CMS Pursuing Expanded Coverage of Many Prescription Drugs Under New Medicare Benefit

Medicare officials are pushing insurers seeking to offer prescription drug coverage under Medicare to "offer a surprisingly generous array of prescription drug choices," pharmaceutical industry executives have said, the New York Times reports. According to the Times, insurers were required to submit their proposed formularies to Medicare by mid-April, and CMS already has approved most of the lists submitted.

According to the insurers, the federal government during negotiations over the formularies "has been insisting that [the plans] cover not just one or two drugs to treat each disease, but most or substantially all the drugs available for certain conditions," the Times reports (Pear, New York Times, 6/15). On Friday, CMS reiterated that Medicare prescription drug plans will have to cover "all or substantially all" medications in six categories: cancer medications; HIV/AIDS treatments; antidepressants; antipsychotic medications; anticonvulsive treatments for epilepsy and other conditions; and immunosuppressants (California Healthline, 6/13).

Beckie Fenrick, vice president of Innoviant, a prescription benefit administrator in Wisconsin, said that "the government told us that our formulary was fine in the commercial market but would not fly in the Medicare program." She added that the "very detailed" review of coverage extended beyond the six high-priority categories, requiring, for example, that the plan cover more oral contraceptives than originally listed.

Joel Owerbach -- chief pharmacy officer at Excellus BlueCross BlueShield in Rochester, N.Y. -- said the plan's formulary approved by the federal government would include coverage for 15 to 20 antidepressants, compared with 10 different antidepressants available under a typical commercial health plan.

John Gorman, a former Medicare official who now consults with insurers, said, "Medicare officials are flexing their muscles. They are requiring prescription drug plans to cover more drugs than anyone expected. They are establishing a gold standard for access to drugs in a number of therapeutic classes."

Babette Edgar, a senior pharmacist at CMS, said that the Medicare drug plan formularies would "look a bit different than you normally see in the commercial population." She attributed the broader coverage to the fact that Medicare serves a more diverse population than many commercial plans.

CMS Administrator Mark McClellan added, "A lot of patients with serious illnesses have been stabilized on certain combinations of drugs and will transition into Medicare for their drug coverage. We want to give them access to all medically necessary treatments."

Medicare officials also said the government is requiring health plans to cover a wider variety of drugs because it is following "best practices" used in the private sector, Medicaid and the Federal Employee Health Benefits Program. They added that the policies will ensure that all Medicare beneficiaries have access to the prescription drugs they need.

Some insurers, federal officials and members of Congress, are worried that the growing number of covered medications will further raise the cost of the new drug benefit. Judith Cahill, executive director of the Academy of Managed Care Pharmacy, said the requirements would increase costs and put "upward pressure on premiums" (New York Times, 6/15).

In 2003, the Congressional Budget Office estimated that the Medicare prescription drug benefit would cost $395 billion over 10 years, but earlier this year, CBO raised the estimate to $849 billion between 2006 and 2015 (California Healthline, 3/11). According to the Times, CBO cited the federal formulary requirements as one factor in its higher estimate.

CBO Director Douglas Holtz-Eakin said the agency's estimates so far have assumed that Medicare drug plans would use "restrictive formularies" to help control spending. He added, however, that with the broader drug lists being required by the government, CBO "now expects that prescription drug plans will be slightly less effective at controlling drug spending than we had previously assumed."

The Bush administration "denies that the requirements would drive up costs," the Times reports. CMS spokesperson Gary Karr said insurers can reduce costs by using the same techniques that they use in the commercial market.

However, according to James Hartert, chief medical officer at Prime Therapeutics, a pharmacy benefit manager owned by nine BlueCross and BlueShield plans, the federal government is not allowing insurers to use many of the usual cost-controlling techniques, such as requiring prior authorization or use of older drugs before newer medications are prescribed. "There will be a cost to that," he said, noting that the organization has "not quantified it" (New York Times, 6/15).

In related news, the Detroit News on Wednesday examined how Medicare beneficiaries "can expect tough and complicated choices in enrolling" in the new prescription drug benefit.

Mary Ann Wagner, vice president of the National Association of Chain Drugstores, said that most of the 200,000 pharmacists in the United States are readying themselves for the many questions that beneficiaries likely will have about the new benefit.

Robert Hayes, president of the Medicare Rights Center, said, "Only the savviest consumers will be able to navigate [the benefit] on their own and even with assistance," adding, "Millions of elderly and disabled people face a bewildering range of options that will cause anxiety and a significant risk of exploitation and intimidation" (O'Rourke, Detroit News, 6/15).

Additional information on the Medicare drug benefit is available online.