit violations will no longer be reflected in Star Ratings, beneficiaries may be unaware of MAO performance problems when selecting a plan. Although CMS uses several compliance and enforcement tools to address MAO performance problems, more action is needed to address these widespread and persistent problems in Medicare Advantage.”

We cannot support weakening beneficiary protections, including access to Part B drugs without being subject to step therapy (aka “fail first”), in misguided reliance on a flawed appeals system. These proposals impact some of the sickest Medicare beneficiaries, who may not have the wherewithal to engage in a difficult appeals process, even if they aware of their right to do so.  Whether or not these proposals move forward, we encourage CMS to work with stakeholders on improvements to the appeals and exceptions process, such as improving information given to beneficiaries at the point of sale.


For the reasons stated above, we urge CMS to withdraw the proposals articulated in the proposed rule and work toward solutions that provide meaningful relief from high drug prices and out-of-pocket costs, rather than approaches that put people with Medicare at risk of losing access to critically important drugs.  

Thank you for the opportunity to submit comments on this proposed rule.  For further information, please contact David Lipschutz, Associate Director/Senior Policy Attorney at or 202-293-5760.


[1] Kaiser Family Foundation, “Health Tracking Poll: Public Opinion on Prescription Drugs and Their Prices” (2016),
[2] 83 FR 62152.
[3]Avalere, “An Analysis of Access to Anticonvulsants in Medicare Part D and Commercial Health Insurance Plans” (June 2013), available at:
[4]Partnership for Part D Access, “Medicare Part D Six Protected Classes Policy” (2018), available at:
[5] The AIDS Institute, Press Release, 11/26/18, available at:
[6] Id.
[7] See, e.g., PEW Trusts Fact Sheet “A Tax on Drug Price Increases Can Offset Costs” (July 2018), available at:, and 2015 OIG report discussing Medicaid clawback provision which allows program to recoup additional rebates when price increases outpace inflation:
[8] MedPAC, June 2016 report available at:
[9] Partnership for Part D Access, “Medicare Part D’s Six Protected Classes Policy: A Balanced Approach to Provide Patients Access to Medications While Allowing Powerful Tools to Control Costs” (2018),
[10] Pew Charitable Trusts, “Policy Proposal: Revising Medicare’s Protected Classes Policy” (March 7, 2018),
[11]“Externalities and Benefit Design in Health Insurance” by Amanda Starc and Robert Town, NBER (August 2016), available at:

[12] Haya Ascher Svanum et al., “The Cost of Relapse and the Predictors of Relapse in the Treatment of Schizophrenia,” BMC Psychiatry 10, no. 2 (2010),
[13] MedPAC, March 2018 report, p. 10-17, available at:
[14] See, e.g., Center Comments on Medicare Advantage and Part D “Transformation Ideas” (April 2017), available at:; these comments were adapted from the Center’s Comments to Notice of Proposed Rule Making (NPRM) CMS- 4159-P (March 7, 2014), available at:
[15]Office of Inspector General, Department of Health and Human Services, Medicare Atypical Antipsychotic Drug Claims for Elderly Nursing Home Residents, OEI-07-08-00150 (May 2011),  (The report understates the use of antipsychotic drugs in nursing homes because it did not address the use of conventional antipsychotic drugs, which are also subject to an FDA black box warning.) 
[16]American Geriatrics Society Updated Beers Criteria for Potentially Inappropriate Medication Use in Older Adults,
[17] See
[18] 79 Fed. Reg. 1917, 1945 (Jan. 10, 2014).
[19] 79 Fed. Reg. 1943.
[20]American College of Rheumatology, Press Release, 8/9/18, available at:  
[21] Medicare Payment Advisory Commission, “Report to Congress: Medicare Payment Policy. Chapter 14: The Medicare Prescription Drug Program (Part D): Status Report” (March 2018),
[22]HHS Office of Inspector General (OIG), “Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and Payment Denials” (September 2018), available at:

Comments are closed.