Step Therapy Policy Alarms Cancer Leaders

OncologyLive, Vol. 19/No. 20, Volume 19, Issue 20

A policy change that allows step therapy provisions in Medicare Advantage insurance plans is setting off alarm bells among oncology leaders, who have joined medical associations from across the country in objecting to the revision.

Stephen S. Grubbs, MD

A policy change that allows step therapy provisions in Medicare Advantage insurance plans is setting off alarm bells among oncology leaders, who have joined medical associations from across the country in objecting to the revision. The controversy has been mounting since the Centers for Medicare and Medicaid Services (CMS) announced in August that step therapy would be permitted for drugs covered under Medicare Part B.

Step therapy, a form of prior authorization, will enable Medicare Advantage plans, starting January 1, 2019, to require that preferred drugs be prescribed first and used until they prove ineffective before physicians can try other, potentially higher-cost agents. The policy reverses a prohibition on step therapy for Medicare Advantage plans established in 2012.1

Anticancer drugs currently covered under Part B include infused drugs, such as chemotherapy, chimeric antigen receptor T-cell therapies, and, in some cases, other types of immunotherapy. Additionally, oral anticancer drugs that are also available as injectables are covered by Part B.

As it stands now, oncology experts do not expect the Medicare Advantage step therapy provision to have a large impact on treatment protocols because anticancer agents can rarely be substituted for one another. However, that’s not the case with supportive care drugs, said Stephen S. Grubbs, MD, vice president of clinical affairs for the American Society of Clinical Oncology (ASCO).

Based on prior experience with private payer policies, “It’s rare for step therapy to force changes in tumor treatment, but it often forces us to change supportive medications we prescribe patients with cancer for problems such as peripheral neuropathy. You start with a less expensive medication that often fails and work your way up to a more effective drug, which delays the benefit of therapy. And there are times when step therapy requirements do prevent you from getting your patients the right drug at the right dose at the right time. That’s just not acceptable, and that is why ASCO opposes this decision by CMS.”

In September, ASCO joined more than 90 state and national professional societies in urging CMS to reconsider its decision in a letter that the American Medical Association circulated.2 The letter also was signed by the American Society of Hematology, the American Society for Radiation Oncology, the Society of Gynecologic Oncology, and the American Urological Association. The Community Oncology Alliance (COA) also is opposing the policy.


ASCO and the other physician groups have urged CMS to reverse the step therapy decision on grounds that such requirements could end up denying a significant number of patients with cancer timely access to medications their doctors deem best suited for them, based on assessments of each patient’s unique circumstances. “While a particular drug or therapy might be generally considered appropriate for a condition, the presence of comorbidities, potential drug-drug interactions, or patient intolerances, for example, may necessitate the selection of an alternative drug as the first course of treatment,” the AMA letter states.In explaining the rationale for the revised policy, CMS said that it will incentivize drug manufacturers and distributors to negotiate drug prices with Medicare Advantage plans much as they do for private payers that employ step therapy. The agency projects a median value of $1 billion in potential savings. In addition, CMS said, more than 50% of the savings achieved through step plans must be returned to Medicare beneficiaries in the form of gift cards or other noncash transfers.1

The changes “should not result in increased costs to enrollees,” CMS said in its memo. Although the new step therapy guidelines compel plans to share at least half of any savings with patients, the competitive market for Medicare Advantage plans in many areas might pressure them to pass more savings to enrollees via lower premiums. Moreover, CMS officials said, regulatory safeguards would prevent access problems for patients. Patients and their doctors will have the ability to challenge step therapy decisions and policies, and reviews of those challenges must be completed swiftly, CMS said. Plans will have 14 days to address regular requests and 72 hours to adjudicate expedited requests.1

CMS has encouraged Medicare Advantage plans to use their Part D protocols as templates for determining when it is appropriate to use step therapy for drugs in Part B. Part D drugs include self-administered prescription drugs, such as immunosuppressants and anticancer oral drugs. As part of the policy change, CMS emphasizes that physicians can be required to use lower-cost Part D drugs before being allowed to try a Part B drugs, which are often more expensive.

This ability to shift patients from Part B to Part D drugs, according to CMS, is a highlight of the new policy because it will give Medicare Advantage plans far more power than they currently have to direct patients to the best treatment, regardless of where it’s administered, and to win lower prices by getting more drug makers to compete against one other. However, to some observers, the ability to move patients back and forth among Part B drugs and Part D drugs suggests that CMS will allow a much more aggressive form of step therapy than merely preferring some drugs in a particular class over other drugs in that same class.

