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CMS Launches Part D Senior Savings Model for Insulin Products

On March 11, 2020, the Centers for Medicare & Medicaid Services (CMS) announced a voluntary model within the Medicare Part D program that would allow certain Part D plans to cap Medicare beneficiaries’ out-of-pocket costs for insulin at $35 per 30-day supply for the entire benefit year (the Model).

Comprehensive information about the Model can be found here. CMS seeks voluntary participation from both manufacturers of insulin and Part D plan sponsors alike. The deadline for manufacturers to apply to participate in the Model is March 18, 2020, while plans have until April 10, 2020. 

Details of the Model

The Model will allow Part D plan sponsors offering enhanced alternative benefit designs to implement pre-set, predictable copays for insulin products in each of the deductible, initial coverage, and coverage gap phases of the Part D benefit. Through statutory authority, CMS is waiving the requirement that if a Part D plan sponsor chooses to offer supplemental benefits that decrease out-of-pocket costs for members in the coverage gap phase, the pharmaceutical manufacturer of an applicable drug only applies its 70% discount (as dictated by the Coverage Gap Discount Program, or CGDP) on the amounts remaining after the plan’s supplemental benefit is applied. Instead, the Model will essentially flip the order in which supplemental benefits and manufacturer discounts are applied, resulting in a new process in which a plan’s supplemental benefits apply after participating manufacturers provide their 70% discount.

The Model is set to run for five years, beginning on January 1, 2021. Participation is limited to approved pharmaceutical manufacturers and Part D plan sponsors, and Medicare enrollees who do not qualify for the low-income cost-sharing subsidy and utilize a Model drug for which their Part D plan provides supplemental benefits.

Responsibilities of Manufacturers

Pharmaceutical manufacturers that currently have a Medicare CGDP Agreement and label and market an applicable drug that is, or contains, a drug classified as insulin in the American Hospital Formulary Services Drug Information or the DRUGDEX Information System compendia are eligible to apply for participation in the Model. The manufacturer must agree, via an addendum to their CGDP Agreement, to include all marketed drugs that meet the definition of a covered Part D drug labeled by it or a subsidiary that is, or contains, insulin. Supplies used for the injection of insulin are not covered in the Model.

Responsibilities of Plans

Part D sponsors are required to offer at least one vial dosage form and one pen dosage form of each insulin type, defined as rapid-acting, short-acting, intermediate-acting, and long-acting, at a $35 copay for 30-days’ supply in the deductible, initial coverage, and coverage gap phases, where there is (i) a participating manufacturer for that type of insulin; and (ii) a Part D sponsors’ participating PBP includes that Model drug on formulary.

Issuances from CMS indicate that the application and selection process for the Model is non-competitive and is open to all manufacturers that label and market an applicable drug that is, or contains, a drug classified as insulin in the AHFS Drug Information or the DRUGDEX Information System compendia.

Manufacturers who wish to participate in the Model should take action now to review available guidance from CMS and to submit an executed addendum to the CGDP Agreement.

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