Physician-administered drugs could catch some windfall due to the Inflation Reduction Act’s Medicare Part D redesign.
Much time and energy has been focused on thinking about how drug pricing, rebating and Part D plan design may shift due to changes set to finish taking effect in 2025 including new caps on enrollee out-of-pocket spend and more liability falling on plans rather than taxpayers. (Also see "Medicare Part D Redesign Could Expand Rebate-Driven Formulary Exclusions In Program" - Pink Sheet, 26 January, 2023.)
But a “sleeper issue here is what all of this is going to mean for Medicare Part B drugs,” said Avalere’s Kesley Lang on a January webinar on the health policy outlook for the new year.
“We can expect that with growing premiums, fewer PDPs options, we may see an acceleration of the trend of beneficiaries choosing Medicare Advantage plans, which is going to shift the landscape around affordability, access,” Lang said.
Plans may try to mitigate impacts of the Part D redesign through the potential shift of beneficiaries toward Part B drugs, added Mina Allo.
There has already been a trend toward increased Medicare Advantage enrollment compared to the fee-for-service market, and MA plans have “structural advantages compare to Part D plans in terms of shouldering some of the financial liability shifts brought forth by Part D redesign, which may serve as another tailwind to MA enrollment,” Avalere’s Mark Gooding said in response to follow up questions from Pink Sheet.
“Finally, MA plans cover Part B services covered under [fee-for-service], but have had flexibilities to apply step therapy to Part B drugs in specific instances since 2019. While Part B drugs have traditionally been more likely to be stepped through Part D drugs first, some of the financial dynamics under the redesigned Part D benefit may shift greater access towards Part B treatments in this new environment,” Gooding said.
Allo said it will be important to look at how to capture any of these changes, such as if there are access barriers created for patients for a Part D product relative to competition that may fall into the Part B benefit.
Of course it is hard to know exactly how all of this will shake it. A greater shift toward Medicare Advantage could create other challenges for Part B drug manufacturers given the greater utilization management in that program. (Also see "Part D In 2024: Premium Increases, Shrinking Choices Signal Early Impact Of IRA Redesign" - Pink Sheet, 5 January, 2024.)
And given the Part D redesign there may be some reasons for seniors to think more about sticking with those standalone plans if they can.
“While many Medicare Advantage members benefit from a $0 premium and some of the enhanced services, there comes a rather steep out of pocket responsibility in your Medicare Advantage benefit. And we now have a Part D benefit that has introduced a $2,000 out of pocket cap, which is substantially lower than Medicare Advantage out of pocket cap,” said Avalere’s VP Lance Grady.
