HHS Aims To Reduce Prescription Drug Costs Through 3 New Models

The U.S. Department of Health & Human Services (HHS) unveiled three new models Tuesday that will be tested by the CMS Innovation Center and aim to lower prescription drug costs. The models include access to $2 generic drugs.

The news is in response to President Joe Biden’s executive order issued in October, which directed HHS to find ways to lower prescription drug costs and improve access to drug therapies for those enrolled in Medicare and Medicaid health plans. The models are meant to build on the Inflation Reduction Act of 2022, which includes allowing Medicare to negotiate lower prescription drug prices for enrollees.

“HHS is using every tool available to us to lower health care costs and increase access to high-quality, affordable health care,” HHS Secretary Xavier Becerra said in a statement. “We are full steam ahead in delivering the cost savings from the President’s Inflation Reduction Act of 2022, and people on Medicare are already feeling the benefits. But as President Biden has made clear, we must build on the new prescription drug law with further action, which is why HHS is implementing these new projects to bring down prescription drug costs.”

The three models selected for testing by the CMS Innovation Center are:

  1. The Medicare $2 Drug List: Oftentimes, cost-sharing for “relatively inexpensive” generic medications varies across insurance plans. Under this model, also called the Medicare High-Value Drug List Model, out-of-pocket costs for a list of generic drugs would be capped at $2 per month per drug for participating Part D plans. 

“Part D plans would be encouraged to offer a low, fixed co-payment across all cost-sharing phases of the Part D drug benefit for a standardized Medicare list of generic drugs that treat chronic conditions,” HHS said.

  1. The Cell and Gene Therapy Access Model: Cell and gene therapies can cost up to $1 million. But under this model, State Medicaid agencies could have CMS administer multi-state, outcomes-based agreements with manufacturers for certain therapies.

“As new therapies come to market, this will help Medicaid beneficiaries gain access to potentially life-changing, high-cost specialty drugs for illnesses like sickle cell disease and cancer,” HHS said.

  1. The Accelerating Clinical Evidence Model: CMS would create payment methods for drugs that have received accelerated approval (when a new drug has been approved by the Food and Drug Administration without going through all the required levels of testing). This would “encourage timely confirmatory trial completion and improve access to post-market safety and efficacy data” and “reduce Medicare spending on drugs that have no confirmed clinical benefit,” HHS said.

Through these new models, CMS hopes to address the many challenges Americans face when it comes to prescription drugs, said CMS Administrator Chiquita Brooks-LaSure.

“In the United States, we pay two to three times as much as people in other countries for prescription drugs,” Brooks-LaSure said during a Tuesday media briefing. “One in four Americans who take prescription drugs struggle to afford their medication. For too long, too many people have had to choose between their medications and other basic needs.”

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