Pharmacy Price Concessions

How it Could Work

For this survey CIDSA experts were given excerpts from the Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs Proposed Rule by CMS. In addition to increasing price transparency and market competition in Medicare Part D, the rule is intended to lower beneficiaries’ out-of-pocket costs by passing some pharmacy price concessions along to the beneficiaries.  

In this proposed rule, CMS separately estimates changes in drug spending for various parties based on whether the proposed definition of ‘negotiated price’ is applied to all phases of the Part D benefit design (including the coverage gap) or only to the non-coverage gap phases. Please note that experts were asked to assess the policy as though the definition would be applied to all phases, including the coverage gap.

Currently, the negotiated price of a drug includes all network pharmacy price concessions except those contingent amounts that cannot reasonably be determined at the point-of-sale. Therefore, according to the proposed rule, “negotiated prices typically do not reflect any performance-based pharmacy price concessions that lower the price a sponsor ultimately pays for a drug, based on the rationale that these amounts are contingent upon performance measured over a period that extends beyond the point of sale and thus cannot reasonably be determined at the point of sale.”

The proposed rule aims to eliminate the exception of the contingent pharmacy price concessions and define negotiated price as: “the lowest amount a pharmacy could receive as reimbursement for a covered Part D drug under its contract with the Part D plan sponsor or the sponsor's intermediary (that is, the amount the pharmacy would receive net of the maximum negative adjustment that could result from any contingent pharmacy payment arrangement and before any additional contingent payment amounts, such as incentive fees).”

To assess the impact of this policy, the CIDSA experts were also given the financial impact estimates of applying this proposed definition to all phases of the benefit design, as seen below.

What the Experts Think

The majority of the CIDSA experts agreed that the proposed rule would increase drug spending, the remaining experts felt it would not affect spending. The experts unanimously agreed that this policy would not affect list prices; while the majority also agreed that this rule would not affect net prices, one expert opined that it would moderately decrease net prices. While most patient groups’ access would be unaffected by this policy, Medicare patients and large patient groups would see a moderate increase in their drug access.

All of the experts opined that this policy would minimally advance drug spending policy. The experts also unanimously agreed that the size of the affected patient population would be a strength to this policy; the majority also believed that the ease of implementation would be a strength. Conversely, the experts unanimously agreed that the magnitude of drug spending impact this policy would have would be a policy weakness. Finally, the experts were split on the precedent setting value of this policy with three experts arguing it was a strength, three saying it remains unknown, and one arguing it is a weakness.

Only 8 experts were able to participate Round 1 of this survey; only 7 experts were able to participate in Round 2 of this survey.