Innovative Models for Lowering Drug Spending

Recently, much has been written about the escalating costs of drug prices in the US. Increasing drug prices are present challenges to those who struggle with affordability and access to their medications. The Inflation Reduction Act brought changes to the way the Medicare program reimburses for prescription drugs. Last year, President Biden challenged the Center for Medicare and Medicaid Innovation (CMMI) to develop and test new payment models that can support value-based payments and promote high-quality healthcare.

CMMI has recently proposed three models intended to improve affordability and access to drugs as well as measuring the feasibility of implementation.

1. The Medicare High-Value Drug List Model

Under this model, Part D plans would be encouraged to offer a low, fixed co-payment across all cost-sharing phases of the Part D drug benefit for a standardized Medicare list of generic drugs that treat chronic conditions. Patients picking plans that participate in the Model will have more certainty that their out-of-pocket costs for these generic drugs will be capped at a maximum of $2 per month per drug.

2.The Cell and Gene Therapy Access Model

This model would have CMS coordinate and administer multi-state, outcomes-based agreements with manufacturers for certain cell and gene therapies (CGT). These agreements could take the form of partial up-front payment for CGT with the remainder based on clinical milestones, risk-based payment where manufacturers pay rebates if clinical outcomes are missed or payments spread over time and based on continued achievement of clinical outcomes. As new therapies come to market, this will help Medicaid beneficiaries gain access to potentially life-changing, high-cost specialty drugs for illnesses like sickle cell disease and cancer.

3. The Accelerating Clinical Evidence Model

Allowing CMS to develop payment methods for drugs approved under accelerated approval, in consultation with the Food and Drug Administration, is the goal of this model. Encouraging timely confirmatory trial completion and improving access to post-market safety and efficacy data has the potential to reduce Medicare spending on drugs that have no confirmed clinical benefit.

These models are all in their preliminary stages and CMMI plans to further develop and test each of these models. They have committed to engaging with stakeholders, including beneficiary and caregiver advocacy groups, manufacturers, health insurers, health care providers, academic institutions and researchers, and other interested parties for feedback and input.

Read the full CMMI report here: https://innovation.cms.gov/data-and-reports/2023/eo-rx-drug-cost-response-report

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