In a bid to lower drug costs, the Trump administration is allowing Medicare Part D plans to alter their formularies — or lists of medicines for which insurance coverage is provided — in hopes of encouraging greater negotiation between the plans and drug makers.
Specifically, the Centers for Medicare and Medicaid Services will permit plans to include different indications, or uses, for prescription drugs. Currently, a Part D plan that places a medicine on its formulary must cover each indication that was approved by the Food and Drug Administration, even if a plan would otherwise want to cover a different medicine for that purpose.
As far as CMS is concerned, this requirement “can discourage Part D plans from including more drugs on their formularies and limit their power to negotiate discounts.” So the agency is now allowing the plans to pursue what are known as “indication-based formulary designs,” which are already used by private insurers and should make it possible for the plans to provide more choices and lower prices.
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