CMS Releases Preliminary Drug List for Medicare $2 Drug List Model

To support the continued development of the Medicare $2 Drug List Model, CMS released a Request for Information (RFI) and a preliminary list of 101 prescription drugs it intends to cover.¹

Proposed in 2023, the Medicare $2 Drug List Model, or the Medicare High-Value Drug List Model, would encourage Medicare Part D drug plans to voluntarily cap out-of-pocket costs at $2 per month for a standardized list of generic drugs that target common conditions.² CMS’s Innovation Center aims to test whether this approach will improve medication adherence, health outcomes, and satisfaction among Medicare Part D beneficiaries.¹

CMS has released a preliminary list of 101 generic drugs for its proposed Medicare $2 Drug List Model, which aims to cap out-of-pocket costs at $2 per month for select medications. | Image Credit: Stillfx - stock.adobe.com

The initial list includes common prescriptions, like metformin and penicillin. It also covers drugs for high cholesterol high blood pressure, and other chronic diseases.

Standardized drug lists with predetermined out-of-pocket costs are nothing new as many large retail pharmacies have successfully offered lists of prescription generic drugs at low, fixed prices. Therefore, the Innovation Center built on this concept to create the $2 Drug List Model by tailoring it to the needs of those with Medicare.

To develop the preliminary drug list, the Innovation Center incorporated various data sources in a quantitative and clinically driven process. This information was reviewed with an external technical expert panel including pharmacists, physicians, and health policy experts.

CMS emphasized that this drug list will not be set in stone but a starting point. Once finalized, periodic updates will be made to keep up with new generic drug launches, changing clinical indications, and pricing trends.

The generic drugs included in this model would not be subject to utilization management requirements at any network pharmacies. Additionally, participation in the model would be voluntary for Part D sponsors and could start as early as January 2027, pending further development.

“We want generic drugs for common chronic conditions to be affordable for people on Medicare,” HHS Secretary Xavier Becerra said in a press release. “Reliably low copayments for essential generic drugs make it more likely that seniors and people with disabilities can afford the drugs they need to stay healthy.”

Medicare $2 Drug List Model Could Reduce Out-of-Pocket Costs for 40% of Beneficiaries

A recent JAMA Internal Medicine research letter found that this model could have modestly lowered out-of-pocket spending for 4 in 10 Medicare beneficiaries if implemented in 2021.³

The researchers used the 2021 Medical Expenditure Panel Survey (MEPS), which collects household medication use data and contacts pharmacies for out-of-pocket costs. Also, they identified the 150 generic chronic condition medications likely to be included in the drug list. Next, the researchers calculated savings if costs were limited to $2 per month for beneficiaries.

The researchers included 4092 MEPS respondents, representing Medicare Part D beneficiaries. The median annual out-of-pocket spending was $99 (IQR, 18-303), with 81% of beneficiaries (95% CI, 80.1-83.3) filling 1 or more of the 150 included generic drugs. Of these fills, 32.5% (95% CI, 30.6-34.4) cost more than $2 per month.

Consequently, 38.3% (95% CI, 36.2-40.4) of beneficiaries would have saved money with a $2 per month limit on these drugs. The predicted median total out-of-pocket savings were $11 (IQR, 4-27), reducing such spending by a median of 6.8% (IQR, 2.3-14.3). Conversely, 1.5% of beneficiaries had potential annual savings of $100 or more.

“Although absolute savings were modest for most beneficiaries, more consistent out-of-pocket costs for commonly used generic drugs might be beneficial for patients and prescribers and could improve medication adherence for chronic conditions,” the authors concluded.

References

1. Biden-Harris administration takes next step on proposed model to lower prescription drug costs for people with Medicare.October 8, 2024. Accessed October 10, 2024. https://www.cms.gov/newsroom/press-releases/biden-harris-administration-takes-next-step-proposed-model-lower-prescription-drug-costs-people
2. McCormick B. Medicare High-Value Drug List Model could lower out-of-pocket costs for 4 in 10 beneficiaries. September 23, 2024. Accessed October 10, 2024. https://www.ajmc.com/view/medicare-high-value-drug-list-model-could-lower-out-of-pocket-costs-for-4-in-10-beneficiaries
3. Cai CL, Kesselheim AS, Rome BN. Estimated savings under the Medicare High-Value Drug List model. JAMA Intern Med. doi:10.1001/jamainternmed.2024.4846