The US Centers for Medicare and Medicaid Services (CMS) has now issued the agreement that drug manufacturers will use to provide savings of about 50% on brand-name prescription drugs and biologics for Medicare enrollees who reach the coverage gap, or “doughnut hole,” in the programme’s prescription drug benefit next year.

The agency “has carefully reviewed the comments we received on our draft agreement language. We believe our final language is responsive to the comments and we expect all brand-name manufacturers to sign,” said Jonathan Blum, deputy administrator at the CMS Center for Medicare.

Drug manufacturers will now be required to sign these agreements by September 1, 2010, in order to be able to continue to offer medicines under the Medicare programme’s prescription drug benefit, known as Part D. Payment inconsistencies or conflicts raised by manufacturers will follow a dispute resolution and appeal process as outlined in the agreement, says the CMS, which adds that it will also perform “extensive editing” on payment data to ensure that beneficiaries and plans receive appropriate discounts and payments.

The agency also points out that, based on comments received from manufacturers, advocates and Part D sponsors, it has revised the agreement to provide additional time for quarterly invoice payments by manufacturers to plan sponsors within 38 days of receipt through the Third Party Administrator (TPA), and that this is consistent with the reimbursement schedule used in the Medicaid Drug Rebate Program. CMS is also providing manufacturers with the claims-level data necessary to validate invoices without sharing private patient information, and it emphasises that the final agreement ensures that beneficiary information will continue to be protected in the same manner as it is now.

Enrollees in Part D of Medicare, the federal health insurance programme for seniors and some disabled people, hit the doughnut hole when the scheme stops paying their prescription drug costs after they reach $2,830 in a single year; it then resumes when the individual’s out-of-pocket expenses exceed $4,550.

Closing the coverage gap is a significant part of the Affordable Care Act signed by President Barack Obama in March, and will begin with a one-time cheque for $250 for beneficiaries who reach the gap in 2010 but are not eligible for low-income assistance. In 2011, enrollees will see savings from around a 50% discount for brand-name drugs and biologics and coverage of generics in the coverage gap and, beginning in 2011, the gap will begin to decrease incrementally until it is eliminated by 2020, says the agency.

While drugmakers’ contribution to closing the doughnut hole is expected to be around $3 billion annually over nine years, they will now be able to retain many customers who, when they reached the coverage gap in the past, had switched to cheaper generic versions of their brand-name drugs, reduced their medications or simply stopped taking them altogether.