New cap on out-of-pocket expenses for Medicare beneficiaries could be important for some patients

Aislinn Antrim: Hi I am Aislinn Antrim with Pharmacy hours®, and I’m here with Joey Dizenhouse, Senior Vice President and Head of Pharmaceutical Services at Health Trust, to discuss the recent Cut Inflation Act and its potential impact on the price and access to medicines and on a variety of other issues. How might this larger act impact drug prices for all Americans, including those who receive drugs through PBMs?

Joey Dizenhouse: So Medicare Part D, as we discussed, I think there’s a real benefit there. These are all provisions that will reduce reimbursable expenses. It’s not just some sort of standard Medicare Part D, or PDP plans as they’re called. There’s a whole alphabet soup of other programs, Medigap and MVPD, and I think there are ancillary benefits that apply to them.

Now, about the commercial space, when I think about what changes the costs in a commercial plan, the price of the drug itself is only one element, right? We’re talking trending or inflationary costs, and it’s usually a mix of at least 3 things: cost per drug, amount of drug used, usage, if you will, and then the mix, c It is therefore a less expensive drug to be replaced by a more expensive drug for the same condition. The unit cost is therefore only one element of the trend, and it is not even necessarily the most important.

So the impact for typical Americans in a business plan, I think this law creates another thing to worry about, but there was already a long list of things to worry about. So that’s just something more to consider. I think there will be some effect, but I don’t think it will be significant, and I don’t think it will happen quickly. I think there will be a bit of a wait-and-see attitude regarding this.

Aislin Antrim: Good to know, and how could this change consumers’ access to medicines?

Joey Dizenhouse: I don’t think that will be the case. If by access you mean the ability to obtain drug supplies. Well, the drugs that have supply issues aren’t the same kinds of drugs that we’re talking about. These are usually generic products, and what sometimes happens is that a manufacturer has been shut down for a production issue, perhaps from the FDA. Or it could be that there are fewer and fewer manufacturers rapidly because some think that there is not enough profitability in this molecule, so they leave, leaving fewer manufacturers, leaving less supply.

None of that is impacted by what we’re talking about here. These are generic molecules. Frankly, when you talk about what the cost of a generic drug should be, you kind of go the other way of that argument because if you can buy a pharmaceutical grade bottle of a particular drug for 20 cents , you have to wonder if it’s viable too? Right. When thinking about the fair price of a drug, there is a minimum that makes sense, especially when you think about protecting the supply to ensure that all Americans have access to it. But no, I wouldn’t expect there to be any access issues from that.

Aislinn Antrim: Good. Will this change the standard drug benefit coverage?

Joey Dizenhouse: Benefits coverage is attractive. Medicare, yes, going through the things that we’ve been talking about, generally for the good, maybe, to be a little against the grain for a while. On the other hand, when we lower the maximum disbursement to $2,000, do we create a risk in certain situations that patients will reach that $2,000? Now there is no cost for them to continue with the drugs.

So maybe it’s getting a little too easy to pick up the more expensive product. Maybe there aren’t enough limiters in the design of the program, what do you have, to prevent it. We talked about the consumption effect of that, and will that have an impact? I think this is a relatively minor issue.

But other than that, I think the benefits are solid on the Medicare side. On the commercial side, I think there will be at most a very limited impact in the short term.

I think what usually happens is the planned sponsors. They look to their actuaries to tell them what will happen to the cost of the plant next year. These actuaries model the anticipated impact of the trending elements we talked about earlier, they can add some effects of this law. This would then have an impact on funding rates. So how much do people pay out of their salary for their insurance? And then maybe how much they pay in co-pays or deductibles? But again, I would characterize it as being really small, and then maybe a bit of panic or fear, right? Just thinking about, oh, my God, me, what’s it gonna do?

So we have to be aggressive in our budgeting and make sure we expect the worst, and then hopefully we get it wrong, and that might have a bit of a short-term effect, but I don’t expect either to be material. I think it will be just another one of those things that goes into underwriting, so to speak.

