shows a woman's hand holding pill bottle, with SHIIP client in the background
Senior PharmAssist counselor Marilyn Disco checks a client's medications. Photo credit: Jim Colman, Senior PharmAssist

By Thomas Goldsmith

The government agency in charge of Medicare recently announced that it’s giving some patients more choice about whether to take an expensive drug infused in a medical office, or a cheaper substitute.

However, the “preferred drug” referred to by the Centers for Medicare and Medicaid Services turns out to be one preferred by CMS, not necessarily by a patient or doctor and might not be what the doctor originally ordered.

Commercial insurers have practiced this type of “step therapy” for years as a cost-saver. The idea is to try lower cost older or generic drugs first to see how well they do for a patient. Patients get access to the newer, more expensive, drugs only if the first treatments don’t work for them.

In one example of step therapy, many people with rheumatoid arthritis can be required to use generic methotrexate, which is also used as a cancer treatment, before starting a course of a newer biopharmaceutical such as Remicade.

“We’re concerned about the proposed role for step therapy in Medicare Advantage,” Sam Taylor, president of the trade group NC Biosciences Organization, said in an interview Aug. 13.

“We think it interferes with the doctor-patient relationship.”


Medicare Advantage plans, managed by insurance companies using government dollars, have been chosen by about one-third of Medicare recipients; the rest are on traditional, fee-for-service Medicare. The process of having to start with potentially less efficacious medications has led some consumers and advocates to label step therapy a “fails-first” model.

“The idea here is to save money by prescribing less expensive therapies first,” Taylor said.

“But if less expensive therapies don’t work, you’re wasting that money as well. It’s not a guaranteed money-saver.”

Step therapy has its advocates among doctors and other medical professionals as well as with insurers. A 2017 study in the Journal of the American Medical Association found: “Many prescribing choices are needlessly expensive, with patients given an expensive drug when a less costly one would be an equal or better choice.”

What CMS says about cost savings for consumers

“Part B step therapy requirements may reduce costs for both the beneficiaries and MA plans. MA plans will be required to pass savings on to beneficiaries through the rewards furnished as part of the drug management care coordination program.
“Rewards passed on to the patient will be required to be equivalent to more than half the amount saved on average per participant.”

Source—CMS fact sheet

The CMS announcement comes as the giant agency tries to cut rapidly ballooning drug costs for Medicare, including the coverage of medications under Part B, for drugs administered in medical offices, and Part D, for drugs bought at pharmacies.

“What they are trying to say is there’s a lot of money being paid for Part B drugs, and we need  to pay some of this back to the system,” said Gina Upchurch, founder of Senior PharmAssist, a Durham-based agency that helps older people gain access to medications.

Among the protections for consumers in the new approach is a requirement that Medicare Advantage plans cover medically necessary drugs. That means that people on Medicare Advantage plans using step therapy can make a case that they should start treatment with a specific drug instead of going through several alternatives first. And those who are already on drugs provided in medical offices will be able to stay on those Part B meds.

“Too many choices”

People signing up for Medicare Advantage can opt into using step therapy without really understanding what they are accepting, Upchurch said. Medicare Advantage beneficiaries, most older than 65, already face a bewildering series of choices, some of which should be made anew every year.

“We think there are too many choices already,” she said. “This just adds another level of complexity. People often don’t look at these forms, and CMS has been pushing people to just get the electronic version.”

CMS said that Medicare Advantage plans that want to introduce changes for the 2019 coverage year must “explicitly communicate(d) to beneficiaries through the Annual Notice of Change and Evidence of Coverage documents. Patients that do not wish to participate in a plan that takes advantage of this approach to lower costs will have the option to select a different plan.”

NC Board of Nursing Protecting the Public y Regulating the Practice of Nursing

On Aug. 7, CMS Administrator Seema Verma announced the move as a money saver for taxpayers and as a benefit for enrollees.

“For too long, Medicare Advantage plans have not had the tools to negotiate a better deal for patients,” Verma said. She claimed the Jan. 1 startup of commercial insurance practices, such as step therapy, will bring down costs and benefit Medicare consumers.

“Today we begin lifting those barriers so plans can use private-sector tools to drive down the cost of expensive drugs while also offering new care coordination and drug adherence programs, to ensure that patients are getting high-quality care at lower cost.”

Gift cards for patients?

Christine Weason, North Carolina government relations director for the American Cancer Society Cancer Action Network, said there’s a role for step therapy in reducing Medicare costs. But step therapy can cause real harm when patients’ time is critical, Weason argued.

“Ultimately in many, many cases, step therapy requires an undue delay for the patient, where they cannot treat their cancer as effectively,” she said. “They don’t have time to go through those procedures.”

CMS also announced that it would return to beneficiaries at least half of any savings created by step therapy. A CMS publication said the savings could be returned through “rewards furnished as part of the drug management care coordination program.”  A separate memo said the rewards cannot be cash, but “may be offered as gift cards or other items of value to all eligible enrollees.”

“They’ve talked about gift cards,” Upchurch said. “We don’t need Medicare to be giving out gift cards. Why not just decrease the cost of health care?”

Representatives of the North American pharmaceutical industry,  which has seen consistent price increases since 2000, oppose the step therapy approach that could make expensive biologics a last instead of first choice for treatment.

“PhRMA has serious concerns with the new CMS guidance regarding Medicare Advantage coverage of Part B medicines and the implications for patients suffering from complex conditions,” Nicole Longo, a spokeswoman for Pharmaceutical Research and Manufacturers of America, or PhRMA, said in an email. “Step therapy will delay many patients’ access to medicines they need, interfere with the patient-physician relationship and increase burdens on physicians to comply with new, more complicated requirements.”

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Thomas Goldsmith worked in daily newspapers for 33 years before joining North Carolina Health News. Goldsmith is a native Tar Heel who attended the UNC-Chapel Hill, and worked at newspapers in Tennessee...