AARP Wants Relief for Seniors From Specialty Rx Costs

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By Mindy Yochelson

Medicare should take a more critical look each year at its cost criteria for allowing drug plans to place expensive medications on a specialty tier, AARP said.

Beneficiaries have to pay more for these medications than for drugs on other formulary tier levels. This can result in their paying thousands of dollars for life-saving or life-extending Medicare Part D drugs, the large nonprofit organization said.

The national group questioned the Centers for Medicare & Medicaid Services’ recent decision not to increase in 2018 its dollar level for placing drugs on a specialty tier, despite rising prices. “We urge CMS to reevaluate the specialty tier threshold amount on an annual basis and to make increases consistent with drug price trends,” AARP said.

AARP and other groups were responding to the CMS 2018 call letter, which gives policy guidance to Medicare drug and managed care plans, and its request in the call letter for public input on how to improve the Part D benefit design. Comments were due April 24.

Coinsurance vs. Copayments

Beneficiaries have to pay for specialty tier drugs through coinsurance, rather than through flat copayments that are set by some plans for drugs on some lower tiers. Coinsurance passes price increases directly to beneficiaries and can require hefty out-of-pocket payments.

Plans generally place medications on specialty tiers that treat complicated, potentially life-threatening conditions such as cancer and hepatitis, as well as chronic diseases like rheumatoid arthritis.

The CMS last year increased the threshold for a drug to be placed on the specialty tier for the first time in eight years—to drugs costing $670 a month from those costing $600, which was set in 2008. The intention is to make fewer drugs eligible for the specialty tier.

Static for 2018

But an AARP official expressed concern about the agency’s decision in its latest call letter, published in April, not to raise it again for 2018.

The 2017 threshold “is pretty low compared to the prices of products on the market,” Leigh Purvis, director of health services research at AARP’s Public Policy Institute, told Bloomberg BNA May 2. When the $670 is multiplied for a yearly total it comes to just over $8,000. AARP’s tracking of these drugs has found that the average specialty drug is over $50,000 annually, she said. The CMS needs to ensure that that its threshold is “actually reflective of the prices of products being used.”

During the years when the threshold was not changed, prices increased by double digits, Purvis said.

Further, new products are increasingly expensive, she said.

AARP told the CMS that the percentage of drugs eligible for specialty tiers keeps rising, along with the proportion of Part D spending for those drugs. Plans use the threshold, even at the $670 level, to place many or all of the drugs in a class on the specialty tier, the group said in its letter to the agency.

End the Tier?

The CMS itself said it’s worried that the percentage of drugs eligible for the specialty tier continues to increase despite last year’s hike. The agency said in the call letter that it “will continue to investigate these and other trends in order to shape future analyses” about the specialty tier.

Another group, the National Association of Specialty Pharmacy, took its concerns a step further, urging the end of the tier.

“The specialty tier should be eliminated as it discriminates against the most vulnerable patients, Medicare beneficiaries who require treatment with a specialty drug,” Sheila M. Arquette, executive director with NASP, told Bloomberg BNA April 28.

The specialty tier “serves to penalize those beneficiaries that require treatment with a specialty medication by subjecting them to coinsurance versus defined copays and onerous utilization management edits,” she said.

The association thinks formularies should be designed so that specialty medications are included on all tiers, “allowing the risk to be spread,” Arquette said.

No Exceptions

Medicare Part D sponsors using a tiered formulary are required to have an exceptions process that allows enrollees to obtain a drug in a higher cost-sharing tier at a lower tier rate when medically necessary.

The CMS said it views these exceptions as “an important beneficiary protection that allows Part D plan enrollees with a medical need for a non-preferred drug to manage out-of-pocket costs.”

But drugs on specialty tiers are exempted from this requirement.

This makes them “unaffordable for many beneficiaries with fixed incomes and limited resources,” another group, the Medicare Rights Center, said in its April 24 response to the CMS’s request for public feedback.

The beneficiary advocacy group urged the CMS to include tiering exceptions for drugs on the specialty tier, “both as a matter of fairness and to promote affordable access to high-cost medications. “

If that doesn’t happen, the agency should “consider limited cases where these exceptions would benefit a notable share of beneficiaries,” the center said.

Arquette agreed that, if there’s no change in the tiers, a process should be installed that allows beneficiaries to request an exception. Financial hardship can impact a patient’s adherence to a medication treatment plan, she said. This increases the patient’s total cost of care and costs for the health-care system, she said.

Defending Specialty Tier Placement

The main trade group for health plans, however, defended the use of specialty tiers as part of the formulary structure.

“Specialty tiers have been a component of Part D since inception,” a spokeswoman for America’s Health Insurance Plans told Bloomberg BNA April 28. “Overall, we support additional flexibility to develop plan designs that are intended to ensure beneficiaries have access to affordable, high-quality drug coverage,” she said.

Further, the focus on formulary design doesn’t address the core issue, she said. That’s the “the fact that drug pricing continues to skyrocket with no clear explanation on how those prices are set,” she said. What’s needed is “increased transparency and competition from generic alternatives to ensure affordable access.”

To contact the reporter on this story: Mindy Yochelson in Washington at MYochelson@bna.comTo contact the editor responsible for this story: Kendra Casey Plank at

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