Medicare’s Protected Class Policy Hinders Rebate Negotiation, Study Finds

A Medicare Part D policy forbidding plan sponsors’ formularies from excluding nearly all drugs in six “protected” classes hinders payers’ ability to negotiate prices and may lead to significantly higher costs to the health care system, according to a recent analysis published in Health Affairs. The study’s lead author notes this is the first peer-reviewed trial suggesting Part D plans “can’t negotiate as high of rebates as they might otherwise be able to” for drugs in the protected classes. 

The protected class regulation has been in place since the Part D program began in 2006 and applies to anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals and immunosuppressants for treatment of transplant rejection. Combined, medications in those classes accounted for nearly one-quarter of drug spending in Part D in 2021, the researchers noted.