The International Pricing Index Model would completely change the Part B reimbursement and delivery framework with the following: 

  • Require physicians to acquire drugs from a vendor AKA middleman- the IPL Model would contract private sector vendors who use IPI pricing as the baseline for their negotiation with drug manufacturers. The vendors would negotiate with drug manufacturers for lower drug prices and Medicare would in turn reimburse vendors at a rate comparable to the payment rate paid in developed countries including: Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, the Netherlands, and the United Kingdom. CMS plans to select at least 3 model vendors so physicians and hospitals have a number of vendors from which they can obtain drugs and to “encourage vendor competition”. The IPI model would permit hospitals, physicians, pharmacies, manufacturers, group-purchasing organizations, Part D plans or other entities to participate as vendors.

 

  •  Replace the 4.3 percent post-sequester add-on payment to the ASP with a flat fee to physicians. CMS would pay physicians and hospitals a per-month or per-dispense administration fee, which would only compensate them for the cost of administration and would not be tied in any direct manner to the cost of the drug administered. CMS is considering creating several alternatives to the add-on payment amount for model participants:

    •  CMS is also considering whether to uniquely set the payment amount for each class of drugs, physician specialty, or physician practice (or hospital).

    •   To incentivize reduced utilization, CMS is also considering creating a “bonus pool”, where model participants would get bonus payments for prescribing lower-cost drugs or practicing evidence-based utilization. 

 

  • CMS is considering creating a new requirement for manufacturers to report certain international sales data in order to support its implementation of the IPI Model- one approach would be to require manufacturers to provide, on a quarterly basis, international drug sales prices and units sold. 

    • Until CMS gathers such data from drug manufacturers, it will rely on existing data sources in order to calculate the model payment to model vendors for the included drugs.  CMS will use data provided from (1) private companies or obtained through review of manufacturers public fillings in other countries and (2) data from CMS- constructed price comparison based on publicly available source from each country. 

 While CMS believes this proposal would lead to “higher quality of care for beneficiaries and reduced expenses for the Medicare program”it is doing the contrary by putting the lives of the most vulnerable and sickest Medicare patients at risk. This policy would:

  • Slow the pace of innovation and chill investments in new cures and treatments that Part B patients and Seniors need. The U.S Biopharmaceutical industry employs close to 1.7 million Americans and account for 57% of all new drugs developed globally; however, this will change with the current proposal. European countries who follow the IPI have restrictive pricing and access to treatment. For example, patients living in 16 countries referenced by HHS have access to only 55 percent of new cancer medicines, compared to 95 percent in the United States. A 2016 report by the  US Department of Commercefound that international reference pricing and other foreign price setting policies lead to 11-16 percent less private R&D investments worldwide. 

  • Disrupt patient care by forcing changes to providers and their patients. Under this proposal, physicians and patients in selected geographic areas across the county representing 50 percent of Part B spending will be required to participate in the mandatory test of a new reimbursement system. For Physicians, this will result in major disruptions in clinical care, added administrative burdens and lower reimbursement due to the elimination of the current market-based reimbursement system. As it result it would worsen already existing trends of providers no longer being able to deliver care in community settings and shift patients into more expensive and less convenient hospital settings- this would add cost to patients and to the overall system. 

    Inserting a middleman would take the decision-making out of the hands of patients and physicians and put more power in the hands of insurers. Introducing a middleman similar to a PBM can lead to delayed coverage decision, denial of coverage, failure to receive medication in a timely manner.