The Fiscal Year 2019 Budget proposes to give the U.S. Department of Health and Human Services (HHS) authority to move certain drugs currently covered under Medicare Fee-for-Service Part B to Part D in order to leverage the negotiating power of Medicare Part D plans. Unlike in Part B, Part D drug prices are negotiated between manufacturers and private Part D plan sponsors. The objective of shifting drugs to Part D is that private insurers could potentially lower the net price of drugs through cost and utilization control mechanisms already in place for Part D drugs but not currently used for Part B.
According to the “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs,” HHS may send President Trump a report to identify particular Medicare Part B drugs or classes where lower prices could be obtained by Part D. A benefit to Medicare from shifting drugs to Part D is the introduction of another payer, the pharmaceutical manufacturer, to share in the cost of the drug. Pharmaceutical manufacturers will pay 70% of the cost for brand drugs in the Part D coverage gap in 2019 for applicable beneficiaries. As a result, some drug spending liable to Medicare in traditional Part B would be shifted to the manufacturer.