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The Medicare Drug Price Negotiation Program marks a major change in the way that prices are determined for certain medications commonly prescribed for Medicare enrollees. It was established by the passage of the Inflation Reduction Act, signed into law by President Biden on August 16, 2022. The program represents one of the most substantial changes to Medicare since its inception. 

Background of Medicare Price Negotiation 

Many think of Medicare only as the federal health insurance program for people who are 65 or older. But it also provides coverage for younger individuals with End Stage Renal Disease (ESRD) and other qualifying disabilities. In 2024, approximately 65 million people enrolled in Medicare, roughly half of them in traditional Medicare and the other half in Medicare Advantage programs.

The Center for Medicare & Medicaid Services (CMS) historically was not allowed to leverage the full buying power of its vast enrollee population to negotiate lower drug prices. Only private insurance companies administering Medicare Advantage or Medicare Part D (prescription coverage) plans were allowed to negotiate prices. 

The push for Medicare to negotiate drug prices directly with pharmaceutical companies gained momentum as part of broader healthcare reform and cost-reduction efforts. 

Objectives of Medicare

The Medicare Drug Price Negotiation Program tackles three key goals head-on:

1. Making prescription drugs more affordable for Medicare enrollees—Although Medicare has no income ceiling, many enrollees have low or fixed incomes. And even those living well above the poverty line can find it difficult to meet high out-of-pocket prescription costs. 
2. Curbing Medicare’s ever-increasing spending on prescription medications—High prescription costs account for a large chunk of Medicare’s spending, contributing to concerns about the long-term sustainability of this essential insurance program. In 2021, Medicare accounted for 32% of all prescription spending in the United States. 
3. Encouraging pharmaceutical companies to price their medications to reflect the value to patients—Pharmaceutical companies might face increased pressure to lower their prices across the board, not just for Medicare but also for other payers.

The Negotiation Process Between Drug Companies and Medicare

The Medicare Drug Price Negotiation Program was carefully designed to achieve the desired outcomes. Here are the steps in the process:

Step 1 Drug Selection: 

Each year, a specific number of high-cost, single-supplier drugs are targeted for negotiation based on such factors as:

• the total cost to Medicare—both Part B (for drugs administered in a doctor’s office) and Medicare Part D (which covers prescription drugs taken by enrollees on their own)
• a lack of price competition, because the drug treats a rare disease or one with few, if any, alternative treatments or when, after at least 11 years on the market, there are no available generics or biosimilars
• the drug’s clinical effectiveness and safety, individually and in comparison to other drugs prescribed to treat the same condition
• the drug’s patent status, taking into account whether it is still under patent protection and has been on the market long enough without competition for negotiation to be appropriate
• the potential impact on Medicare enrollees in terms of decreased out-of-pocket costs and improved access to the prescription medications they need
• the potential impact on public health of greater accessibility to drugs prescribed for the treatment of very common or life-threatening conditions  

Certain orphan drugs, plasma-derived products, and drugs that are a low-spend for Medicare are excluded from consideration. 

The first stage of selection results in an initial list of 50 negotiation-eligible drugs, ranked according to total Part D gross covered prescription drug costs. Two additional considerations may eliminate some of the drugs on that list:

• The Small Biotech Exception—For the years 2026 through 2028, there is an exception for certain “small biotech” drugs for which the drug company has submitted an application for exception that has been approved by CMS. 
• The Biosimilar Delay—The selection of a particular biological product can be delayed if there is a high likelihood that a biosimilar will enter the market within the next two years.

From the initial list of negotiation-eligible drugs, CMS will then select the drugs for price negotiation. 

Selecting the drugs to consider for negotiation is a complex and painstaking process. And for the manufacturers of the selected drugs, it’s not exactly optional, at least not without penalty. 

Step 2 Negotiation: 

Pharmaceutical companies that refuse to negotiate or fail to reach an agreement with Medicare may have to pay a sizeable financial penalty. Most choose to participate, particularly when they can see some reasonable basis for engaging in fruitful price negotiation discussions.

