CMS Rule Finalizes Some Medicare Drug Policy Changes, Withdraws Others

Under the final rule, Part C plans can require providers to implement step therapy protocols for Part B drugs

CMS issued final prescription drug rules for Medicare Advantage (Part C) and Prescription Drug (Part D) plans for 2020 that will permit Part C plans to implement step therapy protocols for specialty drugs but declined to finalize rules permitting Part D plans to exclude drugs from formularies in Medicare’s protected classes under specific circumstances. Medicare’s protected classes rules permit beneficiaries to have access to “all or substantially all” drugs in 6 specific classes.

Final Rule Details

Under the final rule, Part C plans can require providers to implement step therapy protocols for Part B drugs, which are typically specialty medications administered by physicians. However, it’s limited to new prescriptions and requires review and approval by plans’ Pharmacy and Therapy Committees, mirroring requirements in Part D. The rule declines to adopt proposed rules that would have allowed Part D plans to exclude drugs in Medicare’s protected classes (antidepressants; antipsychotics; anticonvulsants; immunosuppressants for treatment of transplant rejection; antiretrovirals; and antineoplastics) from formularies if 1) a drug price increased beyond a certain threshold; or 2) the drug represents only a new formulation of an existing single-source drug or biological product, regardless of whether the older formulation remains on the market.

Business Group Position and Action

The Business Group supports policies to promote sustainable, affordable pricing for prescription drugs including more closely aligning public sector payment policies with private sector (e.g. step therapy) and limiting the reach of Medicare’s protected classes.

Impact on Employers and Employees

Allowing Part C plans to implement step-therapy programs will better align government programs with longstanding private sector efforts to manage pharmacy benefits for the non-Medicare population. This should reduce pharmaceutical expenses while improving quality for enrollees and MA plans, including for employers sponsoring these plans for retirees.

Permitting more formulary flexibility for Part D plans with respect to protected classes could have lowered costs through higher generic utilization and better leverage to secure discounts. These changes could have had positive spillover impacts on the private sector.


The Administration will continue efforts to stem rising prescription drug expenses, but continue to face opposition from disease advocates, pharmaceutical manufacturers and some members of Congress.

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