Print BCTV: Agree to Disagree -- Debate on impact of proposed Medicare Part D changes on drug access

Agree to Disagree

Transcript of BioCentury This Week TV Episode 181




Chris Holt, Director of Healthcare Policy, American Action Forum

B. Douglas Hoey, CEO, National Community Pharmacists Association

Edith Rosato, CEO, Academy of Managed Care Pharmacy

Andrew Sperling, Director Legislative Affairs, National Alliance on Mental Illness




Rep. Joseph R. Pitts (R-PA)

Rep. Marsha W. Blackburn (R-TN)

Jonathan Blum, Principal Deputy Administrator, Centers for Medicare & Medicaid

Rep. Henry A. Waxman (D-CA)

Marilyn Tavenner, Administrator, Centers for Medicare & Medicaid

Douglas Holtz-Eakin, President, American Action Forum


National Committee for Quality Assurance

Pharmacy Care Alliance

Congressional Budget Office

Centers for Medicare & Medicaid

Kaiser Family Foundation

Social Security Administration



Steve Usdin, Senior Editor




STEVE USDIN: The Medicare drug benefit is popular and consistently under budget. So why does the Obama administration want fundamental changes? And what will those changes mean for seniors? I'm Steve Usdin. Welcome to BioCentury This Week.


NARRATOR: Connecting patients, scientists, innovators, and policymakers to the future of medicine -- BioCentury This Week.


STEVE USDIN: Medicare Part D, the prescription drug benefit, is one of the few government entitlement programs that enjoys broad bipartisan support. Seniors like it. Politicians like it. And it consistently comes in under budget.


So why is the Centers for Medicare and Medicaid Services planning fundamental changes that would cut the number of competing plans in half and eliminate the requirement to provide virtually all drugs for depression and immunosuppressants for transplants? Both Democrats and Republicans on Capitol Hill are demanding answers, like Pennsylvania Republican Joe Pitts, chair of the House Energy and Commerce Committee's Health Subcommittee.


JOE PITTS: I'm at a loss to understand why CMS has proposed these changes and what problems with the Part D drug benefit it is attempting to solve. I don't see how any of these proposals provide tangible benefits to seniors.


STEVE USDIN: CMS principal deputy administrator, Jonathan Blum, defended the proposals to Congress.


JONATHAN BLUM: CMS's proposed rule is a consistent path for us to simplify plan choices, to reduce extra plans being offered by the same plan sponsors.


STEVE USDIN: Community and pharmacy trade groups are standing behind CMS. Patient medical groups, managed care pharmacies, and drug industry trade associations are united in opposition. CMS is reviewing a flood of comments that were submitted just ahead of the March 7 deadline. Today, we're going to talk about protected drug classes and limiting the number of competing plans with Andrew Sperling, an advocate for patients with mental illnesses, and with health policy analyst, Chris Holt.


We'll start with another controversial CMS proposal, changing the way seniors access drugs at the pharmacy. To discuss the pharmacy issues, I'm pleased to be joined by Douglas Hoey, CEO of the National Community Pharmacists Association, and Edith Rosato, CEO of the Academy of Managed Care Pharmacy. Doug, can you explain a little bit, what is the change, and why do you favor it?


DOUGLAS HOEY: The change would result in preferred networks. There's actually several changes in the proposed rule. But one of the biggest ones that's important to community pharmacists and patients that we serve has to do with preferred networks. So right now, seniors are limited as to which pharmacies they can go to for their medications. They can go to any pharmacy they want, but if they go to certain pharmacies, they'll pay more.


Our members, we are concerned that we don't have a chance to be offered the same contracts as some of the big box stores. And so our position is supportive of CMS in this particular regard, in that seniors should have the choice of being able to go to any pharmacy they want. And they should be able to choose which plan that they use with those pharmacies.


STEVE USDIN: So Edith, what's wrong with that?


