Obama Administration Halts Attack on Medicare Drug Plans

In an abrupt about-face, the Obama administration halted its ill-timed effort to launch an overhaul of the Medicare Part D program and announced it would not pursue changes in some key rules as proposed earlier this year. The Centers for Medicare and Medicaid Services (CMS) had issued a proposed rule Jan. 10, 2014 to drop “protected” class status for antidepressants and immunosuppressants in 2015 and antipsychotics in 2016, and to limit the number of Part D plans an insurer can offer in each Medicare region. Insurers and pharmacy benefit managers (PBMs) backed the reduction in protected drug classes as a way to gain leverage in negotiating lower prices from manufacturers.

But patient groups lined up with pharmaceutical companies in claiming that the protected classes are

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The even bigger controversy arose from the proposal to limit “preferred” pharmacy networks negotiated by plans. Here, insurers and PBMs cried foul, but pharmacists mounted a national campaign to protect “patient choice.” The crucial issue for the pharmaceutical industry is that the proposal opened the door for CMS to “revisit” the “non-interference” clause for Part D, which blocks CMS from “interfering” in negotiations between plans and manufacturers or pharmacists.

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The administration evidently responded to that advice-and to similar demands from hundreds of interest groups and from Senators on both sides of the aisle-and announced on March 10 that it would drop further consideration of these key changes. In a letter to Congress, CMS administrator Marilyn Tavenner said that given all the complaints and the “complexities of these issues,” the agency would drop further action on proposals to lift the protected class definition on the three drug classes, to alter preferred pharmacy networks, to reduce the number of plans a sponsor may offer, or to set new “clarifications” to the non-interference provisions. And CMS will “engage in further stakeholder input” before advancing changes in these areas in the future.

The agency will proceed with some of its other proposals related to fraudulent prescribing, patient privacy, and consumer protections. But the hot-button topics are off the table for now, and CMS can return to the more pressing task of fixing all the problems in launching insurance exchanges and expanding healthcare coverage.