HHS Advances Payment Model to Lower Drug Costs for Patients

November 2018 ~

On October 25, the Department of Health and Human Services (DHHS), through CMS, announced a new International Pricing Index (IPI) payment model to reduce what consumers in the United States pay for prescription drugs.

Under the new IPI model, described in an Advance Notice of Proposed Rulemaking (ANPRM), Medicare’s payments for select physician-administered drugs would shift to a level more closely aligned with prices in other countries. Overall savings for American taxpayers and patients are projected to total $17.2 billion over five years, according to the press release.

DHHS states the move from current payment levels to payment levels based on international prices would be phased in (over a five-year period), would apply to 50% of the country, and would cover most drugs in Medicare Part B, which includes physician-administered medicines.

Additionally, the model would impede the pharmaceutical industry from offering deep discounts abroad while taking advantage of the Medicare Part B payment system, by paying vendors for Part B drugs at a level approaching international prices. The model seeks to correct existing incentives to prescribe higher-priced drugs and, for the first time, address disparities in prices between the U.S. and other countries by creating a system in which private vendors procure drugs, distribute them to physicians and hospitals, and take on the responsibility of billing Medicare.

The IPI model would achieve several goals:

  • Reduce costs for Medicare beneficiaries, and thereby increase adherence and access to prescription drugs.
  • Introduce competition to the system of paying for physician-administered drugs by bringing in private-sector vendors.
  • Reduce providers’ burden and the financial risk associated with managing drug inventories, so physicians can focus on patient care.
  • Maintain financial stability for physicians while removing incentives for higher drug prices.
  • Address the disparity in drug prices between the U.S. and other countries.
  • Reduce costs to the American taxpayers and Medicare beneficiaries who fund these programs.

For More Information, refer to the CMS Fact Sheet and the Advance Notice of Proposed Rulemaking.



Source(s): MLN Connects for November 1, 2018;