CMS Plans Three Demos To Lower Rx Drug Prices In Response To EO

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US|February 15, 2023·12:32am

HHS announced Tuesday (Feb. 14) that CMS will test three new models aimed at lowering the cost of prescription drugs in response to the president’s October 2022 executive order asking CMS’ innovation center to come up with new demonstrations to cut drug prices. The models will test ways to offer Medicare patients prescriptions at $2 or less; cut state Medicaid costs for cutting-edge cell and gene therapies through multi-state outcomes-based agreements with manufacturers; and help ensure drugs approved via FDA’s accelerated approval pathway are safe and effective by imposing Medicare payment restrictions.

CMS also plans to continue research into other possible future models, including ways to accelerate biosimilar adoption, increase data access to support price transparency, and implement Medicare fee-for-service options to support cell and gene therapy access along the lines of the initial Medicaid model. CMS says the three initial models will build on the drug-pricing reforms in the Inflation Reduction Act. To come up with model options, CMS’ innovation center gathered input from a wide array of stakeholders, including beneficiary advocates, providers, prescription drug manufacturers, and other federal agencies. CMS will continue seeking input as it develops the models.

“To prioritize potential model proposals, our general criteria included first, affordability -- the potential to either lower overall drug prices or directly lower out of pocket drug costs for Medicare and, or, Medicaid beneficiaries. Second, accessibility or access -- the ability to promote access to innovative drug therapies and high-value care. And third, feasibility, and this means alignment with the inflation Reduction Act and consistency with its operational and regulatory limitations,” CMS innovation center chief Elizabeth Fowler told reporters on a call Tuesday.

Fowler said extending the three selected models to the commercial market exceeds the statutory limits of what the innovation center can do for demonstrations, and there are no immediate plans to do so.

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