Aislinn Antrim: Tremendous. Importantly, an addition was removed from the bill that would have capped the price of insulin for non-Medicare customers. Why was this removed? Are there other efforts to lower insulin prices more generally, at all levels for patients?

Joey Dizenhouse: I can not say why it was removed. I know there were a number of factors at play. I think it came down to a kind of parliamentary procedure, and what can pass or not pass. I have to say, I just don’t think the cost of insulin to the patient in the commercial space is that big of an issue. I should give you a caveat on this, but if you look at the typical commercial patient case, okay, the monthly insulin cost is not that different from $35. In fact, for bands I have a closer line of sight to those I currently work with, that average is less than $35.

Where that might be a risk is those with high-deductible health plans that don’t take advantage of manufacturer’s coupons or co-pay assistance and other types of programs like that, or uninsured people, which is a problem in itself. I don’t want to minimize these groups, because they are, they are significant groups, of course, and important, but at the end of the day, there are other programs that are available that can be taken advantage of. It would have been an added protection to have kept the insulin cap for non-Medicare customers, but it certainly would have been more impactful if it were the other way around, and it only had a business impact. and not Medicare, that would have been a bigger concern. Insulin is just one of those products that a patient who rations their dose or does not take to save money creates all sorts of complications that both impact their quality of life and wider health costs.

Aislinn Antrim: Absolutely. One of the other important parts of this bill was the out-of-pocket cap for medicare beneficiaries, and you talked a lot about that. But to focus on it for a while. What does this mean for patients in practice?

Joey Dizenhouse: If you were a person who didn’t hit that maximum out of pocket, you probably don’t pay much attention to it, you probably feel good that it’s there. Then maybe one day you’ll realize you were the lucky one who saved a lot of money because you needed, not lucky enough to necessarily need, some expensive medicine, but you avoided the cost over $2,000.

If you are one of those who pay more than that today, then you benefit a little or a lot. There are at least some 100,000 patients who pay, because there is no catastrophic limit today, they pay over $5,000 a year. Then, of course, there are people paying $20,000 a year and that’s a declining number, but the number really isn’t capped.

So that’s just a big deal for those, the generally fixed income and then the protection and preservation of the subsidies that’s built into this Medicare Part D program, I think that just means good things for this Medicare community .

Aislinn Antrim: Absolutely. We have talked about a lot of different things in this bill. Are there any other things you want to mention?

Joey Dizenhouse: I know you have a large pharmacy and pharmacist readership and that will include people in different elements of the space – retail and specialty and hospital. We haven’t talked about reimbursement. So one of the components of the drug price is also the reimbursement of the drug, which affects pharmacies, which affects service providers. So I would just kind of encourage to stay close and think about the implications of that.

The bill defines a kind of term fair maximum price, or MFP, as if we need another acronym, it’s going to say, here’s how much we’ll index the drug to, and then the reimbursement will be tied to that. Thus for a dispensary, it will be this MFP plus a dispensary fee, of which an unknown dispensary fee will not be called unnecessarily. It can have an impact, certainly on independent organizations looking at their bottom line, maybe less of an issue for big chains that have that scale, but I’m sure they will look at something anyway.

Then the vendors, the notion of particularly infused products or J-code products as we call them and the impact there. I think that’s something to watch out for. I think there’s a pretty limited effect, again, because we’re only talking about a handful of drugs. But depending on what drugs you distribute as a pharmacy or what drugs you administer as a supplier, the impact could be less, or it could be moderate, I would say.

Aislinn Antrim: Absolutely. You mentioned it again, at the start, but to kind of bring the loop back. Do you think this bill could be a step towards more radical changes in the future?

Joey Dizenhouse: I certainly do. I do. I think that’s going to speed up this discussion, and the very difficult conversation about cost-effectiveness, and quality of life, and longevity of life, and all of those things. These are not popular conversations, but they need to happen, and back to the GDP conversation, it’s just not it’s just not sustainable. I think it’s a good corner in this conversation that will at least force her to perform in more depth than she otherwise would have.

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