CMS Pub. 100-18, ch. 6, § 30.2.4

Regulations at 42 CFR §423.578(a)(7) allow Part D sponsors to exempt a formulary tier, in

which it places very high cost and unique items, from tiered cost-sharing exceptions. In order to

ensure that a Part D sponsor does not substantially discourage enrollment by specific patient

populations reliant upon these medications, CMS will only approve specialty tiers within

formularies and benefit designs that comply with the following:

• Only one tier is designated a specialty tier exempt from cost-sharing exceptions.

• Cost-sharing associated with the specialty tier is limited to 25% after the standard

deductible and before the initial coverage limit (or up to 33% for sponsors with decreased

or no deductible under alternative prescription drug coverage designs). When applying a

reduced deductible, sponsors are limited to the maximum specialty coinsurance levels as

defined each year in the Bid User Manual. The deductible applied to the non-specialty

tiers may not exceed the deductible that is applied to the specialty tier.

• Only Part D drugs with sponsor negotiated prices that exceed the dollar-per-month

amount established by CMS in the annual Call Letter may be placed in the specialty tier.

CMS will apply an upfront evaluation across all plans for drugs that exceed the dollar-per-month threshold and are intended for inclusion in the specialty tier.

• If not all drugs (including all strengths) within a category or class meet the criteria for

inclusion in the specialty tier, the sponsor must ensure that placement of the remaining

drugs among the other tiers of the formulary does not substantially discourage

enrollment.

Part D sponsors will need to evaluate the negotiated prices at the drug product strength, package

size, and formulation level in order to determine appropriate inclusion of the drug in the Part D

plan’s specialty tier. In addition to cost calculations, CMS considers claims history in reviewing

the placement of drugs on Part D sponsors’ specialty tiers. Except for newly approved drugs for

which Part D sponsors would have little or no claims data, CMS will approve specialty tiers that

only include drugs when their claims data demonstrates that the majority of the fills exceed the

specialty tier cost criteria. Part D sponsors should be prepared to provide CMS with the

applicable claims data during the formulary review process if requested. Also, if a Part D drug

product is available in multiple strengths, package sizes, and formulations, CMS will only allow

inclusion on the specialty tier of those strengths, package sizes, and formulations that would

reasonably exceed the dollar-per-month threshold.

Part D sponsors must evaluate the long acting nature of some drug formulations and calculate the

monthly cost across the drug's full duration of action in considering possible specialty tier

placement. For example, if the specialty tier threshold was $600 dollars, a long acting

formulation with a plan negotiated price of $900 dollars that lasts for 3 months would not be

eligible for the plan's specialty tier since the monthly cost is only $300 dollars.