CMS is proposing a ban on reference-based pricing, which allows private insurers to charge Medicare beneficiaries more for brand-name medications if generic versions are available, the Wall Street Journal reports. The additional cost often amounts to the difference between the generic and brand-name drugs and sometimes leaves patients paying the full price of the brand-name medication.

CMS has supported reference-based pricing as a way to control costs since the Medicare prescription drug benefit started in 2006. Consumer advocates and policymakers have raised concerns that the pricing structure made it difficult for Medicare beneficiaries to predict their drug costs and said that CMS had not adequately alerted beneficiaries to the possibility of additional charges.

CMS said, "The basis for this decision is our belief that reference-based pricing may be inherently misleading to beneficiaries and inconsistent with our goal of improving transparency."

The ban will affect all Medicare drug plans in 2010. The criteria will be final by March, "leaving a narrow window for the Obama administration to change them," the Journal reports (Zhang/Fuhrmans, Wall Street Journal, 1/10).