For its part, CMS stresses that “Medicare Advantage plans may apply step therapy to control the utilization of services in a manner that does not create an undue access barrier for beneficiaries.”1 This also precludes using prior authorization as a requirement for emergency services, CMS said. “Step therapy or other utilization management policies may not be used as an unreasonable means to deny coverage of medically necessary services or to eliminate access to a Part B covered benefit.”

However, many questions are left open to interpretation. It’s not clear, for example, whether aggressive cancers count as emergencies that would override step therapy protocols. Another unanswered question is if newer drugs proved superior to earlier agents would merit priority in a step therapy lineup.

“In conversations we’ve had with Health and Human Services Secretary Alex Azar and his staff, they have said they don’t expect this decision to have much effect on anti-cancer drugs. The main intent of the order is to save money by letting plans choose the order in which patients try similar medications with similar efficacy and toxicity. But their perception was that there just weren’t that many intraclass substitutions to be made in oncology,” Grubbs said. The assumption is that less-potent drugs would not be allowed in cancer treatment the way they are in less-urgent conditions, such as high blood pressure. “There might be a place for this in conditions like high cholesterol, where there’s little consequence to making some patients wait a few months for the expensive treatments they need while you figure out which patients do just fine on the cheap medications that have been around for decades. But any sort of delay tends to have dangerous consequences for patients with cancer,” COA Executive Director Ted Okon said in an interview.


“There is no place in cancer care for middlemen from insurance companies or pharmacy benefit managers [PBMs] to make these life-altering decisions, and we already know from our experience with private insurance about the dangers of policies forcing patients to use the cheapest treatments rather than the best treatments for them,” he added.CMS’ decision on step therapy comes at a time when Medicare Advantage policies have become increasingly prevalent among the growing population of Americans 65 years and older, the group most at risk of a cancer diagnosis. Medicare Advantage plans covered 19 million Medicare beneficiaries in 2017, 33% of the total, up from 9.7 million, or 22% of the total, in 2008.3


Step therapy is used by payers to ensure that preferred medicines receive priority and health spending is kept under control.

Collectively, Medicare Advantage plans spend about $12 billion a year on Part B drugs, according to CMS officials. Private payer step plans have achieved savings of 15% to 20% on Part B drug expenditures, and CMS is hoping to achieve similar results by implementing the approach in Medicare Advantage plans.4

Indeed, CMS’ move toward step therapy mirrors the trend in private sector insur- ance, where the use of step therapy provisions among employers has grown rapidly during the past decade, from 27% in 2005 to 73% in 2013.5 In 2019, 64% of employers cited “establishing aggressive utilization management” including prior authorization, step therapy, and quantity limits for biologics and other specialty drugs, as strategies for tackling the rising costs of health benefits.6

The growth of step therapy plans in the private insurance market has generated a back- lash among patients and advocates nationwide, with critics often describing the plans as “fail first” requirements. In response to complaints, state legislatures have considered laws regu- lating the use of step therapy; such laws have been enacted in at least 18 states and bills are pending in 8 others (FIGURE).7,8

The new CMS rules do not override step therapy laws that incorporate patient protec- tions limiting the use of such protocols. The policy change also forbids plans from using step therapy requirements to stop paying for treatments that patients are using when the new policies take effect. Step therapy require- ments can apply only to treatments that begin after the new rules are adopted. Further, plans that wish to implement step therapy for Part B drugs in 2019 must notify patients in their Annual Notice of Change and their Evidence of Coverage documents prior to the annual election period.

Additionally, CMS’ plan includes a patient engagement element that requires Medicare Advantage plans to provide avenues for their involvement in decisions affecting their care. Plans that implement step therapy must also offer patients the opportunity to partici- pate in “drug management care coordination activities,” a term that CMS defines, “at a minimum,” to include:

•Having interactive medication review and associated consultations for enrollees to discuss all current medications and perform medication reconciliation and follow-up when necessary;

• Providing educational materials and information to enrollees about drugs within the drug management care coordination program; and


• Implementing medication adherence strategies to help enrollees with their medication regimen.The dispute over the step therapy provision is unfolding against a backdrop of frustration among oncology specialists and other physicians over the burden that prior authorization rules and drug utilization management strategies place on patients and practices. In ASCO survey findings published in July 2018, 58% of respondents from nearly 400 oncology practices identified payer practices as the top source of strain, led by prior authorization (78%) and coverage denials and appeals (62%).9

Okon noted that news organizations have recently published reports containing anecdotal evidence that formulary restrictions hurt clinical outcomes. He singled out an 8-month investigation from the Columbus Dispatch as a particularly eye-opening look into the consequences of giving power to PBMs.10

However, there appears to be a paucity of peer-reviewed research into how step therapy approaches affect outcomes in the cancer arena; neither Grubbs nor Okon knew of any research that ties step therapy to inferior outcomes in patients with cancer. Overall, much of the literature on step therapy is gener- ated by industries most directly affected by such policies: pharmaceutical companies, payers, and PBMs.

