What If You Build It and They Don’t Come: IPI May Be Vendor-Less


January 11, 2019

While the initial reaction was somewhat muted, opposition to the Administration’s framework for the International Pricing Index (IPI) model has grown and spans nearly all stakeholder groups, including patients, providers, payers, pharmaceutical manufacturers, and wholesalers. With the comment period now over—and resources limited under the government shutdown—CMS is having quite the job of going through close to 4,000 submitted public comments.

The IPI model seeks to index reimbursement on an international benchmark, cutting payment for a significant number of Medicare Part B drugs by 30%, and would be phased in over a 5-year period with mandatory participation in 50% of Part B drug markets.

One group that unabashedly supports the model is the Patients for Affordable Drugs (P4AD). P4AD argued that full implementation could be achieved in 3 years (rather than the proposed 5 years), which “should be adequate for the players to adjust to the new system.” However, the group is unsure about how the federal government could create a sustainable business model for vendors “that [would be] both viable and responsive to customers,” or how many potential vendors would need to participate to make the model profitable and sustainable. 

Many other patient groups, including the American Cancer Society Cancer Action Network, are concerned about access and want oncology drugs excluded from any Part B model; several groups want Oncology Care Model (OCM) participants to be excluded from participation. The initial advance notice of proposed rulemaking was uncertain how models like the OCM would be incorporated.

Lack of interest from potential vendors was a chief factor that led to the downfall of the Competitive Acquisition Program in 2008. The same may be true for this model—no group is jumping at the chance to be a vendor; there is only mild interest by a few potential candidates, but only if CMS makes many changes to the model. Provider groups, including the American College of Rheumatology and the American Academy of Ophthalmology, support the provider-vendor design for the model if the program is made voluntary and does not require vendors to work nationally. Both CVS Health and Express Scripts believe CMS may have a very tough time finding organizations to participate as vendors because the price setting does not allow for negotiation. America’s Health Insurance Plans (AHIP) believes that pharmaceutical manufacturers or organizations with conflicts of interest should not be vendors. 

Congress is also concerned that changes to Medicare policy could unintentionally harm beneficiaries. On January 9, House Ways and Means Committee leaders sent a bipartisan letter to HHS with concerns about proposals such as the IPI model that have not received input from Congress, urging the Administration to be more transparent about upcoming Innovation Center projects. This letter comes on the heels of a letter signed by 339 patient and provider groups and sent to Senate and House leadership in December voicing concern about the mandatory pricing “experiment affecting Medicare beneficiaries who take Part B-covered drugs.” (See the December 14 issue of Health Policy Weekly for further details.) 

It seems that HHS has its work cut out for it if the Administration wants this pricing model, or a variant thereof, to have a chance at implementation. Rumors abound about a proposed rule as early as next month, but—given the staunch opposition to the advance notice—a proposal in the next few weeks seems unlikely.

Health Policy Weekly is written by Xcenda, a consultancy and business unit of AmerisourceBergen Specialty Group. Visit Xcenda’s online archive to access more health policy news.

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