Drug pricing is a hot topic for both the Senate’s HELP and President Trump’s Administration. Learn more.

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June 16, 2017

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FEATURED STORY
 

With the Cameras Watching Sessions, HELP Talking Drug Pricing

 
 

This week saw the ongoing discussion over drug prices reach a fever pitch, with both the Trump Administration and the Senate hosting high-profile events.

On Tuesday, the Senate Committee on Health, Education, Labor, and Pensions (HELP) held the first of 3 hearings on drug pricing, this one titled, “The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay,” with 4 witnesses:

  • Dan Mendelson, President, Avalere Health
  • Allan Coukell, Senior Director of Health Programs, Pew Charitable Trusts
  • Paul Howard, PhD, Senior Fellow and Director of Health Policy, Manhattan Institute
  • Gerard Anderson, PhD, Professor of Medicine, Johns Hopkins University School of Medicine

The witnesses identified several areas for lawmakers to examine to lower the cost of prescription drugs, including:

  • Benefit design. Focused on how patient cost-sharing is based on the list price of the drug, without accounting for manufacturer rebates or other price concessions
  • Competition. Working with the Food and Drug Administration (FDA) to expedite the approval of second and third “me-too” branded drugs, generics (particularly “sole source”), and biosimilars
  • Distribution. Restricting the use of “closed” distribution systems and curbing the use of Risk Evaluation and Mitigation Strategies (REMS) to prevent generic drug makers from obtaining samples for bioequivalence testing
  • Value-based contracting. Designing incentive programs to improve patient adherence to prescriptions
  • Data. Using patient data to identify gaps in care and acting to fill them

According to Chairman Lamar Alexander (R-TN), the HELP Committee plans to hold 2 additional hearings. The second, likely sometime in July, will focus on the process (from manufacturers to patients and payers), how drugs are paid for, and the various costs in the system. In the fall, the committee will hear from Norm Augustine on a report from the National Academy of Sciences, Ensuring Patient Access to Affordable Drug Therapies.

In addition to the 2 drug-price hearings cited above, Alexander suggested the possibility of holding a roundtable to undertake a more “in-depth examination” of this issue.

Meanwhile, the Trump Administration continues on its own path to address drug prices. BioCentury reported that members of BIO’s board of directors met on Monday with Health and Human Services (HHS) Secretary Tom Price to advocate for the industry’s position of pro-innovation policies.

And, at press time, rumors abound about a forthcoming White House executive order on drug pricing, potentially being released today. According to BioCentury, it will instruct executive agencies to use value-based contracts for drug purchases and to pursue trade policies that enhance the intellectual property rights of American pharmaceutical companies.

The outlines of the executive order are noteworthy in that it suggests the Trump Administration may adopt positions on drug prices much friendlier to the industry than when Trump’s campaign promises included drug importation and granting Medicare the authority to negotiate prices directly with manufacturers.

 
XCENDA ORIGINAL RESEARCH
 

Part D Reduces Medical Costs and Improves Access for Oncology Patients

 
 

Celgene Corporation commissioned Xcenda to analyze the impact of the Medicare prescription benefit (Part D) for oncology patients. Xcenda’s research and analysis showed that Medicare patients utilizing Part D for their oncology care are, on average, less expensive and use fewer medical services than expected. Key study findings include:

  • Prescriptions available to cancer patients through the Part D program have delivered greater savings to the Medicare program than estimated by the Congressional Budget Office (CBO)
  • Patients utilizing only Part D for their treatment used fewer inpatient services, outpatient services, and physician services
  • In 2013, medical costs for oncology patients receiving treatment under Part D only were 58% lower than what the CBO had estimated for this population ($17,831 vs $42,606)

Xcenda’s analysis suggests that prescription utilization affects the use of, and may reduce the need for, medical services for some patients. In addition, the Part D benefit facilitates access to treatments that do not require frequent visits to a doctor’s office, translating to savings to the Medicare program and higher beneficiary satisfaction.

Access the full study: Reducing Medical Costs, Providing Access: An Analysis of Medicare’s Part D Prescription Drug Benefit for Oncology Patients.

 

The Whole Picture: Consideration of Personalized Medicine in Value Assessment Frameworks

 
 

BIO International Convention | June 19–22 | San Diego, CA

Join Xcenda’s Jennifer Snow, MPH, Director of Health Policy at Xcenda, as she moderates a panel titled, “The Whole Picture: Consideration of Personalized Medicine in Value Assessment Frameworks” on June 22 at 10:15 AM PT. This session will examine how value assessment frameworks have been developed historically, look at the current critiques of their processes and methodologies, and explore how they might have to change in the future to support personalized medicine. Learn more

 
 

 
LEGISLATIVE UPDATES
 

SPIKE Volleys Pharmaceutical Price Increases

 
 

Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced a bill on Tuesday, the Stopping the Pharmaceutical Industry from Keeping Drugs Expensive (SPIKE) Act, to control the price increases on manufacturers’ products.

