International Pricing Index Model for Part B Drugs

Network Warns CMS Against Moving Forward

What is the International Pricing Index (IPI)?

In October 2018, the Centers for Medicare & Medicaid Services (CMS) proposed implementing an International Pricing Index (IPI) model, a mandatory Center for Medicare & Medicaid Innovation (CMMI) demonstration that would dramatically alter how patients access and physicians administer Part B drugs—complex injections or infusions such as chemotherapy that are typically administered in a doctor’s office.

The IPI payment model would require third-party private-sector vendors to procure and distribute Part B drugs to physicians and hospitals who would then administer the drug to the patient and collect beneficiary cost-sharing. The model would also set Medicare Part B payments by pegging them to the reimbursement rates of foreign countries. As a result, the price of drugs will be subject to market forces outside of the US, raising a variety of access and affordability issues for Medicare beneficiaries. Instead of the current percentage-based add-on payment, physicians and hospitals would receive a set payment amount for storing and handling drugs that would not be tied to drug prices.

Though the IPI’s goal of lowering costs for Part B drugs is laudable, healthcare stakeholders have expressed myriad concerns why the model could result in negative unintended consequences for patient access, outcomes, and overall costs.

Disrupts Patient Access

The IPI model would fundamentally disrupt patient access to timely, personalized cancer treatment close to home. As proposed, the IPI model could restrict real-time decision making by doctors, such as dosing adjustments, and potentially open patients up to vendors’ utilization management techniques such as step therapy, through which patients are required to take an older, less effective drug before they are authorized to receive the preferred drug an oncologist originally prescribed. Not only does this interfere with the physician/patient relationship, but it also creates unnecessary, harmful, and painful delays in care. By shifting the responsibility of managing a patient’s personalized care away from a trained medically-licensed physician to an outside entity, patients—particularly the 1.7 million Americans diagnosed with cancer every year—are increasingly vulnerable to receiving unsafe treatments and possibly counterfeit drugs from third-party vendors.

Won’t Lower Costs

While CMS claims the IPI model is designed to reduce drug costs, data show less than 1% of seniors in Medicare would experience lower out-of-pocket costs. Though the goal of lowering costs is worthy, the IPI model would force an unproven, untested hypothesis on half of Medicare beneficiaries, opening them up to the threat of higher costs and decreased access to community-based care.

Poorly Designed

Unlike other payment reforms that are bending the cost curve through comprehensive approaches to patient care, the IPI model is solely focused on drug costs.  In doing so, it would introduce an unparalleled level of complexity and administrative burden on community-based practices. By requiring use of a third-party vendor, the IPI model will restrict doctors’ abilities to provide personalized treatment options to Medicare patients in the model geographies. In addition, by forcing providers to focus more on paperwork and less on patients, the IPI model poses excessive risk and unpredictability and could force some providers to close their doors—ultimately restricting access to timely, tailored cancer care. Furthermore, the IPI model would negatively impact every Part B provider in the country as the price of IPI-acquired treatments will be included in the nationwide Average Sales Price (ASP).

Impedes Transition to Value-Based Care

The IPI model would impede voluntary and ongoing investments to transition toward value-based care models, like the Oncology Care Model, which are delivering proven results for patients and the Medicare program.

Exceeds CMMI’s Authority

The IPI model is mandatory, expansive, and lacks a control group. This means that even as CMS is experimenting on patients’ care, it will have no way of gathering evidence to show the IPI is able to lower costs as the demonstration is designed to do. Further, there are legal implications as to whether CMMI has the authority to implement a demonstration of this scope, based on little to no data, that will impact more than half of all Medicare beneficiaries.

Based on Failed Model

The IPI model includes provisions that are strikingly similar to the failed Competitive Acquisition Program (CAP) that was in effect from 2006 to 2008. The voluntary program was supposed to drive down costs for Part B drugs by encouraging competition between third-party vendors in a bidding process to supply medicines to physician offices. Unfortunately, the CAP struggled to enroll physicians and convince more than one vendor to join the scheme and after just two years, the program was scrapped when that vendor declined to renew its contract—despite being paid rates higher than the Average Sales Price Plus 6 percent (ASP+6) formula. According to MedPAC, the CAP cost patients and taxpayers more than if CMS did not enact the policy at all. The IPI, as proposed, promises more of the same failures.

Stunts Innovation

By linking the cost of Part B drugs to artificial price controls and access restrictions in foreign countries, the IPI could limit patient access to novel, pioneering therapies not available in other countries. Should pharmaceutical companies reduce funding for research and development, it will be much more difficult for scientists and researchers to discover innovative, new breakthroughs to treat chronic, complex conditions – including cancer. Ultimately, the IPI model will prevent lifesaving and life-altering drugs from ever coming to market, creating serious access issues for Medicare patients in the long run.

To learn more about other Administration drug pricing proposals, click here.