CNS Communiqué


The Centers for Medicare and Medicaid Services (CMS) seek input on a new International Pricing Index (IPI) payment model to reduce what Americans pay for prescription drugs.  Under the IPI model, described in an Advance Notice of Proposed Rulemaking (ANPRM), Medicare payments for select provider-administered drugs – not medicines purchased at pharmacies – would shift to a level more closely aligned with prices in other countries.

The move from current payment levels to payment levels based on international prices would be phased in over a five-year period, would apply to 50% of the country, and would cover selected Part B Medicare drugs.  Currently, the government pays for drugs in Part B according to a formula based on each drug’s average sales price, plus a 6% markup for the provider.  The proposed rule also sets up a first-time system inside Medicare through which drugs would be sold to vendors instead of directly to providers and hospitals.  It would remove incentives for providers to prescribe more-expensive drugs by paying them a flat fee for storing the medications instead of a fee based on a percentage of the drug’s price.

CMS will review comments and consider issuing a proposed rule for the IPI in the spring of 2019, with a potential model start in spring 2020.  Comments will be received on the ANPRM until December 31, 2018.