Adam Fein’s Post

MUST READ! Very interesting article regarding the Inflation Reduction Act and Medicare Part D plans.

Another terrific article from Adam Fein about how the IRA actually INCENTIVIZES Part D Plans to favor HIGH LIST/HIGH REBATE products. My only quibble with the article? (And its not much of a quibble) I don’t think this is “surprise” to policymakers. I don’t think it’s the law of unintended consequences at work; I think it is an intended consequence. I’ve thought this for more than 20 years. Let’s go back to the early days of the “pricing/marketing on the spread” cases—you remember those cases: Bayer, TAP, and AZ. The government attacked AWP and, to a lesser extent, WAC, in those cases. And they did so clothing themselves in the white garment of a line of attack that these were “false” prices that “misrepresented” the “true” net prices. The government’s position made it sound like they were advocates—indeed champions—for transparency in pricing. But that was not true. We need to look no further than the Bayer settlement, the resolution of the grand daddy of all the cases, to see that something different was at work. In the Corporate Integrity Agreement for Bayer the government did NOT obligate the company to lower AWPs or to stop rebating. The CIA provided only that Bayer would share its “average sales price” (the first use of that term before it became a reimbursement metric) WITH the government and ONLY the government. In other words, what the government saw as a “fix” to the “problem” reveals what the government saw as the ACTUAL problem. For the government, the REAL issue was not that there were rebates that rendered the list price “false”, the REAL issue was that the GOVERNMENT was not benefiting from those rebates. The government wanted to capture the value of those rebates and it thought it could do so if it secured the ASPs. When I look at Adam’s two charts, one showing the economics of a heavily rebated arrangement and the other showing a list price consistent with the net price, here’s what I see. First, under either approach, the GOVERNMENT’S direct costs as compared to the pre-IRA world go down. Second, under the high list/high rebate models, the plan share of the cost goes way down and the manufacturer share goes way up. This helps the GOVERNMENT, because if the manufacturers don’t subsidize the plans through rebates, then the GOVERNMENT would have to do so directly. (As an aside, this is the same driver as 340B; if manufacturers weren’t creating an arbitrage for providers, the GOVERNMENT would have to provide direct subsidies to all those providers.) Here’s the dirty little secret. The government is fine with high list prices and rebates; it just wants to make that system work for it. The surprise here is only how often the government, though willing to embrace high list prices and the rebate model, has failed to make that system work for it. But that’s for another day and another post. Fantastic work, Adam! #awp #drugpricing #medicare #pbms #rebates #medicareadvantage #medicarepartd #340b

CMS Releases Updates for 2025 PART-D OOP/out of pocket limit for prescription drugs at $2000. wow! CMS is detailing improvements to the structure of the Medicare Part D drug benefit for CY 2025 that will result in lower drug costs for millions of people with Medicare through the concurrent release of the Draft CY 2025 Part D Redesign Program Instructions. Thanks to the Inflation Reduction Act, in 2025, annual out-of-pocket costs will be capped at $2,000 for people with Medicare Part D. “Prescription drugs should be affordable. Today, we are continuing to take steps to lower prescription drug costs so that no one must choose between feeding their family and taking their medicine,” said HHS Secretary Xavier Becerra. “The Biden-Harris Administration is committed to making sure the millions of people who have managed care plans called Medicare Advantage get the best care possible, and that taxpayer dollars are used efficiently.” Need help with a drug plan? Thats just one of the many services we offer Call to get help on this and other enrollment help with Medicare, Part D plans, Long term care coverage, and Medigap solutions 732-497-2273 www.65andready.com

Which drugs will be selected for Medicare negotiations? Here’s what we know

Which drugs will be selected for Medicare negotiations? Here’s what we know

Which drugs will be selected for Medicare negotiations? Here’s what we know