EDITH ROSATO: Well, the way that the proposed rule and the way that Medicare Part D is outlined patients can access their prescription drugs at any pharmacy. They don't necessarily have to go to a preferred network pharmacy. The trade-off is that they'll pay a little bit more with regard to their premium to go to an outside of a network pharmacy.


But then the bottom line is that CMS and Medicare Part D has been a very, very successful program. If you take a look at the numbers, there's been considerable savings using a preferred network pharmacy. In fact, over the next 10 years, we're scheduled to see about $6.3 billion in savings just by using preferred network pharmacies.


DOUGLAS HOEY: If I may, we disagree with that particular contention. In fact, our analysis has shown, and CMS's analysis has also shown that preferred networks are actually more expensive in many cases, not in every instance, but in many cases, the non-preferred networks. And in fact, CMS has a responsibility, not just responsibility by law not to allow preferred networks if they're costing the government more.


So we've gone through Plan Finder, doing our own analysis. In fact, we did one just recently. Nine out of the 13 different plans that we checked using a common market basket of drugs were more expensive using preferred networks then using the non-preferred pharmacies.


STEVE USDIN: I want to give Edith a chance to respond to that. First, I want to clarify a little bit, so people understand what the preferred network is. And basically, as I understand it, that's a contract between the plan provider and a pharmacy. And they say, if you go to these particular pharmacies that are preferred, you'll get the drugs cheaper, you'll have a smaller copay or something like that.


And then there's a kind of a deal that the plans have with the pharmacies. Is that roughly what it is?


EDITH ROSATO: Yes, it's a contractual agreement between the managed care organization and either the community pharmacy or the mail order facility. And one of the important things we have to keep in mind is that we want patients to have choice, so they can either go to their community pharmacy, they can go to a chain pharmacy, or a mail order facility. The contract provides the provider has to meet certain requirements to be able to contract with a managed care organization.


And we call them standards of care. A lot of the standards of care are wrapped around quality and also affordability. So the bottom line is, what we're trying to do is, we're trying to make it very cost effective for seniors to get their prescription drugs, to have a robust enough network that they can access their prescription drugs in a variety of ways and have that choice, and in addition to that, make sure that the quality of care is there for the seniors.


STEVE USDIN: From the point of view of the seniors, I can understand the community pharmacies, obviously they don't want to get squeezed out or disadvantaged here. From the point of view of the Medicare beneficiaries, what's the difference?


DOUGLAS HOEY: One difference is, it's costing them more money. And again, the plan finder analysis shows it's more costly to go to these preferred networks, not only for the government, but also for seniors. And again, I'll emphasize it's not in every single analysis that's been done, but in several.


STEVE USDIN: We have to agree that you disagree about that.


EDITH ROSATO: I do disagree, because in the analysis that we've seen, actually, the premiums for seniors is, on the average, 21% lower in a preferred network than it is for a non-preferred network. And the bottom line is, the numbers tell the story. If we we're able to save CMS and if we're able to save beneficiaries and taxpayers money in the Medicare Part D program, which we have.


If you take a look at the Kaiser Family Foundation, they actually did a study in 2012 that showed that the CMS Part D program is coming in at 45% less than what the CBO estimates were.


STEVE USDIN: Everybody agrees on that. But there's a contention between the two of you. And we're going to resolve it today, over whether preferred networks save money or not.


DOUGLAS HOEY: Just think how much they would've saved if they hadn't used preferred networks.


STEVE USDIN: We're going to come back and talk about that just a moment. First, Representative Marsha Blackburn and CMS official Jonathan Blum had this exchange about the administration's proposal to reduce the number of Part D plans. More in a moment.


MARSHA BLACKBURN: What would you say to the seniors in my district who like the plan that they have but cannot keep it if you get your way?


JONATHAN BLUM: First is, that CMS, since 2009, has put in place a strategy to reduce the number of extra plans that sponsors provide.


