The federal agency that oversees Medicare just released new guidance -- and it has major implications for roughly 50 million Americans who rely on the program for prescription drugs.
The guidance details how the Centers for Medicare & Medicaid Services will impose price controls on more than a dozen common medications. Worryingly, CMS seemingly has no plans to consult doctors about the drugs in question before making pricing decisions.
That's concerning, because the private insurers that administer Medicare "Part D" drug plans will plausibly respond to CMS's decisions by steering patients towards a narrow set of preferred drugs -- and away from other therapeutic options that may better serve individual patients’ needs. In some cases, this could mean only covering medicines selected for price controls, but in other instances, plans may have incentives to impose access restrictions on the price-controlled medicines to maximize profits.
In both cases, narrow and restrictive formularies -- the cost categories insurers use for different drugs -- will impact patients' ability to obtain needed medicines.
Yet CMS evidently has no interest in seeking physicians' expert advice about the clinical differences between many drugs, nor how the agency's decisions will affect tens of millions of patients.
The new guidance affects medicines that will undergo Medicare price "negotiations" in the coming years, with the prices actually taking effect in 2027. So the exact impact of the guidance, and the government price setting, aren't certain yet.
But based on insurer behavior in recent years, that impact is unlikely to be favorable for patients who need access to a broad range of treatment options.
Between 2011 and 2020, the number of Medicare enrollees who signed up for the program's prescription drug benefit grew by nearly 20 million. But at the same time, the share of drugs that were readily available to those patients through Medicare plans declined -- because the insurers that sponsored those plans increased their use of restrictions. In 2011, less than 32 percent of drug compounds were restricted -- either by "prior authorization" and "step therapy" requirements or through outright denials of coverage.
By 2020, over 44 percent of drugs were restricted or excluded. For brand-name-only compounds, the figures were even higher, with more than 68 percent of brand-name drugs facing some restriction that same year.
The government's price-setting will only exacerbate these trends, as insurers increasingly restrict or exclude medicines from plans to narrow their financial liability and respond to the incentives in the system to maximize their own profits.
At best, new restrictions will cause delays in treatment as patients and physicians weed through a bureaucratic gauntlet of authorizations and appeals. But any delay can be devastating for patients, especially those with certain cancers, where each week treatment is delayed can increase the risk of death by 1.2 to 3.2 percent.
At worst, aggressive formulary restrictions could block patients from accessing certain treatments altogether, leading to poorer health outcomes and lower quality of life.
And as insurers increasingly limit which drugs are available, many Medicare beneficiaries who are currently on a particular medication that gets dropped from their insurance plan will be forced to switch to a different, covered one.
Doctors see the harm of this "non-medical switching" firsthand.
A physician's job and duty is to find the most effective medication for each individual patient. It's well documented that drugs in the same therapeutic class aren't fully interchangeable -- and that a drug that works well for one person won't necessarily work for another, or may cause adverse side effects.
Insurance companies and Medicare officials look at patients in the aggregate. The thinking is that if a change is good for the average patient, it's good for everyone. But just like no American family has exactly 1.94 children, no patient is truly average.
The problem with overarching, top-down decisions like CMS's drug price setting is that they often have unintended consequences. Healthcare is an ecosystem, and its inhabitants adapt and evolve. Insurers will do whatever is necessary to preserve their own profits -- even if it means restricting patients' access to clinically necessary treatment options.
That's why it's so important to make physician input a key part of CMS decision-making. Without doctors advocating on behalf of patients, CMS officials could easily overlook the more subtle aspects of clinical care and ultimately harm the very people they're trying to help.
To that end, CMS should ensure plans do not restrict coverage such that it overrides provider prescribing decisions. Plan formulary standards should be tied directly to physician clinical recommendations, but also allow for flexibility so providers can treat their patients as they see fit. CMS should also foster more transparency by mandating that plans publish details on the restrictions they've implemented.
If we don't implement these common-sense reforms, patients will pay a steep price.
Dr. Wolfgang Klietmann is a former clinical pathologist and medical microbiologist at Harvard Medical School.
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