What CMS is trying to accomplish with a new drug pricing model


The Obama administration is trying to duplicate efforts by insurance companies to manage drug prices.  The results could lead to a change in how the Centers for Medicare & Medicaid Services (CMS) spends $20 billion a year for drugs under Part B, which are those given in doctors’ offices and hospital outpatient centers. 

According to Kaiser Health News, CMS is following recent efforts by insurers such as Aetna and Cigna to only pay for drugs that work--in the long run.

For example, Aetna and Cigna inked deals in early February with drugmaker Novartis that offer the insurers rebates tied to how well a pricey new heart failure drug works to cut hospitalizations and deaths. 

In another approach, pharmacy benefit firm Express Scripts this year began paying drugmakers a special negotiated rate for some cancer drugs — to reward the use of the medicines for the specific cancers for which they have the most demonstrated effectiveness.

Under CMS's proposed rule, different methods would be tried in selected geographic areas over a five-year test period. Some of these experiments would begin this year, with others added in 2017. The proposal faces two months of public comment.

Such pricing strategies for drug pricing are largely unproven, but are the latest tactics being tried to slow growth in prescription drug spending amid rising public alarm about drug prices.