Trump administration proposes Medicare rules aimed at opioids, drug costs

(Reuters) - The Trump administration on Thursday proposed changes to Medicare drug plans including limits on opioid prescriptions and rules aimed at reducing drug costs for seniors, such as requiring health insurers to pass on discounts to consumers.

FILE PHOTO: Bottles of medications line the shelves at a pharmacy in Portsmouth, Ohio, U.S. on June 21, 2017. REUTERS/Bryan Woolston/File Photo

To help combat overprescription and abuse of addictive painkillers, the U.S. Centers for Medicare and Medicaid Services (CMS) said it was considering allowing drug coverage plans to require beneficiaries to obtain prescriptions for opioids only from selected prescribers or pharmacies.

CMS, part of the Department of Health and Human Services, oversees healthcare and drug benefits under the government-paid health plan for older and disabled people, which includes coverage plans managed by private insurers.

CMS said it is requesting information on applying discounts drug companies negotiate with health plans to prices beneficiaries pay at the pharmacy counter. Drugmakers have argued that consumers with high deductibles or other coverage limitations are not getting the benefit of such contracted discounts.

The proposal signals “that CMS is starting down the road of potentially disrupting the prescription drug rebate and distribution system,” Evercore ISI analyst Michael Newshel said in a research note.

The drug industry has been on edge for two years about the potential for more government pressure on pricing after sharp increases in the costs of some life-saving drugs drew scrutiny in the press and among lawmakers.

Newshel said the CMS change could lower the out-of-pocket price paid by consumers for brand-name drugs, while also potentially lowering the revenue and rebate dollars that now flow to drug distributors and pharmacy benefit managers (PBMs), particularly if such a move to transparency were adopted more broadly beyond Medicare.

Health insurers often contract with PBMs like Express Scripts Holding Co to manage plans for prescription drugs, which are distributed by wholesalers like AmeriSource Bergen Corp and McKesson Corp.

CMS said it is also considering a change in treatment of “biosimilar” drugs, which are copies of expensive biotechnology drugs that have lost patent protection. To encourage the use of lower-cost alternatives, CMS said it may cover biosimilars like other generic drugs when determining how much certain beneficiaries pay for drugs out of pocket.

The agency may also allow midyear changes to prescription drug formularies when a new, lower-cost generic becomes available and may revise pharmacy participation rules to promote greater participation of local pharmacies.

President Trump has in the past championed other tactics for reducing prescription prices, including allowing Medicare to directly negotiate with drug companies or import medicines from other countries. But those options were not mentioned in the proposed rule changes.

If finalized, the changes would take effect in contract year 2019.

Reporting by Deena Beasley in Los Angeles; Editing by Matthew Lewis and Cynthia Osterman