CMS Takes Next Steps on Medicare $2 Drug List Model

In another move to lower drug costs for Medicare beneficiaries, the Centers for Medicare & Medicaid Services (CMS) released new information on the Medicare $2 Drug List Model.

On October 8, 2024, CMS published a Request for Information (RFI), seeking feedback on the model from interested parties. They included a sample Medicare drug prices list they intend to include under the proposed model. In accordance with President Biden’s Executive Order 14087, “Lowering Prescription Drug Costs for Americans,” the model will give enrollees access to certain generic prescription drugs for a low, fixed copayment of no more than $2 for a month’s supply per drug.

Here are the highlights and what it could mean for your clients on prescription drug plans (PDPs).

What Does CMS Aim to Improve with the Medicare $2 Drug List Model?

With this model, CMS’ Innovation Center intends to test a simplified approach to low generic drug costs and further control Medicare Part D out-of-pocket costs. They hope to see if their approach can:

• Improve medication adherence
• Lead to better health outcomes
• Improve satisfaction with Part D benefits among both beneficiaries and prescribers

CMS Administrator Chiquita Brooks-LaSure states, “The Medicare $2 Drug List Model will aim to help improve access to and affordability of low-cost generic drugs for people with Medicare prescription drug coverage, and we encourage the public to provide feedback on the model.”

The Innovation Center takes its cue from standardized drug lists with low fixed prices that already exist, especially among large retail pharmacies and grocery chains. CMS’ version, however, takes a more tailored approach to those with Medicare, targeting drugs that are more prevalently used by older Americans.

What Are the $2 Drug List Parameters?

CMS will not pick just any drug to include on their $2 drug list. They plan to adhere to certain parameters:

• Must be a Part D drug
• Must pass certain quantitative and clinically driven processes and pass review from an external technical expert panel
• Treats more common conditions, like high cholesterol and blood pressure

Additionally, any drug on the list would not be subject to utilization management requirements, except for safety-related requirements, at any network pharmacies.

Is Participation Required for Part D Carriers?

No; participation in the Medicare $2 Drug Model List is voluntary for Part D sponsors.

When Will Changes Go into Effect?

Pending further development of the model and revisions to the Medicare drug list, the capped prices could go into effect as early as January 2027. While this might seem far off for beneficiaries, it gives Part D carriers time to plan accordingly.

How Does the Medicare $2 Drug List Model Impact Clients?

With low fixed prices on generics that treat common conditions, the model’s impact on your clients should be overwhelmingly positive. Especially for those who take multiple medications, the low copay should come as a relief. Your clients could enjoy more predictable Medicare out-of-pocket costs at the pharmacy and an overall improved experience with their coverage.

How Does the Medicare $2 Drug List Model Impact Agents?

The $2 Drug List demonstrates that CMS aims to keep Part D alive and well, which means it’s an important component to your portfolio. Low fixed copays are an attractive reason to choose a PDP, so when the time comes, make sure to offer plans from Part D sponsors participating in the model. Additionally, consider offering Medicare Supplements (Med Supps), the natural complement to a PDP.

Imagine the possibilities for loyalty, retention, and referrals when you inform your client that they’ll only owe $24 per year per prescription for certain common drugs!

Next Steps

Before and after implementing the model, CMS will continue to revisit and update the $2 Drug List at regular intervals as new generic drugs launch, clinical indications change, and pricing trends fluctuate.

According to CMS Deputy Administrator and Director of the Innovation Center, Liz Fowler, “The initial version of the $2 Drug List represents a starting point for the drug list that would be included in the model. CMS intends to include many drugs that are used to treat common conditions for people with Medicare, with periodic updates to the drug list once it is finalized.”

The Innovation Center is seeking feedback on the ongoing process so they can refine the model and its implementation.

We’ll continue to keep you updated on the Innovation Center’s progress and any important changes to the Medicare $2 Drug List Model. For more information, visit CMS.gov.

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