NARRATOR: You're watching BioCentury This Week.




STEVE USDIN: We're talking with Douglas Hoey and Edith Rosato, discussing the Obama administration's proposals to change the Medicare Part D drug benefit. Edith, one of the things that some of the members of Congress said at a recent hearing was that even if this was a good idea, even ones who supported it, said that they thought it might not even be legal for a CMS to do that. What's your view on that?


EDITH ROSATO: That's correct. Actually, the whole spirit of the Medicare Part D program that Congress intended was that it would open up to a competitive marketplace so that there was the ability to negotiate and to increase competition among the marketplace to be able to drive costs down and also improve the quality of care. So our members do believe that it is a violation of the intent of Congress and that the government will not solve the issues. If there are issues at hand, they really should let the marketplace come to the table with CMS to figure out how we can improve upon this program that's already very successful.


STEVE USDIN: Doug, your view on the legality of CMS stepping in and saying that community pharmacists have to be treated equally to the big box chains, essentially and the preferred networks.


DOUGLAS HOEY: Really, a couple things. On the non-interference clause, the original intention of that, in our view, was to prevent the government from negotiating with pharmaceutical manufacturers for rebates. That was the main intention. And in fact, there's different interpretations when you look at the law as to whether or not it applies to pharmacies and plans.


But even setting aside the non-interference clause, you could almost ignore that and say that CMS right now is in violation of the Social Security Act, because preferred networks are only allowed if they cost less than non-preferred pharmacies. And we have evidence as well as CMS has evidence, case after case after case where the preferred networks are costing Medicare more money and they're costing the consumer more money.


So set aside the non-interference argument. And just look at the Social Security Act. And they're in violation of that. So CMS has to decide if they continue to be in violation of the Social Security Act or if they pursue the non-interference clause.


STEVE USDIN: So both of you say that the law is on your side. I'm wondering if you lose -- and one side is going to win, one side is going to lose when CMS acts -- are either of you prepared to take CMS to court over it?


EDITH ROSATO: Well, I would say, first of all, we're kind of looking into the future thinking what's going to happen. And I would say that with the support of the Senate Finance Committee members who also issued a letter to Marilyn Tavenner, who's the CMS administrator, asking for withdrawal of the proposed rule. I think that would be the next step.


Certainly, there's enough groundswell support to ask CMS to withdraw the rule as it is currently and to allow stakeholders to come to the table and figure this out together.


STEVE USDIN: I want to switch to another topic for another couple minutes that we've got here, which is protected classes. I was interested, your organization was one of the very few that's come out in favor of what CMS has done there and said that you favor abolishing protected classes for anti-depressants and immunosuppressants for transplants. Why is that?


EDITH ROSATO: Well, that's because what we're trying to do, ultimately is, we're trying to use the evidence that we'd look at the evidence for clinical trials, medical information. And when we develop formularies, we determine that the best drug for that should be on the formulary is the safest, most effective, and the highest quality for patients.


So we are in favor of disbanding that and allowing these three protected classes that any drug would be paid for in those categories.


STEVE USDIN: Scrapping it for the three others. And Doug, what's your view on the protected classes?


DOUGLAS HOEY: Protected classes, we really have not taken a strong stand on. We do think that if CMS is going to go forward with the protected classes, that they do need to be very cautious in how they implement it, because obviously, patients have to have access to these very critical drugs. But we have not taken a strong stand on that. I would say, though, that the groundswell of emotion around the whole proposed rule, the protected classes is the lightning rod.


CMS, makes changes to the Medicare Part D every single year. They tweak it. They make it better. They improve it. And if protected classes wasn't thrown into this category --


STEVE USDIN: We wouldn't be having a show today.


DOUGLAS HOEY: We probably wouldn't be here today.


STEVE USDIN: Thanks a lot. That's a good set up, because we're going to be talking about protected classes next with Andrew Sperling of the National Alliance on Mental Illness and Chris Holt from the American Action Forum. First, here's Representative Waxman quizzing CMS about eliminating protected drug classes.