A 2010 review of 15 studies that examined the effects of step management policies found few concrete benefits and many areas of concern. “Although formulary restrictions may decrease drug costs, several studies have demonstrated that total healthcare costs remained the same or increased,” Rashad I. Carlton, PharmD, and colleagues reported in a study funded by Novartis.11

Similarly, a 2017 literature review, written by Novartis pharmacists, found that step therapy and other formulary restrictions were posi- tively associated with pharmacy cost outcomes but negatively associated with medication adherence, clinical outcomes, patient-reported treatment satisfaction outcomes, healthcare resource utilization for outpatient visits and hospitalization, and medical costs.12


Brenda R. Motheral, PhD, RPh, MBA, a PBM specialist, painted a more favorable picture in a 2011 review of step therapy studies in 5 therapeutic classes: antidepressants, anti-hypertensives, antipsychotics, nonsteroidal anti-inflammatory drugs (NSAIDs), and proton pump inhibitors (PPIs).13 Her findings show that the drug savings and clinical impact of step therapy for antipsychotics was unclear, but that significant savings could be achieved for NSAIDs and PPIs without increasing the use of other medical services. At the same time, Motheral pointed to the need for further research for other therapy classes in which step therapy is used, notably independently funded evaluations “to help reduce the potential for study bias.”Beyond the debate about the practical impact of step therapy provisions, some observers have focused on the ethical considerations of requiring patients to fail a first-step drug before moving on to another medication.

“More than other utilization management tools such as formulary tiering, step therapy raises important ethical concerns regarding the proper balance between cost control and the ability of patients and clinicians to tailor care to the needs of the individual patient,” bioethicists Rahul K. Nayak and Steven D. Pearson, MD, MSc, FRCP, wrote in a 2014 article in Health Affairs.14 Nayak is now an MD candidate at Harvard Medical School and Pearson is president of the Institute for Clinical and Economic Review and a visiting scientist in the Department of Bioethics at the National Institutes of Health. For patients with cancer, they noted, these issues are particularly acute “largely because the possible risks of failure of the first-step therapy are more clinically meaningful to patients and in some cases may represent irretrievable harms.”

Nayak and Pearson proposed 8 ethical criteria that should be incorporated into step therapy policies that require patients to take a less-expensive drug before covering a more expensive medicine:

• Weigh cost savings against long-term outcomes.


• Ensure that first-step drugs are clinically appropriate.CMS believes that its mandated safeguards will eliminate any negative outcomes that have been associated with some step therapy plans, but agency officials say that patients who remain skeptical should be able to buy coverage that does not include step therapy requirements.

According to an analysis by the Henry J. Kaiser Family Foundation, the average Medicare beneficiary has access to 21 Medicare Advantage plans this year. Such numbers make it possible that most Americans will be able to choose among several plans that do and several plans that do not implement step therapy for Part B benefits. But such competition is not universal. Residents of 44 counties currently have access to only 1 Medicare Advantage plan. Barring new competition in those markets, patients would have to accept the incumbent’s decision or enroll in standard Medicare.15

Medicare Advantage plans collectively spend about $12 billion a year on Part B drugs.4 If plans representing half of all patients implement step therapy programs and achieve an average savings of $1 billion per year, that would still be a small fraction of the estimated $535 billion that will be spent on prescription medications in the United States this year.16

“The change to allow step therapy for Part B benefits probably won’t be an earth-shattering move when considered on its own, but it’s just one of a number of moves that [the Trump] administration is making to address the problem of drug pricing,” said Rachel E. Sachs, JD, MPH, an associate professor at the Washington University School of Law who studies how patent law and health law affect innovation and costs. “For example, the FDA is making a real push to get generics and biosimilars onto the market to increase price competition, and CMS has just issued another memo that gives plans more flexibility with the Part D formularies.17 Add everything together and you may see some real downward pressure on prices. But it’s still too early to tell.”

Sachs believes it’s also much too early to make reliable predictions about how many plans will implement step therapy for Part B benefits, how many patients will enroll in such plans, and who will benefit most from the savings. “You can make a plausible argument that the overwhelming majority of plans will implement Part B step therapy, and you can make a plausible argument that very few plans will do so, and you can make a plausible argument that it will vary from place to place such that nearly all of the plans in some plan regions adopt this and virtually none of the plans in other plan regions adopt this,” Sachs said. “As to the question of how any savings will be divided between plans and patients, CMS is obviously working to direct it to patients, but market forces will ultimately determine where the money goes, and that could vary greatly from place to place."


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