When a new Administration took office last year, promises to tackle healthcare costs ensued. Some ideas proposed by Congress and new HHS Secretary Alex Azar included the repeal of the Affordable Care Act, drug importation, government-controlled rebate negotiations within Medicare Part D, passing of rebates to Medicare Part D patients at point of sale, and work requirements for Medicaid.1 Each suggestion met with some dissent from leading lobby groups such as the Pharmaceutical Care Management Association and the Pharmaceutical Research and Manufacturers of America. However, increasing pressure from constituents and the threat of a prolonged government shutdown led to consensus, and President Trump signed the Bipartisan Budget Act of 2018 (BBA of 2018) into law on February 9, 2018. Notably, Medicare Part D prescription drug coverage provisions were included in the law to reduce Medicare costs.2

Below is a summary of changes resulting from the BBA and the potential impact to various stakeholders.3,4

So who are the winners and losers of the BBA of 2018, and do seniors and the CMS save? The answers to both questions remain open for debate. About 2.4% of Part D enrollees are considered high-cost beneficiaries most likely to benefit from the changes; however, these beneficiaries account for 20% of all Part D out-of-pocket (OOP) costs. The changes reduce the amount required to move a patient into the catastrophic phase by approximately $500 and on average reduce total OOP spending for high-cost enrollees by $400. The BBA also transfers liability from plan sponsors to manufacturers. Plan sponsors may save up to $700 for each high-cost beneficiary and an estimated $5.5 billion for all beneficiaries in the coverage gap. The potential rise of beneficiaries in the catastrophic phase may increase a plan sponsor spend by about $2.4 billion. Therefore, overall insurer liability beyond the initial coverage limit is expected to decline by $3 billion, or 10%, in 2019 based on the changes.4

The Congressional Budget Office estimated a $10.05 billion positive budget impact of both changes over 10 years (2018-2027).1

What do the changes enacted mean to payer marketers? In a word, vigilance. Payer marketers need to continue to assess the impact of pushing risk and accountability not only to manufacturers but to payers as well. On February 12, 2018, President Trump’s fiscal year (FY) 2019 budget was released with additional proposals related to Medicare Part D drug coverage, such as sharing rebates at POS with beneficiaries by Part D plans.1 The proposed sharing of rebates at POS with beneficiaries could act as financial offsets to manufacturers affected by the increase of manufacturer discounts in the coverage gap.6

Neither payers nor manufacturers are shielded from legislated changes. Payers will continue to monitor the changes and policies from the federal government, forecast impact, and leverage their power to control price and volume while touting their support of a value-based healthcare landscape.

Payer marketers need to be proactive, stay ahead of the game, and develop meaningful clinical and financial differentiation for products. Sole rebating is no longer the endgame. Both payers and manufacturers will respond to the impact of the changes and proposals. Key innovative partnerships with payers may lead to real-world evidence and value-based contracting that generate noteworthy return on investment for both payers and manufacturers.

With no clear winners and losers in the ever-changing healthcare landscape, why not get ahead of the curve?


  1. Goldstein A, Eilperin J. Senate finance committee evaluates Alex Azar to be the next HHS secretary. The Washington Post. https://www.washingtonpost.com/national/health-science/senate-finance-committee-to-evaluate-alex-azar-to-be-the-next-hhs-secretary/2018/01/08/e6d790c0-f48f-11e7-b34a-b85626af34ef_story.html?utm_term=.656b61434da2. Published January 9, 2018. Accessed April 3, 2018.
  2. Cubanski J. Summary of recent and proposed changes to Medicare Prescription Drug Coverage and Reimbursement. Kaiser Family Foundation. https://www.kff.org/medicare/issue-brief/summary-of-recent-and-proposed-changes-to-medicare-prescription-drug-coverage-and-reimbursement/. Published February 15, 2018. Accessed April 3, 2018.
  3. Kelly C. Part D coverage gap discounts deepened to 70% in budget bill. Pink Sheet. Published February 8, 2018. https://pink.pharmaintelligence.informa.com/PS122488/Part-D-Coverage-Gap-Discounts-Deepened-To-70-In-Budget-Bill. Accessed April 3, 2018.
  4. O’Neill Hayes T. Examining the effects of recent and proposed reforms to Medicare Part D. American Action Forum. https://www.americanactionforum.org/wp-content/uploads/2018/02/2018-02-15-Pres-Budget-Part-D-changes-FINAL.pdf. Published February 20, 2018. Accessed April 3, 2018.
  5. Walsh N. Biosimilars: consensus recommendations issued. MedPage Today. https://www.medpagetoday.com/rheumatology/generalrheumatology/67768. Published September 8, 2017. Accessed April 3, 2018.
  6. Kelly C. Medicare Part D drug price policies may offer financial trade-offs. Pink Sheet. https://pink. informa.com/PS122495/Medicare-Part-D-Drug-Price-Policies-May-Offer-Financial-TradeOffs. Published February 11, 2018. Accessed April 3, 2018.