Administrative action on drug pricing: Lessons and opportunities for the Center for Medicare and Medicaid Innovation.

Abstract

In October 2022, the Biden administration issued an executive order to the Center for Medicare and Medicaid Innovation (CMMI) to develop new health care payment and delivery models to lower prescription drug costs and promote access to innovative therapies. In response, the agency proposed 3 novel drug payment models for testing. To understand the impact that CMMI demonstration projects can have on the prescription drug market. We examined each of the models listed on the CMMI website and searched the Federal Register and news articles for additional models that contained interventions related to patient out-of-pocket drug costs, Medicare drug spending, or Medicaid drug spending. We excluded models with indirect effects on drug costs (for example, bundled payments). We comprehensively reviewed all previous cases in which CMMI has attempted models addressing prescription drug costs and spending and evaluated the circumstances, impact, and lessons learned that may aid policymakers in the design and implementation of new models. We identified 9 CMMI models containing direct interventions related to drug costs. Among prior models addressing drug prices, nearly half (44%, 4/9) were not implemented because of their scope, voluntary nature, and procedural challenges. No implemented models met the CMMI standard for expansion, although key elements of the Senior Savings model limiting monthly insulin costs to $35 were later incorporated into the Inflation Reduction Act. In future CMMI implementation efforts, we suggest maximizing voluntary collaboration when selection bias concerns are minimal, using mandatory models when not, ensuring that the geographic scope is not overly ambitious, and adhering closely to statutory authority and established administrative procedure to minimize legal challenges and maximize model demonstration utility.