On October 14, President Biden issued an Executive Order (EO) calling for new payment and delivery models that will lower drug prices. The EO instructs the Health and Human Services (HHS) Secretary to prioritize models that could lower cost sharing for commonly used drugs and include value-based payment for drugs. The order requires the Secretary to submit a report on model options by January 12, 2023. This action builds upon drug pricing reforms recently enacted under the Inflation Reduction Act, which includes Part D redesign, Medicare price negotiation, and rebates for Part B and D drugs whose costs outpace inflation.
More on Models
“Too many Americans face challenges paying for prescription drugs,” the order said. “On average, Americans pay two to three times as much as people in other countries for prescription drugs, and one in four Americans who take prescription drugs struggle to afford their medications.”
The order applies to models that can be tested under the Center for Medicare and Medicaid Innovation (CMMI). CMMI has been working to incorporate drug price reform in some of its models. For example, CMMI rolled out the Enhancing Oncology Model back in June, which seeks to steer oncology practices towards more high-value drugs and not necessarily the most expensive pharmaceuticals.
As reported by Bloomberg, “The goal here is to have the secretary define some areas of opportunity to increase access to drugs or lower prices for people on Medicare and Medicaid,” said Stacie Dusetzina, an associate professor in the Department of Health Policy at Vanderbilt.
“Part of this will be, ‘what could we do now or sooner?’ Some of the provisions for the Inflation Reduction Act don’t kick in for a couple of years,” she said, referring to the legislation under which HHS can negotiate drug prices.
“There have already been attacks on the Inflation Reduction Act, and some Republican members talking about repealing it, or going after certain parts of the law,” she said.
As the Inflation Reduction Act drug-pricing provisions continue to be implemented, there are a range of projected effects that may challenge CMMI’s ability to implement sweeping drug models. However, the EO signals that the Biden Administration continues to value drug pricing as a political priority and will likely seek to implement new demonstrations prior to the general elections in 2024.