CMS’ Proposed Part B Price Controls: Hurdles and Unintended Consequences

5 November 2018
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Key takeaways:
  • On October 25, 2018, the Center for Medicare and Medicaid Services (“CMS”) issued an Advance Notice of Proposed Rulemaking seeking comments on a proposal which, if implemented, would change how Medicare Part B drugs are obtained and reimbursed.
  • Currently, physicians and outpatient hospital facilities purchase Part B drugs from wholesalers or distributors. CMS reimburses those drugs at the amount of the Average Sales Price plus 4.3 percent. Under CMS’ proposal, vendors would purchase Part B drugs, and CMS would provide reimbursement at a rate designed to bring Part B drug prices in closer alignment with the cost of such drugs in specified foreign markets. However, since many foreign governments set prescription drug prices by fiat, CMS’ proposal would effectively impose price controls.
  • CMS’ proposal, if ultimately implemented, would be challenged in court and face a variety of other hurdles including disruption of distribution or shortages of Part B drugs.