The negotiation process engages both drug companies and the public through:

• The submission of data from drug companies
• Meetings between CMS and each drug company to discuss the data submitted
• A public patient-focused listening session for each drug selected for price negotiation
• An initial offer from CMS to each drug company, presenting CMS’s proposed price and its justification
• A drug company can accept CMS’s proposed price or submit a counteroffer

During the first round of price negotiations, CMS may invite each drug company to participate in up to three negotiation meetings before August 1, 2024. 

Negotiation is considered successful when Medicare and a particular pharmaceutical company arrive at agreement on a drug’s price—one that is a fair reflection of value and meets Medicare’s cost reduction objective.

Step 3 Implementation of Negotiated Prices: 

The new price arrived at through negotiation becomes the price that Medicare pays the pharmaceutical company for the drug moving forward, including reimbursements under Medicare Part D plans.

Initial Drugs Selected for Price Negotiation

The first round of negotiation, which took place between June 1, 2022 and May 31, 2023, resulted in new pricing for the following 10 medications, effective beginning in 2026:

• Eliquis (for the prevention and treatment of blood clots)
• Jardiance (for diabetes and heart failure)
• Xarelto (for the prevention and treatment of blood clots and risk reduction for people with coronary or peripheral artery disease)
• Januvia (for diabetes)
• Farxiga (for diabetes, heart failure, and chronic kidney disease)
• Entresto (for heart failure)
• Enbrel (for rheumatoid arthritis, psoriasis, and psoriatic arthritis)
• Imbruvica (for blood cancers)
• Stelara (for psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis)
• Fiasp, Fiasco FlexTouch, Fiasp PenFill, Novolog, Novolog FlexPen and Novolog PenFill (for diabetes)

According to CMS, these 10 drugs account for $50.5 billion (about 20%) of total Part D gross covered prescription drug costs during the time period June 1, 2022 through May 31, 2023.

Moving Forward

The first round of drug price negotiation was for price applicability year 2026. The milestones and schedule will be announced in advance of the drug selection and price negotiation for price applicability year 2027 and each subsequent year. And future negotiations may target more than 10 prescription medications. 

The Congressional Budget Office has estimated that the Medicare drug price negotiation program will lower what Medicare pays for prescription drugs and reduce the budget deficit by $25 billion by 2031. 

Simplefill connects Americans who are finding it difficult, even impossible, to pay for the prescription medications they depend on to manage chronic diseases with the programs and organizations offering such help. To learn more about prescription assistance programs and how Simplefill can help you get enrolled, read below and become a Simplefill member today. 

200 Medications Dropped by Insurance for 2021

Millions of Americans got an unwelcome surprise this year when they learned that the prescription medications they rely on to manage chronic medical conditions are no longer covered by their health insurance because they were dropped from their plan’s formulary. 

What is a Formulary?

Every insurance plan has its own formulary—a list of covered medications, both brand name and generic. A formulary typically is divided into three to five tiers that determine how much of the cost of the medications in each tier is covered by the insurance plan and how much the insured individual must pay. 

Tier 1 typically includes generic medications, which may be 100% covered and cost the insured nothing. The higher tiers are for brand name medications, which carry a co-pay or co-insurance requirement that increases by tier, with the most costly ones being in the top “premium” or “specialty” tier. (For those unfamiliar with the terms: coinsurance requires the insured to pay a certain percentage of a drug’s full cost, while a copay is a fixed amount the insured must pay per prescription.)

How Often Do Formularies Change?

Some insurance plans change their formularies annually, but that doesn’t mean there won’t also be mid-year changes, though formulary changes are not permitted during the annual election period, which begins in October. New medications may be added, and medications already listed may be moved to a different tier or dropped altogether. 

Insurance plans sometimes place restrictions on certain high-cost medications as a condition for adding them to their formulary or as an alternative to dropping them.  For example, the insurer may require prior authorization, which means that health care providers must provide additional information to substantiate the need for the medication. Or they may limit the amount prescribed at one time for one co-pay, or even recommend that a different, less costly medication be prescribed initially for a trial period to see if it’s an effective alternative.  Any of these changes can affect what you must pay to fill your prescriptions.

