This past August, the release of negotiated Maximum Fair Prices (MFPs) for ten highly utilized drugs in Medicare marked an inflection point within a broader attempt by the federal government to increase access to prescription medications. In creating the Inflation Reduction Act (IRA), Congress included policies to increase treatment access for Medicare beneficiaries, including a $2,000 annual cap on out-of-pocket costs and a policy that allows patients to spread Medicare copayments out over the course of the year.
These policies could prove lifechanging for patients. However, if drug price negotiation continues without guardrails in place to protect beneficiaries, it may in fact impede the policies’ effectiveness in lowering barriers to care. Without adequate oversight from the Centers for Medicare & Medicaid Services (CMS), the Medicare Drug Price Negotiation Program (MDPNP) could upend how insurers manage prescription drug benefits to the detriment of older adults and other Medicare beneficiaries. To ensure patients receive the intended financial relief from these policies, CMS must use existing regulatory authority to implement vital plan oversight and take action to develop monitoring and feedback systems within the negotiation program.
Barriers To Treatment Access For Older Americans
Ninety-five percent of Americans aged 60 and older live with at least one chronic condition. Once patients have worked with their provider to find an effective treatment regimen for their condition, a process that can take months or even years, they frequently face additional barriers to access that care.
High out-of-pocket costs or administrative obstacles force many patients to skip or delay treatment. Seventy-five percent of Americans struggle to adhere to their prescribed treatment plans and experience worse health outcomes as a result. When out-of-pocket costs reach more than $75, more than 25 percent of patients abandon their treatment at the pharmacy counter. Oftentimes, treatment nonadherence can be traced back to the presence of utilization management (UM) restrictions – protocols instituted by health plans that require patients to meet certain guidelines before they can access their prescribed treatment. In the interest of cost containment for insurers, these complex policies often block or delay a patient’s ability to access their treatment by requiring the patient and their provider to jump through burdensome administrative hoops.
Common UM tactics include prior authorization, where a plan requires beneficiaries to secure separate approval before an insurer will cover the treatment, and step therapy, which requires beneficiaries to “fail” on one or more lower-cost therapies before they can “step up” and access their provider-recommended treatment. Physicians surveyed by the American Medical Association (AMA) reported care delays for 93 percent of patients whose treatment required prior authorization, while 1 in 4 physicians reported that prior authorization had caused a serious adverse health event for a patient in their care.
Balancing Cost With Patient Access
By setting a cap on annual out-of-pocket costs and allowing Medicare beneficiaries to set up a monthly “smoothing” payment mechanism, CMS has demonstrated a commitment to improving beneficiaries’ access to prescriptions and medical services. A recent report from Manatt Health and the Alliance for Aging Research, however, reveals how other policies intended to improve the Medicare Part D prescription drug program may ultimately fall short and actually restrict patients’ ability to access timely and effective care, particularly by incentivizing greater use of UM tactics.
By empowering Medicare to negotiate the cost of certain medications directly with drug manufacturers, the MDPNP shifts financial risk to insurers and will decrease their expected revenue. Beyond drug price negotiation, the IRA’s redesign of the Part D benefit could further influence health plans to implement programs that are outside of the best interest of patients. With the redesign, health plans’ financial liability in the catastrophic phase of coverage, when a beneficiary’s out-of-pocket spending reaches $8,000, increases from 15 percent in 2023 to 60 percent in 2025. To make up for these expected profit losses, insurers are likely to prioritize coverage of higher-rebate drugs, encourage patients to choose products without negotiated prices to maintain their rebate revenue, or limit the overall number of covered drugs despite the resulting increase in out-of-pocket costs or access barriers it could create for patients.
Enhancing Patient Care Through Regulatory Action
Existing regulatory authority allows CMS to ensure that all provisions within the IRA bring meaningful relief to patients – without waiting for additional legislative or executive action to do so. CMS can act now to increase insurer oversight and protect Medicare beneficiaries from detrimental health plan practices.
Before the start of each plan year, prescription drug plan (PDP) sponsors must submit formulary files for CMS to review. These files define the drugs the plan will cover, categorize them into preferred and non-preferred tiers, and outline any necessary utilization management or step therapy protocols associated with these drugs.
CMS’ existing review process for these formularies seeks to ensure that plan sponsors cover at least two drugs per therapeutic class or all drugs within the six protected classes to ensure that patients have access to a diverse array of medications to treat their conditions. CMS also has the authority to set minimum quality and coverage standards for plans participating in Medicare Part D, require adequate coverage of drugs commonly prescribed to beneficiaries, and regulate which drugs can be designated as specialty treatments through this formulary review process.
If drugs selected for price negotiation are deemed “non-preferred,” assigned to a higher tier, or subjected to more restrictive UM protocols compared to other drugs in the same class on a plan’s formulary, they become much more difficult for patients to access. To ensure that patients do not face any administrative hurdles or financial barriers to access care, CMS currently has the regulatory authority to require sponsors to provide a “reasonable justification” for formulary placement based on clinical factors such as the superiority or equivalence of the drugs and compliance with applicable regulations.
Looking Ahead
For many older Americans, treatment delays and interruptions are not simply an inconvenience — they can cause negative immediate and long-term health consequences, lead to even higher medical costs through extra doctor appointments, hospitalizations, and emergency room visits, and curb their independence.
CMS must exercise its authority to increase transparency and safeguard patient access to medications, while moving forward to create feedback and monitoring systems, such as a formalized public “watchlist” to enable patient input and mitigate UM burdens as they arise. CMS could publicly identify specific formulary designs and UM practices as problematic and announce that it will be monitoring for similar instances in the future. This proactive approach would allow the agency to help prevent similar plan designs from being submitted and demonstrate its commitment to protecting patient access. Any prescription drug plan repeatedly submitting formularies needing correction could be required to implement a corrective action plan.
Through active monitoring and grievance processes, CMS can gain valuable insights into real-time access challenges, ensuring that these mechanisms are streamlined to help beneficiaries navigate coverage disputes effectively. Otherwise, these discriminatory practices will impede forward progress and severely limit older adults’ and other underserved patient communities’ access to current and future breakthrough treatments.
Author’s Note
The author is the Director of Public Policy and Government Relations at the Alliance for Aging Research, the leading 501(c)(3) nonprofit organization dedicated to changing the narrative to achieve healthy aging and equitable access to care, which receives funding from corporations, foundations, nonprofit organizations, and individual donors that are actively involved in efforts to advance the science of aging and health. She works directly with congressional staff and key federal agencies, including the Food and Drug Administration and Centers for Medicare and Medicaid Services, to ensure that laws and regulations reflect the voice and the priorities of older adults.