HENRY WAXMAN: I take seriously the concerns that have been expressed by patients that removing drugs from the protected classes list will mean that Part D plans may not cover them. And seniors will not be able to get the drugs they need. Give us or your rationale here.


JONATHAN BLUM: The Part D program has many protections built into place -- the appeal systems, transition policy, the very rigorous formulary review that we do.




NARRATOR: Now, back to BioCentury This Week.


STEVE USDIN: We're continuing the conversation about the Obama administration's plans to change Medicare Part D. I'm joined now by Chris Holt of the American Action Forum, and the National Alliance on Mental Illness's Andrew Sperling.


What are the protected classes, and why is it important, in your view, to keep them protected?


ANDREW SPERLING: So back in 2006, when the Medicare Part D program was initiated, CMS, at the time, made the decision that there were six therapeutic categories where they needed an extra protection for patients to make sure that they could access the medications their physician prescribed for them.


And they segregated immunosuppressants, antiretrovirals, antineoplastics, anticonvulsants, antipsychotics, and antidepressants, and told the Part D plans that you need to include on your preferred drug list, your formularies, all or substantially all of those, were the actual words, all or substantially all of the medications in those therapeutic classes, to make sure that particularly for low income, what we call dual- eligible beneficiaries, who are concurrently eligible for Medicare and Medicaid, when they transitioned into the program in January, 2006, to make sure that all the drugs their physicians have been prescribing to them will be covered on those preferred drug lists.


STEVE USDIN: So that transition provision, that's one of the things that CMS says. They say, well, that transition's long over, and they contend that it would be OK to eliminate the protection for antidepressants, for immunosuppressants, and perhaps for antipsychotics. Why do you think that that would be a problem?


ANDREW SPERLING: Well, first of all, we know that there are new patients that come into the program every year. Because they turn age 65, and then non-elderly people with disabilities that qualify for the program that are likely been living with a particular chronic condition, whether it's schizophrenia, whether it's kidney disease, whatever that chronic condition is. And they need access to the medications that they need for their ongoing treatment.


So we have new beneficiaries that come into the program. And then to remove that protection for those that already have it would allow a plan to engage in therapeutic substitution, taking patients that are stable on a particular medication for a complicated illness, with likely medical comorbidities, you want to make sure that that treatment is consistent and that all the drugs that they're prescribed are available on the formulary.


STEVE USDIN: So Chris, from an economic standpoint, CMS says that they might save as much as $720 million over five years by eliminating the protected classes. They contend that there's over utilization as a result of protected classes. Do the numbers add up?


CHRIS HOLT: So CMS thinks about half of their projected savings come from this portion of the rule. What they're not -- they're taking a very, very siloed approach. And they're looking purely at what happens to their costs if they get rid of the protected classes. They're not looking at the impact on the parts of the Medicare program.


So just last week, there was a study that came out from MBER that has made quite a bit of news. And one of the things that they found is that Part D has saved about 8% -- reduced costs by about 8% in other parts of the Medicare program, particularly the part B hospitalization.


STEVE USDIN: So people take their drugs and they don't go to --


CHRIS HOLT: Exactly. So they're not accounting for potential increases in other parts of Medicare.


STEVE USDIN: So what you're suggesting is that if patients aren't able to get the access to the drugs that they need and the protected classes, that they might end up actually going to the hospital and costing Medicare --


CHRIS HOLT: Right. CMS needs to do a much more comprehensive cost analysis of this proposal.


STEVE USDIN: So one of the other things that CMS says is, well, there's an exception process. If there's a drug that a patient really needs, that within seven days their physician can make a request and they can get it through their plan. What would be your response to that?