Why Do Formularies Drop Medications?

The decision to reduce or eliminate coverage for a particular prescription drug is not made casually. Typically, the decision is made by a group of health care professionals including physicians and pharmacists in conjunction with the plan’s Pharmacy Benefit Manager (PBM). A number of factors can lead to a medication being moved to a different tier or dropped from a formulary, such as:

• There is an equally effective but less costly medication.
• A generic version of a brand-name medication has become available.
• There are concerns about the effectiveness or safety of a medication.
• A medication formerly available only by prescription is now being sold over-the-counter.
• The medication is prescribed for some cosmetic purpose and is not medically necessary.

The Medications No Longer Covered

The formulary decisions made by the nation’s two largest PBMs–CVS Caremark and Express Scripts–affect what the majority of Americans pay for their prescriptions.  The following are the medications they dropped from their formularies in 2021.

What Can I Do If My Medication Was Removed?

You should receive a notification if a medication you take regularly is removed from your health plan’s formulary and is no longer covered. The worst case scenario is that you will have to pay its full retail price in the future. If your medication is still listed but has been moved to a higher tier, you will end up paying more for it than you were paying before that change. 

If your plan’s formulary does not include a comparable drug that your health care provider can prescribe without an adverse impact on your health, you can request that your health plan continue to cover your medication even though it is no longer listed on the formulary.  The prescribing physician will need to attest to the medical necessity of granting your request. Under the Affordable Care Act, there is an appeals process that may or may not produce the outcome you’re seeking.

You also might consider changing your health plan to one that includes your medication on its formulary. This may not be feasible for those insured by an employer-sponsored plan, but Medicare recipients have the option of switching plans between October 15 and December 7 each year—Medicare’s Annual Election Period (AEP). 

There are certain Medicare rules that apply when a medication is dropped from a Medicare Part D Prescription Drug Plan or Medicare Advantage Prescription Drug Plan within 90 days of a new member’s enrollment, as well as for members living in nursing homes or other institutional settings. In these circumstances, members are covered for a temporary supply of non-formulary medications while other options are considered, such as switching to a comparable formulary medication or requesting an exception that allows continued coverage of the dropped medication.

How Can I Save Money If My Medication Was Dropped?

Let’s assume that none of the strategies discussed to this point will enable you to get insurance coverage for a specific medication you need that has been dropped from your health plan’s formulary or moved to a higher tier. What other options do you have if you can’t afford to pay the medication’s full retail price or even a higher co-pay or coinsurance rate? You have a lot of company if you find yourself in that boat. 

Many patients’ finances are stretched to the breaking point by the medical expense and income implications of living with a chronic disease, such as:

• Cardiovascular disease, 
• Diabetes, 
• Crohn’s disease, 
• Rheumatoid arthritis, 
• Parkinson’s disease, 
• Cancer, 
• End stage renal disease, 
• HIV/AIDS, 
• Alzheimer’s disease, to name a few.  

Finding some financial relief may be essential to maintaining an uninterrupted supply of the medication(s) you rely on to manage your symptoms and slow or prevent disease progression. It can also ease the stress you and your entire household may be experiencing—stress that can have an adverse impact on your health. 

There are prescription discount cards that can take an average of about 30% off the retail cost of your medications. If you meet the income and other eligibility criteria, you may also be able to get prescription coverage through a government-sponsored insurance plan for the uninsured or underinsured, such as those that became available as a result of Medicaid expansion. And many people who are struggling to pay for non-formulary medications should qualify for prescription assistance from the manufacturers of those drugs.

Government-funded prescription coverage typically allows members to fill their prescriptions for only a nominal co-pay, and sometimes for no co-pay at all.  Continued membership in these government-funded plans requires a periodic requalification determination. 

Pharmaceutical companies that offer prescription assistance usually do so through a charitable foundation they’ve established for that specific purpose. If you qualify, you’ll most likely receive a supply of the medication you need at little or no cost for a specified period of time—usually six or twelve months, after which you’ll need to reapply and demonstrate an ongoing need for prescription assistance.

