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New Proposed Rule: Lower Drug Prices for Medicare Advantage and Medicare Part D

By  Senior Market Advisors  on December 3, 2018

New Proposed Rule: Lower Drug Prices for Medicare Advantage and Medicare Part D

The Centers for Medicare and Medicaid Services (CMS) is actively searching for new ways to implement lower drug prices for beneficiaries.  In November 2018, CMS opened public comments on a new proposed rule that is set to hit the Federal Register by the end of the month. The main purpose of this new rule is to lower drug prices in Medicare Advantage and Part D plans.

Proposed Provisions to Medicare Advantage and Part D

This proposed rule consists of five provisions to the Social Security Act and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. These two acts have formed what we know today as Medicare Advantage and Part D.

Plan Flexibility

This provision would allow price flexibility for antidepressants, antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant rejection, antiretrovirals, and antineoplastics in Part D plans. These drugs will still be protected but will allow Part D plans to seek discounts for beneficiaries who have a prescription.


The second provision focuses on e-prescribing and would require the use of a Real Time Benefit Tool (RTBT) in Part D plans by 2020. An RTBT is a new innovation in technology that compares prescription details, out-of-pocket costs, drug alternatives, and prior authorization information. This helps beneficiaries make informed drug prescriptions.

Part D Explanation of Benefits

This provision strives to increase transparency and encourage lower costs. The current Part D Explanation of Benefits would be required to include drug pricing information and lower cost alternatives. CMS believes that this increase in transparency will encourage lower drug prices overall.

Step Therapy

The fourth provision would require Medicare Advantage plans to implement step therapy for any Part B medication. Step therapy is the practice of trying cheaper drug options before “stepping up” to drugs that are more expensive. The step therapy requirement would only apply when a beneficiary is starting a new medication.

Drug Prices and Pharmacies

This provision is targeted for as early as the year 2020. The goal is to reduce out-of-pocket costs and improve price transparency and market competition. CMS aims to do this by redefining the lowest possible payment to a pharmacy. If this provision were to be implemented, the government, beneficiaries, and drug manufacturers will be impacted and could save costs in the long run.

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