Understanding Drugs and Money in 2025

SPECIALTY MEDICATIONS have dramatically improved the lives of so many both in terms of quality and longevity. They’re an integral part of the first approach to treatment in an ever-increasing number of disease states. However, the cost of the ever-expanding portfolio of these products has ballooned to an astronomical number.

Many years ago, the approval of using generic pharmaceutical products upon patent expiration brought financial relief. In a similar manner, the use of biosimilar products upon patent expiration of biologics was predicted to have a tremendous impact on costs as well when the first biosimilar was released in 2015. The U.S. Food and Drug Administration (FDA) published its Biosimilars Action Plan (BAP) in 2018; it was updated in April 2024 to reinforce its strategy to further expand biosimilar product availability and use, marking the 50th biosimilar agent release. According to Sarah Yim, MD, director of FDA’s Office of Therapeutic Biologics and Biosimilars, “The [updated] BAP describes the agency’s high-level vision to encourage innovation and competition for biologics and to facilitate the development of safe and effective biosimilar and interchangeable biosimilar products at potentially lower costs for patients.”

This article focuses on four goals that are designed to increase biosimilar uptake: improving efficiency of the biosimilar development and approval process; maximizing scientific and regulatory clarity surrounding biosimilars; developing communication strategies to improve patient, clinician and payer understanding of biosimilars; and supporting market competition, as well as identifying misinformation.

The Inflation Reduction Act (IRA): Continued Implementation

Although many aspects of the IRA are designed to drive down costs that cover a multitude of areas outside of the healthcare environment, three primary components are related to prescription drugs: the Drug Price Negotiation Program, Medicare Part B and Part D inflation rebates and the Medicare Part D redesign.

In early October 2024, the Centers for Medicare and Medicaid Services (CMS) released final guidance outlining the process for the second cycle of drug price negotiations under the Medicare Drug Price Negotiation Program. It also explains how CMS will help ensure Medicare beneficiaries access the first and second wave of negotiated prices (first 10 drugs, Jan. 1, 2026; next 15 drugs, Jan. 1, 2027). Implementation will be supported by a Medicare transaction facilitator to ensure Medicare beneficiaries and pharmacies have access to maximum fair prices, as well as CMS-hosted monthly technical calls for pharmacies and a series of patient-focused roundtable events.

As part of the IRA Rebate Program, some Medicare beneficiaries paid less for coinsurance for 54 Part B drugs through the end of 2024. The law includes a rebate program that reduces their financial responsibility for co-pays for medications that increase in price by more than the rate of inflation. Collectively, more than 100 drugs have sustained the co-pay price reductions through the program since April 1, 2023. This will continue on a quarterly basis through 2025. For more information, see the quarterly average sales price (ASP) pricing file at www.cms.gov/medicare/payment/part-b-drugs/asp-pricing-files. Qualifying products are indicated with “inflation-adjusted coinsurance” in the notes column.

Rebate implementation proposals will:

• Codify policies related to rebates drug manufacturers must pay when the price of their product increases more rapidly than inflation
• Remove 340B Drug Pricing Program claims using national provider identities and/or Medicare provider numbers from all claims used to determine rebate amounts
• Establish a process for reconciling rebate amounts for Parts B and D drugs
• Clarify rebate amounts in specific circumstances such as when drugs are subject to wastage refunds

Biosimilar reimbursement is enhanced to encourage use. IRA establishes a payment rate for biosimilars under Part B during the initial period:

• Initial period payment rate is the lesser of the biosimilar’s wholesale acquisition cost (WAC) +3%, or 106% of the reference product’s ASP for biosimilars furnished on or after July 1, 2024.
• Increased Part B add-on payment for qualifying biosimilars from 6% to 8% of the reference product’s ASP for a five-year period. During this period, the payment for such biosimilars would be the biosimilar’s ASP +8% of the ASP of the reference biological.