What Does Simplefill Provide?

Simplefill proudly bridges the gap between those who are in need of prescription assistance and the programs and organizations most likely to meet that need. Once you become a Simplefill member and engage with one of our patient advocates in a profiling interview, we’ll use the information you provide about your income, prescriptions, and insurance status to match your needs to the most appropriate prescription assistance options. 

Get started today, and before you know it, you’ll be paying little if anything for your non-formulary medications.

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Shared with us from our friends at Silvernest

Ask any Baby Boomer to reflect back to their childhood and their general perception of their grandparents when they were in their 60’s or 70’s. Most usually widen their eyes and exclaim, “old!” Images of a grumpy old man or wizened old woman come to mind. Many of today’s 65 year-olds look nothing like that. In a short thirty years, we have extended our lifespan, and opened up a third phase of adult life 50+ that is often filled with vibrancy, possibility and health. Yet, our society continues to perpetuate the notion that the “peak years” of life are around age 28. It’s all downhill from there. Really?

Ever heard of the word “ageism?” According to Ashton Applewhite, author of “This Chair Rocks, a Manifesto Against Ageism,” it is the last socially sanctioned prejudice, and a cultural narrative that impacts almost every aspect of life after 50. Have you ever felt compelled to lie about your age, or had someone compliment you and say, “You look great for your age?” That’s ageism.

In the past few months after the release of her book, Applewhite has been named “Influencer of the Year” by Next Avenue’s Influencers in Aging list, featured in the New York Times, appeared at the United Nations and is traveling around the country. She is the voice of a new movement, and on a mission to highlight the pervasive narrative that reinforces aging as something to fear, deny or dread.

She opens her book with the confession, “I’ve never lied about my age – I have no problem saying ‘I’m sixty-three’ loud and clear – but I know a lot of people who do. People who lie on resumes and on airplanes and on dates.”

Applewhite admits ageism is something it has taken years to fully recognize. “Any time we make an assumption about what any person is capable of, what they’re thinking about or doing on a basis of chronological age – that defines ageism,” she says. “Chronological age is a lousy indicator of pretty much anything abut a person, and all “isms” are based on stereotyping – especially because the longer we live, the more different from one another we become.”

The term “ageism” was first coined by Pulitzer prize winning physician Robert Butler, founder of the International Longevity Center, in 1968 – around the same time as the terms racism and sexism. “We experience ageism any time someone assumes that we’re “too old” for something – a task, a haircut, a relationship – instead of finding out who we are and what we’re capable of,” said Applewhite.

This Chair Rocks is a wonderful and fast read; full of powerful insights, and would make a fantastic book-club pick. Applewhite humorously breaks down pre-conceived notions about what it means to get older, and paves the way for trailblazing Boomer activism. Her zany style made me laugh out loud on numerous occasions, and nimbly poked to the inner core of what it means to get older in today’s society. In addition to the book, Applewhite has created a blog called, “Yo is this Ageist?” and a “conscious-raising” booklet to promote grassroots discussion called, “Who Me Ageist?”

“No one is born prejudiced, but attitudes about age – as well as race and gender – start to form in early childhood,” she writes. “Over a lifetime they harden into a set of truths: “just the way it is.” Unless we challenge ageist stereotypes – old people are incompetent. Wrinkles are ugly. It’s sad to be old – we feel shame and embarrassment instead of taking pride in the accomplishment of aging. That’s internalized ageism.”

SimpleFill was recently featured on The Balancing Act, a popular talk show that focuses on bringing balance to our daily lives. The Balancing Act highlights ways that viewers can better manage day-to-day tasks that might otherwise be stressful or time-consuming. One such problem for many Americans is prescription fulfillment. At SimpleFill, we make it easy to research prescription assistance solutions, find the most affordable options and enroll our members into these programs so that you can be happy, healthy, and stress-free. Watch our feature on The Balancing Act, and learn more about the SimpleFill prescription assistance program. Continue reading →