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Access to Care & Drug Pricing: 2018

Access to Care

The Tax Cuts and Jobs Act, signed into law December 22, 2017, included language to repeal the individual mandate penalty starting January 1, 2019. ASH opposed this repeal. The individual mandate helps to stabilize the health care marketplace and keep premiums down by encouraging more healthy individuals to purchase insurance and thereby, spreading risk more broadly across beneficiaries. ASH will monitor the impact of this repeal when it goes into effect.

The Administration expanded access to both association health plans and to short-term limited-duration insurance coverage. For the latter, insurers are now able to renew or extend short-term coverage for up to 36 months; alternatively, the Obama-era rule on short-term plans limited the maximum duration to three months. The concern with expanded access to both of these types of plans is that neither have to comply with the Affordable Care Act’s (ACA) most significant consumer protections, meaning insurers can charge higher premiums based on health status, exclude coverage for preexisting conditions, impose annual or lifetime limits, opt not to cover entire categories of benefits, rescind coverage, and require higher out-of-pocket cost-sharing than under the ACA.

Additionally, the Administration issued a proposed rule in late October outlining new rules to make it easier for employers to use health reimbursement arrangements (HRAs) to help workers cover medical costs. If finalized, this rule would allow employers to provide subsidies to employees to buy individual market coverage, either on or off the ACA exchanges. This is another move by the Administration to expand consumer choices and lower costs for small businesses. Employers were prohibited from funding HRAs under the Obama Administration because such arrangements would not have satisfied the employer mandate, which requires companies with more than 50 full-time employees to provide health benefits. Experts anticipate that this change may result in some employers choosing not to offer health coverage and instead subsidizing their employees’ purchase of plans on the individual market.

With Democrats taking control of the House of Representatives in the 116th Congress, we do not expect that there will be any further attempts to repeal and replace the Affordable Care Act (ACA). Protections for pre-existing conditions will remain in place unless the decision in Texas v. United States, which would be subject to appeal, overturns them. The change in House leadership may also revive the attempt to pass legislation that would include policies to stabilize the individual market. 

Drug Pricing

A priority for the current Administration is addressing the high cost of drugs. In May they released “American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.” The document identified challenges in the American prescription drug market, such as high list prices for drugs, and high and rising out-of-pocket costs for consumers, and provided a blueprint for addressing these challenges. The Administration identified four key strategies for reform: improved competition, better negotiation, inventive for lower list prices, and lowering out-of-pocket costs. The document also included ample opportunity for feedback. In response to the request for comment, ASH focused on the proposal to move some drugs from Medicare Part B to Medicare Part D. The Society highlighted that moving drugs from Part B to Part D could increase costs for patients because of the differing benefit designs and increase the practices of “white bagging” and “brown bagging,” both of which cause concerns regarding quality control, waste, and patient safety. ASH also led a sign-on letter for State Societies on this issue.

In August, the Centers for Medicare and Medicaid Services (CMS) issued guidance allowing Medicare Advantage plans to implement step therapy for physician administered Part B drugs beginning January 1, 2019. Step therapy requires patients to begin on (and fail) a less expensive treatment before being prescribed a more expensive, but many times more effective, treatment. ASH signed onto a letter, led by the American Medical Association, expressing concern about this policy change, highlighting that step therapy can harm patients and undercut the physician-patient decision-making process.

In October, the Administration issued a proposed rule which would require pharmaceutical companies to disclose the list price of prescription drugs in television advertisements for any drug that cost more than $35 a month. The list price, or wholesale acquisition cost, is the price set by the manufacturer prior to any discounts, rebates, or financial assistance. The public will have two months to comment on the proposal. It is important to note that the proposed rule does not include a government enforcement mechanism that would force companies to comply.

Finally, the Administration put forth an Advanced Notice for Proposed Rulemaking on the development of an International Pricing Index (IPI) Model to reduce expenditures on certain Part B drugs and biologicals. If finalized, private-sector vendors would supply physicians, hospital outpatient departments, and others, including providers/suppliers with the drugs that CMS chooses to include in the model for all of the selected geographic areas, which will represent approximately half of current Part B spending. The vendors would acquire the drugs and bill Medicare. CMS would reimburse the vendor for the included drugs based on international prices. Doctors and hospitals would be able to select different vendors for different drugs. Lastly, Medicare would pay a set drug administration payment to physicians and hospitals. The Department of Health and Human Services hopes to put forth a proposed rule in the spring of 2019 with a proposed start date for the model as spring of 2020. ASH is in the process of analyzing the proposal and will be submitting comments, which are due to CMS by December 31, 2018.

Drug pricing is an area where we may see legislative action next year. Both Democrats and Republicans agree that the high cost of drugs in this country must be addressed. However, they have typically disagreed on how to accomplish this with Democrats generally supportive of providing Medicare with the authority to negotiate drug prices. Both parties are more likely to agree on policies that will facilitate the development of lower cost generic drugs.