Some physicians andpatient advocates are concerned that the pursuit of lower Part Bdrug prices could endanger very sick Medicare Advantage patients ifthey can't be treated promptly. (Photo: Shutterstock)

Starting next year, Medicare Advantage plans will be able to addrestrictions on expensive, injectable drugs administered by doctorsto treat cancer, rheumatoid arthritis, macular degeneration andother serious diseases.

Under the new rules, these private Medicare insurance plans couldrequire patients to try cheaper drugs first. If those are noteffective, then the patients could receive the more expensivemedication prescribed by their doctors.

Related: Government drug price disclosure confirms it: costsare soaring

Insurers use such “step therapy” to control drug costs in theemployer-based insurance market as well as in Medicare's stand-alone PartD prescription drug benefit, which generally covers medicinepurchased at retail pharmacies or through the mail. The new optionallows Advantage plans — an alternative to traditional,government-run Medicare — to extend that cost-control strategy tothese physician-administered drugs.

In traditional Medicare, which covers 40 million older ordisabled adults, those medications given by doctors are coveredunder Medicare Part B, which includes outpatient services, and steptherapy is not allowed.

About 20 million people have private Medicare Advantagepolicies, which include coverage for Part D and Part Bmedications.

Some physicians and patient advocates are concerned that thepursuit of lower Part B drug prices could endanger very sickMedicare Advantage patients if they can't be treated promptly withthe medicine that was their doctor's first choice.

Critics of the new policy, part of the administration's effortsto fulfill President Donald Trump's promise to cut drug prices, sayit lacks some crucial details, including how to determine when aless expensive drug isn't effective.

“Do you have to lose vision before you are allowed to use”medication approved by the Food and Drug Administration, askedRichard O'Neal, vice president for market access for Regeneron,which makes Eylea, a medicine that is injected into the eye totreat macular degeneration. In 2016, Medicare paid $2.2 billion forEylea prescriptions for patients in traditional Medicare, more thanany other Part B drug, according to government data.

Medicare Advantage insurers spend about $12 billion on Part B drugs, compared to the $25.7 billiontraditional Medicare spent in 2016 on such drugs. Insurers thatadopt the step therapy policy can apply it only to newprescriptions — medicine a patient hasn't received in the past 108days.

The change in policy gives insurers a new bargaining tool: Pharmaceutical makers may want tocompete by cutting prices to get their product on the plans' listof preferred lists, allowing patients to receive the medicineswithout step therapy pre-conditions. That “strengthens theirnegotiating position with the manufacturers,” Medicare chief SeemaVerma said when she unveiled the policy last month.

It could also save patients money since they usually pay aportion of the Part B prescription cost. In addition, Medicare isrequiring plans to share the savings with enrollees.

“Competition is a big factor in price concessions,” said DanielNam, executive director of federal programs at America's HealthInsurance Plans, an industry trade group. But insurers haven't hadmuch leverage to negotiate lower prices for these drugs withoutstrategies like step therapy, he said.

Federal health officials told insurers in a memo last month thatthey could substitute a less expensive Part B drug to treat amedical condition the FDA has not approved it for, if insurers candocument that it is safe and effective. Yet coverage for a Part Ddrug is usually denied for a condition that doesn't have FDAapproval, according to the Center for Medicare Advocacy, whichhelps beneficiaries with appeals.

Several representatives of medical specialty groups recently metwith Alex Azar, the secretary of the Department of Health and HumanServices, to express their concerns.

Dr. Stephen Grubbs, vice president of clinical affairs at theAmerican Society of Clinical Oncology, was among them. He said Azartold then the new step therapy policy would not have a big impacton cancer treatment.

Patients and their physicians who encounter problems gettingspecific Part B drugs can appeal using the “process that we havethroughout the Medicare Advantage program and Part D plans,”advised Verma.

Under this system, if patients don't want to follow theirinsurance plans' requirements to try a less expensive medicationfirst, they can request an exception to step therapy.

“They need their doctor's support,” said Francine Chuchanis,director of entitlement rights at Direction Home, an Area Agencieson Aging organization that serves older adults and people withdisabilities in northeastern Ohio. The physician must tell the planwhy its restrictions should be lifted and provide extensivedocumentation.

The plans have 24 hours to respond to an expedited exceptionrequest and 72 hours for a regular one. During this time, “peopleare going without their drugs,” said Sarah Jane Blake, a Medicarecounselor for New York's StateWide Senior Action Council.

However, Dr. David Daikh, president of the American College ofRheumatology, said plans frequently do not meet the 72-hourdeadline.

“We raised this point with the secretary and his staff,” hesaid. “They replied that they felt that there would not be abacklog for this program.”

If a plan denies the exemption, patients can file a“reconsideration” appeal. During this process, patients still can'tget their medicine unless they pay for it out-of-pocket.

Only a tiny fraction of Medicare Advantage beneficiaries filed areconsideration appeal last year. Of the 3,498 cases that weredecided, just 1 in 10 beneficiaries won decisions fully orpartially in their favor, according to Medicare statistics.

“That's disheartening to say the least,” said Blake, but shewasn't surprised. “Beneficiaries are intimidated by the hoops theyhave to go through and often give up trying to purchase the drugsprescribed for them.”

KHN's coverage of these topics is supported by Laura and John ArnoldFoundation and John A.Hartford Foundation

Kaiser HealthNews (KHN) is a national health policy news service. It is aneditorially independent program of the Henry J. Kaiser Family Foundation whichis not affiliated with Kaiser Permanente.

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