ANDREW SPERLING: Well, first of all, that's a very complicated process. We don't have a lot of data on the initial stages of the appeals that are done internally to the plan, in terms of how that's working now. And we have the six protected classes in place, so we don't have that system overwhelmed with applications for exceptions and appeals.


That system would be overwhelmed if suddenly not thousands, but typically more than a million Medicare beneficiaries suddenly needed to access that exceptions process, it would overwhelm it. So we believe that's insufficient to provide the protection that's now in place in these six protected classes.


STEVE USDIN: And very quickly, the other contention CMS makes is that -- for example, for antidepressants, there are about 30 drugs that are approved. They say basically, they're all the same. It doesn't matter which one you get.


ANDREW SPERLING: Well, we have numerous studies demonstrating that these drugs vary in both their mechanism of action, in terms of neurochemistry, but especially in terms of the side effect profile associated with each of these individual compounds. And those side effects can be severe, in some cases, and could lead to non-adherence. And that's something that we don't want. When someone's trying to manage a serious condition like depression, they need to be able to adhere to that treatment. And when they are switched to a medication with a different side effect profile that they can't tolerate, their ability to adhere to treatment and avoid hospitalization is at risk.


STEVE USDIN: This was a massively complicated rule. One of the aspects of the rule was the expansion of something called medication therapy management, MTM. What's that about, and what's your position on it?


ANDREW SPERLING: MTM is designed to be an extra intervention for Medicare patients that have three or more chronic conditions. They're taking lots of medications. Not just, say, for depression, but also diabetes and heart disease. And there are lots of drug-drug interactions. And they're likely being prescribed medications by two or three, even four physicians.


So MTM is designed to coordinate that care to figure out which medications work best and avoid complications through drug-drug interactions. Some of these programs work.


What's in the rule is really a massive expansion of this program by lowering the threshold by which medication therapy management would be mandated for Medicare beneficiaries.


STEVE USDIN: And it's lowered the threshold by saying instead of having to have three chronic conditions, you only have to have two chronic conditions, right?


ANDREW SPERLING: Exactly. So it brings in, with the Medicare population, it's older and sicker, it brings in a lot more people. Under this rule, it's projected that 55% of Medicare beneficiaries would be required to participate in medication therapy management.


Now MTM can work for some patients. What we don't yet have are really the protocols and the standards by which these programs should operate. So NAMI has urged in our comments -- CMS consult with accrediting bodies, like the National Committee for Quality Assurance or the Pharmacy Care Alliance, to figure out what are the standards, what credentialing should go on, what outcomes should we demand of these programs to make sure they're really following what we know works, based on clinical research, rather than what someone thinks MTM ought to be.


STEVE USDIN: And Chris, any thoughts about MTM or other aspects of the law -- of the proposed rule that haven't gotten as much publicity?


CHRIS HOLT: I think what this brings attention to is the fact that CMS is dealing in absolutes. There's not a lot of flexibility in this rule. And it's a 700-page rule. It is massively changing the Part D program. And they're proposing it to go into effect in October.


I think CMS needs to take the comment period -- it just closed -- and they need to review those comments. If they want to do some of this stuff, maybe we should look at the 2016 plan year.


STEVE USDIN: So is part of what's happening here that the Obama administration has only got two of these -- two more of these changes that they can make in Medicare, and they're trying to jam as many of them in as quickly as possible?


CHRIS HOLT: It definitely looks like they're trying to rush this through.


STEVE USDIN: And Andrew, what do you think's going to happen come October? What are the political ramifications of some of these changes?


ANDREW SPERLING: Well, we'll see. I'm certainly not much of a political prognosticator. We hope, from NAMI's perspective, the most important thing is to pull back the six protected classes proposal to remove the protections for three of those therapeutic categories. That's the most important thing, in NAMI's view.


STEVE USDIN: So we're going to switch more to another topic, which is steps that Medicare has taken to limit the number of plans that can compete in a specific area, right when we come back.


