The Trump administration continues to take steps aimed at bringing down drug prices. CMS Administrator Seema Verma said in an Aug. 29 memo to Medicare Part D plan sponsors that they can begin using indication-based formularies in contract year 2020, AIS Health reported.
Starting in 2020, "Part D sponsors may utilize step therapy-like requirements within their [prior authorization] to promote cost-effective drug therapy by requiring the use of one formulary drug for a certain indication prior to authorizing coverage of a second drug for that indication," explains the memo.
Experts say there are multiple benefits to using indication-based formularies. According to Andrew Cournoyer, R.Ph., vice president at Precision for Value, plan sponsors will have the "ability to negotiate steeper discounts in the specialty space — not tied into a single rate for utilization of a product across multiple indications."
Plans also will be able "to assign a combination of higher payment and/or lower cost share for a treatment used for a particular indication, where evidence shows that this treatment for that indication is likely to yield a better outcome compared to alternative treatments," says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. In addition, for uses of a drug in which evidence offers worse outcomes compared with alternatives, plans can "assign a lower payment and/or a higher cost share," he adds.
The policy, however, has multiple potential downsides and risks. Cournoyer points out that it won't impact the broader population. And Rubinstein questions "what constitutes sufficient evidence to support preference for one product over another as a matter of policy and benefit design, if there are patient-specific variables such as severity, age, mobility, comorbidities or other matters that should be taken into consideration?"
Rubinstein also suggests that another challenge will be how payers can "verify the correctness of a drug written for a preferred indication."