Drug Price Law to Launch New Era in Medicare, Top Official Says

Jonathan Blum was a Senate staffer early in his career when Congress developed the original Medicare Part D prescription drug program.

More than 20 years later, he holds a position at the Centers for Medicare & Medicaid Services that gives him huge influence over the next major iteration of drug pricing policy.

Blum returned to the federal government in 2021 in the middle of the Covid-19 pandemic with a goal of expanding the reach of CMS programs after working in the commercial insurance world.

“What I saw during the last three years with the Covid pandemic” was “a health-care system that largely failed many people,” Blum, 53, said in an interview.

“To come back and really take the lessons from the past three years or so, and have CMS better positioned going forward to build more resilient health-care systems, more resilient health-care communities, really focusing on programs for how we help people going forward, that to me is a huge opportunity for us.”

He’ll consider the agency’s work a success if it results in “lower costs to beneficiaries and better clinical measures” as a result of more patients better able to afford needed therapies, he said.

Monumental Task Ahead

Blum is the principal deputy administrator and chief operating officer at the CMS. He has a monumental task ahead of him: leading the entire agency’s policy planning and day-to-day operations as it implements the authorities the Inflation Reduction Act granted to Medicare to negotiate the prices of some of the highest cost drugs.

The No. 2 CMS official is also overseeing the IRA’s provisions allowing Medicare to collect rebates from pharmaceutical manufacturers that raise prices on products faster than inflation, and a redesign of Medicare’s drug benefit.

As a staffer on the Senate Finance Committee under former Chairman Max Baucus (D-Mont.) in the early 2000s, he helped develop prescription drug and Medicare Advantage policies during the establishment of the Medicare Part D prescription drug program. His career eventually took him to the CMS during the Obama administration, where he worked as the principal deputy administrator until 2014.

First Draft Guidance Coming

The CMS must publish by Sept. 1, 2023, the first Medicare Part D drugs selected for negotiation starting in 2026. Draft guidance on the negotiation process for this first group of drugs is expected to come out Wednesday, HHS officials told reporters in a call Tuesday. The guidance will touch on topics like the agency’s plans for the offer and counteroffer process between Medicare and prescription drug companies, and the methodology for applying maximum fair prices.

The drug industry has railed against the drug negotiations, arguing that they will hinder future innovation and do little to lower what patients pay at the pharmacy counter.

The administration fueled further concern last week with the release of President Joe Biden’s fiscal 2024 budget request. The proposal, while unlikely to become law, includes plans to double the number of drugs Medicare would be required to negotiate starting in 2026, and shorten the timeline any drug is exempt from negotiation to five years.

Blum, who from 2014 to 2018 served as an executive vice president for CareFirst BlueCross BlueShield, said engagement with industry groups and others throughout the policy process is “one of the core principles that we have at CMS.”

“We’ve been actively going out into the world to hear feedback and comment and that very active engagement will continue throughout these processes going forward,” he said.

A ‘Customer-Centric’ Agency

With a career spanning more than 25 years, Blum said he’s seen CMS programs, particularly the Medicare Part D benefit, shift away from one “largely driven by the federal budget constraints” to one more focused on delivering savings for beneficiaries.

Medicare didn’t cover outpatient prescription drugs until 2006. When Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which authorized the Medicare Part D program, coverage was driven by the federal budget constraints set at the time, Blum said.

“That meant there was no total cost protection for beneficiaries, particularly those that have chronic disease,” said Blum, a graduate of both Harvard University and the University of Pennsylvania.

Components of the IRA’s Medicare Part D redesign intend to close that gap and allow more people to qualify for low-income protections, Blum said. The law aims to specifically limit out-of-pocket spending for Part D beneficiaries by eliminating the 5% coinsurance requirement for catastrophic coverage in 2024, as well as capping out-of-pocket spending at $2,000 in 2025.

“We are touching many more lives than ever before,” Blum said. “The reach through our programs is so much bigger, which creates so much more opportunity today to really improve our system for the better to make it more responsive, to make it more customer-centric.”

Pairing Knowledge With Outreach

Those who have worked with Blum—better known as “Jon” to coworkers and friends—say his long career, as well as his thoughtful, meticulous approach to health-care policy, make him especially qualified to oversee the IRA’s changes to the Medicare program.

He’s been “working on all the major initiatives of the past couple of decades in Medicare,” said Amy Bassano, managing director for Medicare at research and consulting firm Health Management Associates, where Blum worked from 2018 to 2021 as vice president and managing principal on Medicare issues.

“He’s just a really thoughtful, smart person who deliberates on the issue before him and gathers information before making decisions,” said Bassano, who also served as director of Medicare’s Hospital and Ambulatory Policy Group when Blum was leading the Center for Medicare.

Blum’s diverse experiences, including work with organizations that directly serve low-income and other vulnerable populations, is what “sets him apart as unique,” said Leslie Graham, president and chief executive officer at the Primary Care Coalition, a Maryland-based nonprofit that helps to coordinate health care for low-income and uninsured populations in the Washington metro area. Blum served on the organization’s board of directors, including as vice chair, for roughly four years until he started his second stint at the CMS.

During his time at the PCC, Blum was also a board member for Mary’s Center, a federally qualified health center providing health care, education, and social services to the larger Washington community.

“At his heart, he is a public servant who truly believes in this country and bettering our health care,” Graham said.

Deadline Pressure

Blum said at the Biopharma Congress meeting in February that the timeline Congress set to begin negotiating certain drug prices are “tremendously tight” for the agency.

Right now, the CMS is especially interested in feedback on “definitions for small biotech drug manufacturers,” which are exempt from negotiations in the early years, and “how we think about the agreements that drug manufacturers will have to sign with CMS for those who are selected for the first early rounds,” Blum said in an interview.

“We are working at full cylinder to ensure that we hit the deadlines,” Blum said.

When measuring the IRA’s impact, Blum said it’s essential to look at how the various pieces all move together, from the Part D redesign to the inflation rebates and the drug price negotiations.

“All three elements are designed to help build a better Medicare program going forward,” he said.