NARRATOR: Every month, BioCentury This Week will feature Profiles In Innovation, a special segment highlighting the stories of innovators whose work is improving lives and transforming the world of healthcare.




STEVE USDIN: We're with Andrew Sperling and Chris Holt discussing the Obama administration's proposed changes for Medicare. Chris, I want to start with another change which actually is more fundamental maybe than some of these other ones we've talked about but has gotten less publicity. And that's limiting the number of plans that a sponsor can offer in a given region. Can you talk about what that is and why you think it's important?


CHRIS HOLT: Yeah, so what CMS is proposing doing is narrowing -- they've narrowed this several times now -- but narrowing from three plans to two plans the total number of plan options that a provider can offer in a geographic region. The argument that CMS makes is that seniors are confused. They end up in the wrong plan.


They don't know. There's too many choices. Today there are about 23 choices, at least 23 choices in every geographic region. CMS doesn't think that seniors can handle that, never mind that CMS has a plan finder on their website, that every plan provider has services to help people end up in the right plan.


But let's take a step back and look at why the Part D program has been so successful. And it's because of the competition that was built in between these plans in the market and between these plans, and the pharmacies, and the pharmaceutical manufacturers. My boss, the former CBO director Douglas Holtz-Eakin, was CBO director at the time and projected that in 2012, the cost for the Part D program would be $122 billion. In actuality, that came in at $55 billion.


STEVE USDIN: So Doug Holtz-Eakin was --


CHRIS HOLT: Was very wrong.


STEVE USDIN: -- was very wrong.


CHRIS HOLT: And he's happy to tell you that.


STEVE USDIN: So Andrew, what does it mean for patients to have limited -- do you think that this issue of Medicare beneficiaries being confused by the number of plans is a legitimate one?


ANDREW SPERLING: In our view it's not. And the reason is because not every Medicare beneficiary has the full choice of plans available. Those that are low income, below 135% of the federal poverty level who get what's called a low-income subsidy or extra help and those that are concurrently or dually eligible for Medicare and Medicaid, they can't choose any plan they want.


In order for them to maintain a $0 premium to have Medicare Part D be affordable to them, they can only pick a plan that's at or below what's called the Regional Benchmark, essentially the median plan. So they can't pick an expensive plan because their coverage is so heavily subsidized.


So since 2007 and again in 2011 when CMS changed the rules to limit the number of plans below Benchmark that an individual sponsor could bid on, that's dropped from well over 600 to now less than 200, so essentially a huge drop in the number of plans available. So the problem with these beneficiaries is the changes that CMS has already made in terms of limiting the number of plans available for these low-income beneficiaries has already had some adverse consequences.


And many of these beneficiaries have to switch plans every year because their plan moves above the Benchmark. It's what's called auto reassignment. They're essentially involuntary moved from one plan to another. We're concerned that this proposal is going to result in more of these auto reassignments.


And it can be sometimes difficult for a beneficiary through no fault of their own is suddenly notified by CMS, your plan is not available to you anymore because the premium went up. And we're worried that this rule is actually going to result in more of those reassignments and fewer plans available to low-income beneficiaries.


STEVE USDIN: Chris, we've just got a few seconds. Do you think that's -- is that the way you see it?


CHRIS HOLT: Yeah, absolutely, I think that could be a real problem.


STEVE USDIN: And very quickly, what's your prediction? Is CMS going to go ahead with this rule or are they going to change it?


CHRIS HOLT: Frankly, this would be very politically damaging for Democrats in October to have seniors losing their plans. I can't see that the White House wants to have this fight this year.


STEVE USDIN: Well, we're going to have another show, maybe in October or whenever it is, to find out whether you're right about that. That's this week's show. I'd like to thank my guests, Douglas Hoey, Edith Rosato, Andrew Sperling, and Chris Holt.


Have a thought about today's show? Remember, you can tweet about it using the hashtag #BioCenturyTV. I'm Steve Usdin. I'll see you next week.