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CMS Unveils IPI Demonstration Project

posted: December 11, 2018

 In a speech to the Department of Health and Human Services in late October, President Trump unveiled his administration’s new plan to reduce Medicare’s costs for prescription drugs. The administration plans to align Part B drugs with international prices using a model called the International Pricing Index (IPI). The proposed model would benchmark US drug prices against 16 other countries that reportedly have lower drug prices.

CMS has issued an Advance Notice of Proposed Rulemaking (ANPRM) outlining its plans for a demonstration project intended to change the way Medicare pays for Part B drugs. Beginning in 2020 and extending until 2025, the payment model would overhaul current reimbursement for Part B drugs in favor of a target price derived from the IPI. CMS claims that this approach could generate a 30% savings in total spending for the selected drugs-- a projected savings of $17.2 billion.

The OAR signed on to a letter sent to congressional leadership, outlining several concerns with the IPI demonstration. The letter stressed the model would hinder access by putting vendors with no clinical or medical expertise between patients and doctors. The letter goes on to say that CMS plans to use reference pricing from countries with health care models where government bureaucrats, not physicians, make medical decisions.

In addition, the OAR also plans to sign on to comments that will be submitted to CMS responding to the ANPRM. CMS is expected to issue a proposed rule on the model in the spring of 2019, in response to feedback gathered from the AMPRM.