Taking a Step Toward Lower Drug Prices

Taking a Step Toward Lower Drug Prices

Some drug prices should be lower for patients following recent changes to physician-administered and Part B medications.

The Centers for Medicare & Medicaid Services (CMS) announced in August that Medicare Advantage (MA) plans will have the ability to use step therapy for these prescriptions in a manner that serves to reduce costs and improves care for Medicare beneficiaries.

Effective January 1, 2019, MA plans may start utilizing step therapy to manage Part B drugs (those medications you get at a doctor’s office or hospital outpatient location).

Understanding Step Therapy

The term “step therapy” generally means first attempting to use lower-priced drugs to remedy a health condition. If the more cost-effective medication does not work, more expensive drugs are utilized.

If you take a generic medication that does not work, your physician may prescribe you another relatively cost-effective drug. If that medication does not work, the doctor then prescribes a third, more expensive drug. You then discover the prescription requires step therapy.

Your insurance plan will need to determine that you’ve tried less expensive drugs before it covers the more expensive medication. In order for the plan to cover the drug, you must follow the appropriate step therapy steps when required to do so – or risk your plan not covering the drugs at all.

If step therapy is needed, the pharmacist should inform your physician to see if there’s a medication that does not require step therapy.

How it Helps Medicare Beneficiaries

With Part B guidelines, traditional Medicare usually pays clinicians a set percentage above the sales price for biologicals and drugs given in a doctor’s office. This formula does not allow for much price negotiation on the drugs. Previous CMS guidelines did not allow for plans to use prior authorization for Part B drugs and also banned step therapy.

With the rescinding of this practice, patients in MA plans will get better deals on medications, while the average sales price for Part B drugs may also decrease, passing saving on to individuals with traditional Medicare.

MA plans will continue to cover Part B plans that are determined to be medically necessary, as step therapy will only be applied to new prescriptions of Part B drugs for patients who are not receiving the affected drugs. As a result, no beneficiary currently receiving medications under Part B must change drugs.

Click here for more information on the changes to MA plans.