CMS Tackles Drug Prices, But What Does This Mean for Patient Care Access?

Targeted Therapies in OncologyOctober 2018
Volume 7
Issue 10

Rising prescription drug prices continue to add to the burden of paying for quality healthcare. In an effort to confront such costs, the Centers for Medicare & Medicaid Services has rescinded a prohibition on step therapy for Medicare Advantage plans. But some contend such a policy will reduce patient access to optimal medication.

Step therapy, or “fail first,” is the practice of using the preferred or most cost-effective drug therapy first through prior authorization and progressing to more costly or risky therapies only if needed. CMS will allow MA plans the option of implementing step therapy for physician-administered and other Part B drugs beginning January 1, 2019.1The plans that elect to use step therapy will be able to decide which drugs are preferred; however, they must adhere to established CMS policies and FDA-approved indications.

Private plans that already use step therapy have achieved savings of 15% to 20%, and CMS anticipates that step therapy implemented through MA plans will save close to $1 billion per year. “As soon as next year, drug prices can start coming down for many of the 20 million seniors on Medicare Advantage, with more than half of the savings going to patients,” Alex Azar, HHS secretary, said in a statement. “Consumers will always retain the power to choose the plan that works for them.”

Patients can choose not to follow step therapy; however, any medication outside of the program may not be covered. In addition, appeals processes must be established for patients and their providers to make the case for a nonpreferred drug, and rapid adjudication of these requests is expected of MA plans.

The rationale behind this new policy stems from the perceived need for drug price negotiation between public payers and drug manufacturers. CMS contends that private payers, through their freedom to negotiate with drug makers, achieve savings that are out of reach to public payers. If MA plans can use step therapy to control access to drugs, the theory goes, drug makers will be more amenable to lowering prices for desirable drugs that are not high up on preferred lists.

Medicare has traditionally paid participating practices 6% plus the average sales price for Part B drugs. “This payment method leads to little negotiations to reduce the price of these drugs,” CMS explained in a statement. “By rescinding this guidance, patients enrolled in MA plans and taxpayers will get a better deal.”

With step therapy, patients who use less expensive drugs will yield lower costs for public payers. The money saved with this practice will ideally circulate back into patient care as part of a drug management care coordination program. CMS will require all MA plans to allow the patient over half of the average amount saved per participant.

“For too long, Medicare Advantage plans have not had the tools to negotiate a better deal for patients,” said Seema Verma, CMS administrator, in a statement. “[We are beginning] to lift those barriers.”

There is hesitation, however, from many healthcare providers who argue that step therapy may keep patients from accessing the drugs they truly need. The policy could delay the most effective therapy needed for patients and, in some cases, prevent patients from receiving the medication altogether.

The Community Oncology Alliance (COA) commended CMS’s efforts, yet they concluded that step therapy ultimately disrupts the “physician-patient decision-making relationship.”

“Although CMS has tried to build in protections and an appeals process for patients who are stopped from getting the most immediate and appropriate [treatment], navigating those hurdles while dealing with cancer care can be agonizing and is an unnecessary burden,” COA said in a statement.

“Step therapy requires patients to try and fail to have a desired clinical outcome on a lower cost medication before they can access the medication prescribed by their healthcare provider,” Monica M. Bertagnolli, MD, president of the American Society of Clinical Oncology (ASCO), said in a statement. “This not only delays patient access to proper treatment, [but] it potentially leads to irreversible disease progression and other significant patient health risks.”

In a group statement, associations such as the American Medical Association (AMA), the American Society of Hematology, and ASCO addressed the administrative burden that step therapy would place on physicians. Currently, physicians do not have access to patient benefit and formulary information, according to the statement. This lack of transparency can make it difficult for them to determine what therapies will be covered by payers and could pose an even greater financial risk if claims are later denied by failing to meet the requirements for step therapy.

“At a time when CMS has prioritized regulatory burden reduction in the patient-provider relationship through its Patient Over Paperwork initiative, it is our hope that another layer of administrative complication will not be added to a strained system,” the group statement, signed by more than 50 organizations, said.

Critics of step therapy have said it is merely another form of prior authorization that constitutes a barrier to access. In a 2017 survey conducted by AMA, more than 500 US physicians reported waiting at least 1 business day after submitting a prior authorization for a decision from a health plan.2Nearly all (92%) said that prior authorizations delay patients’ access to necessary care.


  1. Medicare advantage prior authorization and step therapy for part B drugs [press release]. Baltimore, MD: CMS; August 7, 2018. press-releases/cms-empowers-patients-
  2. 2017 AMA prior authorization physician survey. AMA website. ama-assn. org/sites/default/files/media-browser/public/arc/prior-auth-2017.pdf. Published March 19, 2018. Accessed September 24, 2018.
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