The accuracy and completeness of claims data drives rebates calculated by CMS and paid by the manufacturer.^1,2,3

The ABCs and Ds of Medicare

• Part A covers the inpatient environment with the inpatient prospective payment system rules following a fiscal year calendar effective Oct. 1; 340B program pricing does not apply.
• Part B covers the outpatient environment with the outpatient prospective payment system (OPPS) rules and the physician office setting with the physician fee service (PFS) rules following a calendar year effective Jan. 1. Drugs are covered as incident to both OPPS and PFS. Some sites will be eligible for the 340B pricing program.
• Part C Medicare Advantage (MA) may include drugs controlled by pharmacy benefit managers (PBMs). Each eligible Medicare beneficiary has the option of remaining a traditional Medicare patient or becoming a Medicare Advantage patient (Part C) instead. This means leaving “fee-for-service” and moving to managed care provided by the private sector. Greater than 50 percent of Medicare recipients have moved to the MA option. (The beneficiary could change on an annual basis, although it’s difficult to switch to once again become a traditional Medicare patient.) Medicare Advantage is operated by commercial/private insurance plans. Medicare pays these plans a fixed fee per patient for taking these beneficiaries into their managed care plans. These companies profit if the expenses for these patients are less than the flat fee they receive, hence PBMs, prior authorizations, site-of-care, treatment ladders, formularies, etc., are used to reduce costs.
• Part D provides prescription drug coverage for home/ambulatory use. Medication therapy management is available; applicable sites are eligible for the 340B pricing program.

PrEP for HIV and Related Preventative Services

In a somewhat surprising move, CMS Medicare moved oral pre-exposure prophylaxis (PrEP) dosage forms out of Part D and into Part B effective Sept. 1, 2024. This means they will cover oral and injectable forms of PrEP and other related services to prevent HIV without cost-sharing (i.e., deductibles or co-pays) under Medicare Part B. CMS posted a final national coverage determination (NCD) for PrEP using antiretroviral drugs to prevent HIV infection. NCDs are made through an evidence-based process and are posted on the CMS Medicare Coverage Center website to provide stakeholders with the Medicare coverage criteria for each technology, a summary of the evidence considered and CMS’ rationale for the decision. See www.cms.gov/medicare/ coverage/prep for more information.

Despite concerns raised by the pharmacy and patient community, CMS recently confirmed that with this transition, HIV PrEP prescribed by a pharmacist will not be covered by Medicare Part B. Although pharmacists have expanded authority to prescribe HIV PrEP in many states with many HIV PrEP clinics by pharmacists, there is the possibility that this unintended consequence of the NCD may impact many Medicare beneficiaries and pharmacists. Additionally, people can access PrEP medications only from a pharmacy that is enrolled in Medicare Part B. Medicare Advantage plans must follow this NCD, including providing PrEP drugs for HIV with no cost sharing at in-network providers beginning Sept. 30, 2024.

CMS determined that PrEP using antiretroviral drugs to prevent HIV is covered as an additional preventive service for individuals at increased risk of HIV acquisition. CMS found that PrEP using antiretroviral drugs to prevent HIV is reasonable and necessary for the prevention of an illness or disability; recommended with a grade of A by the United States Preventive Services Task Force (USPSTF); and appropriate for individuals entitled to Medicare benefits under Part A or enrolled under Part B.

The physician or other healthcare practitioner who assesses the individual’s history will also make the determination of whether the individual is at increased risk for HIV. CMS covers furnishing HIV PrEP using antiretroviral drugs, including the supplying or dispensing of these drugs and the administration of injectable PrEP.

For individuals being assessed for or using PrEP to prevent HIV, CMS covers all the following as an additional preventive service: up to eight individual counseling visits with a physician or other healthcare practitioner every 12 months, which include HIV risk assessment (initial or continued assessment of risk); HIV risk reduction and medication adherence; up to eight HIV screening tests every 12 months; and a single screening for hepatitis B virus.⁴