Drug Affordability and Accessibility Report Released by CMS Innovation Center in response to Executive Order 14807- Lowering Prescription Drug Costs for Americans

Drug Affordability and Accessibility Report Released by CMS Innovation Center in response to Executive Order 14807- Lowering Prescription Drug Costs for Americans

In October of 2022, the Biden Administration released Executive Order 14087 – Lowering Prescription Drug Costs for Americans (Executive Order) as a companion piece to several other health cost containment initiatives, including the Inflation Reduction Act of 2022 (IRA).  The Executive Order enhances the efforts already underway in the Administration to improve competition and reduce prices for prescription drugs by tasking the Center for Medicare and Medicaid Services (CMS) Innovation Center with exploring new payment and delivery models to reduce drug costs, while also opening the pathway to innovative drug therapies for Medicare and Medicaid recipients. The combined focus of the IRA, Executive Order, and the Innovation Center, are to reduce the number of Americans who are delaying care, putting off treatment or not utilizing necessary medications due to cost.

Some notable reforms included in the IRA include a phased in cap for out-of-pocket costs at the pharmacy, no cost recommended adult vaccines and a $35 a month cap for Medicare prescription drug plan insulin.

Even more prevalent in recent years are the number of American’s who have reported delaying health care services or not being able to afford medications. In the 2022 Gallup Health and Healthcare poll, 38 % of respondents reported delaying care due to cost. This new data reflects the highest in the polls 22-year trend, and a 12% increase from last year. As the work being done by CMS and other agencies begins to operationalize, it will be interesting to track the impact these combined efforts have not only on health costs, but also equity – as the increases reported were more than double (18% for over $100K household income v 34% for under $40K) in lower income respondents.

The Innovation Center’s recently released study touches on the findings and suggestions for advancing five strategic objectives: advancing health equity, driving accountable care, affordability, supporting innovation and strategic partnerships for system transformation. As directed, the Innovation Center engaged input from experts across CMS and other agencies, as well as external stakeholders to develop the final three affordability and accessibility models. See figure below.

Over the coming years, the Innovation Center will test the following reforms/ approaches.

Model 1: Medicare High Value Drug List
  • Targets Medicare Part D enrollees.
  • Examines whether “providing access to a standard list of high-value generic medications, at stable, predictable co-payments, increase beneficiary adherence to chronic care medications, improve clinical outcomes, and reduce health care costs”[1]
Model 2: Cell & Gene Therapy Access
  • Targets Medicaid beneficiaries
  • Tests whether “a CMS-led approach for administering outcome-based agreements for cell and gene therapy treatments improve beneficiary access and outcomes and reduce health care costs?”[1]
Model 3: Accelerating Clinical Evidence
  • Medicare Fee for Service beneficiaries
  • Examines if “targeted adjustments on payments for Accelerated Approval Program (AAP) drugs accelerate confirmatory trial completion, provide timely information on the safety of the AAP drugs on the market, facilitate withdrawal of AAP drugs when appropriate, and reduce Medicare spending on drugs that do not have a confirmed clinical benefit? [2]

The timeline for development and implementation varies for each model, with some building upon existing systems and others requiring an extended review period that could span years before discernible impact on cost containment is realized. In the short term, policy makers hope this will result in a reduction of beneficiaries who, in the last 12 months, indicate that they, delayed medical care due to cost and “often” or “sometimes” delayed filling prescription drugs due to cost.

[1] https://innovation.cms.gov/data-and-reports/2023/eo-rx-drug-cost-response-report,  at pg. 10

[2] https://innovation.cms.gov/data-and-reports/2023/eo-rx-drug-cost-response-report, at pg. 14

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