As prescription drug costs have continued to rise, Medicare Part D plan sponsors and the federal government have sought creative solutions to mitigate the financial impact. CMS recently brought forth a proposal in the “Contract Year 2021 and 2022 Medicare Advantage and Part D Proposed Rule” aimed at allowing plan sponsors greater flexibility to manage the cost and utilization of specialty medications. Specifically, the provision would permit plan sponsors to introduce a preferred specialty tier to their formularies starting in CY2021.
This paper outlines the key provisions of the proposal and considers the implications to the primary stakeholders in the Part D market: plan sponsors, beneficiaries, drug manufacturers and the federal government. We also explore which types of plan sponsors may benefit from this provision and what the potential downsides may be.
