The Trump administration’s drug cost blueprint looked at the possibility of moving Part B drugs to Part D, a potentially seismic shift in the drug landscape that would face opposition from providers and beneficiaries.

With few details and little traction, it seems unlikely to move forward in the short term. However, a smaller move made by the administration in August may cause some different ripples in the market.

The administration withdrew a 2012 rule that banned Medicare Advantage plans from negotiating for drugs covered under Part B. That move opens a new avenue for drugs to become preferred agents, and it also gives payers a way to push for lower pricing in some high-cost drug classes.

Why Payers Struggle with Part B Drug

Part B drugs are primarily administered by providers. These drugs tend to be the most expensive on the market, although their administration in provider settings makes any utilization restrictions contentious out of fear for disrupting the doctor-patient relationship. Part B covers macular degeneration, oncology, chemotherapy, immunosuppressant, autoimmune, and multiple sclerosis drugs. Because of the setting and the sensitivity surrounding many of these conditions, Part B drugs have been notoriously difficult for payers to manage.

However, the savings that could be achieved through step therapy on Part B drugs requires threading a needle. Macular degeneration drugs are among the most expensive on the market. Adding step therapy for oncology and chemotherapy agents could post greater challenges, especially if Medicare Advantage (MA) beneficiaries have aggressive forms of cancer. Carriers targeting those classes would almost certainly court louder public outcry.

MA plans are required to offer members using Part B drugs a care coordination plan. Plans also have the option to require that a Part D drug precede a Part B drug. Any Part B step therapy would also be limited to one try-and-fail drug, so beneficiaries would not need to try a series of drugs before a physician could administer the drug desired.

The Centers for Medicare & Medicaid Services (CMS) projects the change could save 15% to 20% of the $12 billion annual Part B drug spending. In the short term, those savings could be less than expected. Patients will still be able to appeal and seek exceptions to step therapy. Patients on existing treatments won’t be forced to change, and the two-thirds of beneficiaries who are using traditional Medicare won’t be affected. Members who switch plans to find they have a Part B drug that requires step therapy will be allowed a grace period to switch plans.

CMS is also requiring MA plans to share any savings on these drugs with beneficiaries. What form that will take is not clear, but it could ease beneficiary concerns.

The Part B step therapy move also won’t impact Part D, which would require an act of Congress and remains a non-starter for the pharma industry.

The Potential Impact on Autoimmune Drugs

One class likely to receive insurers’ attention for Part B step therapy is autoimmune drugs, which encompasses rheumatoid arthritis, psoriasis, Crohn’s disease, ulcerative colitis, and several other conditions. This class could be the area most ripe for step therapy to take hold.

Despite dozens of agents, several blockbuster drugs—namely Humira, Enbrel, and Remicade—have dominated market share. Most agents are approved for multiple autoimmune indications, making it harder for new drugs to break through.

It is among the first drug class to see a steady introduction of biosimilars, although none have dented the market share of the leading autoimmune agents. Of the 11 biosimilars approved to receive FDA approval as of June 2018, six are biosimilars of autoimmune drugs (three of Remicade, two of Humira, and one of Enbrel). Autoimmune could serve as a test for other classes in which Part B drugs are getting close to losing patent exclusivity.

Those factors could make autoimmune attractive to plans seeking a discounted first-line agent. MA plans could require members try a biosimilar for one of those drugs first, but one of the blockbusters could just as easily be the front-line agent.

As such, competition could be fierce across some Part B classes to be the drug patients must try first.

Since MA carriers had little lead time before developing 2019 formularies—payers could have more space to negotiate with pharma companies who want their drugs as the front-line agent for the 2020 plan year.

But it will not take long for the market to shift with MA giant UnitedHealthcare already stepping into Part B step therapy for 2019. As anticipated, UnitedHealth has made Inflectra and Renflexis, biosimilars of Remicade, preferred Part B items while Remicade is non-preferred. The same is true for Erythropoiesis-stimulating agents, with biosimilar Retacrit preferred while Procrit and Aranesp are non-preferred (UnitedHealthcare Network Bulletin October 2018).

The impact might not be even across the Part B landscape, but MA plans are unlikely to skip a chance to leverage lower costs from expensive drug classes.

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