(Washington, D.C.) — A new report, “Medicare Part D Pharmacy Price Concessions at the Point of Sale, Potential Impacts on Stakeholder Costs” analyzed the Medicare Part D proposed rule, specifically the proposed rule’s provision to mandate the inclusion of contingent pharmacy price concessions, otherwise known as pharmacy DIR, in the “negotiated price” at the point-of-sale.

Consistent with CMS’s analysis, a new Milliman analysis indicates that the proposed 2023 Medicare Part D rule could increase premiums for Part D beneficiaries. While in aggregate across all beneficiaries cost-sharing savings could outweigh the potential premium increase, the analysis indicates that roughly one-third of beneficiaries could experience no change in overall costs, and roughly one-third of beneficiaries could experience potential premium increases that may not be offset by a decline in cost-sharing. As few as 10 percent of Part D beneficiaries could experience cost-sharing savings in excess of increased premiums. The remaining 20 percent of Part D beneficiaries could also potentially experience a decline in cost-sharing greater than their potential increases in premiums. The potential cost or savings for each beneficiary will vary based on their mix of brand and generic drugs, which pharmacies they actually use, and other factors, which could result in either higher or lower costs under the rule.

“Medicare pharmacy direct and indirect remuneration, DIR, represents value-based contracting that Part D plans, through their PBMs, use to incentivize pharmacies to improve patient care, while helping to lower Part D premiums,” said PCMA President and CEO JC Scott. “Especially concerning is the proposal’s potential Part D premium increase, as studied by both Milliman and the CMS actuary, which could occur on top of this year’s 15 percent premium increase in Medicare Part B and rising inflation. If CMS is seeking to address patient out-of-pocket costs, our industry stands ready to engage in developing constructive policies that would not undermine the important value-based arrangements that are proven to improve patients’ experience at the pharmacy.

“In addition, the proposed rule’s implementation timeline is completely unworkable, as the rule will be finalized too late for its changes to be included in the Medicare Part D contracts and bids for 2023. We hope that CMS will provide more time for a fulsome review of this policy and the impact on beneficiary premiums and pharmacy quality.”

A recent episode of The Pharmacy Benefit, “Understanding DIR and Pharmacy Value-Based Contracting” explains how Medicare pharmacy DIR is value-based contracting that benefits patients.

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