Medicare drug pricing order could have ‘significant ramifications’ on LTC pharmacies in long-run: expert

DATE: September 16, 2020

McKnight’s Long-Term Care News 

By Danielle Brown – September 16, 2020

Long-term care pharmacies could soon be facing “significant ramifications in the long run” following an executive order signed by President Trump on Sunday. That directive states that the Medicare program should not pay more for Part D prescription drugs than the lowest price. More still needs to be known about possible effects, experts caution.

The executive order is an extension of a previous one announced in July. The initial plan applied to Part B drugs and Sunday’s move extended the order to include Part D drugs. The move is part of an overall effort to drastically lower drug prices.

The plan directs the secretary of the Department of Health and Human Services to establish demonstration projects under Part B and Part D, respectively, explained Alan Rosenbloom, president and CEO of the Senior Care Pharmacy Coalition. He said the Part B provision concerns “certain high-cost” drugs and biologics, while the Part D provision targets all prescription drugs and biologics.

“In both cases, patients would pay no more than the lowest price, after various adjustments, at which a manufacturer sells the drug or biologic to certain member countries of the Organization for Economic Cooperation and International Development. The Part D provision adds further qualifications and limitations,” Rosenbloom told McKnight’s.

He also noted that both are demonstration projects, not systemic changes across the Part B or Part D programs, and Medicare statute’s “Innovation Center” authority prohibits HHS from implementing key provisions systemically,

“Although HHS does have the authority to waive those provisions as part of a limited demonstration project. It would take congressional action to amend the Medicare statute to make changes systematically,” Rosenbloom explained.

“Also, HHS must complete rulemaking before implementing these demonstration projects. For the Part D project, once the regulations were finalized, it likely would take another cycle of annual Plan Sponsor bids before implementation. As a result, the Part B demonstration could be implemented in late 2021, but the Part D demonstration likely could not be implemented until 2022 at the earliest,” he added.

The impact on drug prices and long-term care pharmacies won’t be known until HHS finalizes the details pertaining to drugs and biologics, and the markets in which the demonstrations would operate, according to Rosenbloom.

“Depending on the details, however, the demonstrations could contribute to lower drug prices for consumers but potentially higher Part D premiums. The potential impact on LTC pharmacies in those markets could be economically significant or benign, depending primarily on the drugs that HHS includes in the Part D demonstration,” he said.