The SPIKE Act would:

  • Require the HHS Secretary to notify manufacturers of drugs that meet one of 2 qualifying tests: 1) the drug is at least $10 per dose and had a price increase of at least 300% over 5 years or 100% over 1 year; or 2) the drug represents the top 50th percentile of net drug spending in the Medicare or Medicaid program and had a price increase of at least 50% over 5 years or 15% over 1 year
  • Require drug manufacturers to submit a “justification” for price increases to the HHS Secretary, which may include: individual factors that contributed to the price increase, percentage of total expenditures on research and development derived from federal funds, and total cost of marketing and advertising the drug
  • Require price justification reports be made publicly available on the Centers for Medicare & Medicaid Services (CMS) website
  • Exempt drug manufacturers from the reporting requirements if they subsequently lower the list price of their drugs

Wyden also re-introduced his Reducing Existing Costs Associated with Pharmaceuticals for Seniors Act of 2017 (RxCAP Act of 2017) that would impose a cap on the out-of-pocket costs seniors in Medicare Part D pay for prescription drugs. The bill would eliminate all cost-sharing for Medicare Part D beneficiaries above the current out-of-pocket threshold of approximately $8,000.

 

Senate Bill Would Remove Wholesaler Discounts From ASP Calculation

 
 

Last week, Sen. Pat Roberts (R-KS) introduced S.1304, which would exclude customary prompt pay discounts to wholesalers from the Medicare average sales price (ASP) calculation. The aim of the bill is to better align reimbursement with actual costs and to ensure accurate payments for physicians and clinics.

S.1304 has been referred to the Committee on Finance. A near identical House bill, H.R.1920, was recently referred to the Subcommittee on Health.

Prompt pay discounts are based on negotiated terms between manufacturers and distributors for payment within a certain time frame and represent the time value of money. Currently, CMS interprets the Medicare Modernization Act’s (MMA) definition of ASP to include prompt pay discounts by manufacturers to distributors in the calculation of ASP, even though the discount is not passed along to providers. Inclusion of these discounts reduces provider reimbursement which, combined with the way sequestration has been applied, brings payment well below ASP+6% and can make the margins between purchase price and reimbursement difficult to manage.

 

Payer Perceptions and Utilization of ICER Value Assessment Framework

 
 

The Institute for Clinical and Economic Review (ICER) was established as an independent, nonprofit organization that evaluates the value and affordability of drugs and other therapies. It takes a broad societal approach to evaluate comparative clinical effectiveness evidence to estimate value and affordability. While ICER has gained both praise and criticism, limited evidence has been gathered to evaluate stakeholder perceptions and utilization of the ICER framework.

We wanted to know more. Did payers use ICER reports? What were the strengths of its evaluations, and what were the limitations? Our survey findings illustrate the impact that the ICER framework has had on payer decision making.

 
 

 
REGULATORY UPDATES
 

Holy Here We Go Again, Batman—MedPAC Report a Doozy

 
 

The Medicare Payment Advisory Commission (MedPAC) unveiled its June report on Medicare and the healthcare delivery system, recommending a number of changes to Part B drug payment, the Merit-based Incentive Payment System (MIPS) and advanced alternative payment models (A-APMs), post-acute prospective payments, and design issues regarding premium support, among others. This summary highlights the Part B and MIPS/A-APM recommendations. To accompany the report, MedPAC also issued a press release and fact sheet summarizing the totality of the commission’s recommendations.

Part B Drug Payment Reform

MedPAC’s recommendations for reforming Part B drug payment closely followed its discussions in its March meeting (as covered in the March 10 issue of Health Policy Weekly). MedPAC proposes a range of policy proposals that would modify the ASP system as follows:

  • Require all manufacturers of Part B products to submit ASP data and impose penalties for failure to report
  • Reduce wholesale acquisition cost (WAC)-based payment from WAC+6% to WAC+3%
  • Require manufacturers to pay Medicare a rebate when the ASP for their product exceeds an inflation factor
  • Group a reference biologic and its biosimilars in a common billing code

MedPAC also recommended Congress create and phase in a voluntary Drug Value Program (DVP), reminiscent of the MMA’s Competitive Acquisition Program (CAP), no later than 2022. Upon implementation of the DVP or no later than 2022, MedPAC recommended to reduce the 6% ASP add-on in an incremental fashion—ultimately, to ASP+3% in 2024.

MIPS and A-APMs Redesign

MedPAC asserts that MIPS will not help beneficiaries choose physicians or help clinicians change practice patterns to improve value. Therefore, its recommended changes include Medicare’s withholding of an unspecified portion of payments from clinicians under MIPS, who would be able to recoup that withhold based on their performance on quality measures.

The commission believes CMS should eliminate the current set of MIPS measures and use a much smaller set of population-based outcome measures calculated from claims or surveys. MedPAC believes this would minimize burdensome clinician reporting. Clinicians could get the quality withhold back by joining a virtual group or an A-APM.

MedPAC suggested changing how the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) qualifies clinicians to receive a 5% incentive payment for participating in A-APMs by eliminating the threshold of clinicians’ revenue that must be reached to qualify. Instead, the incentive would be proportional to clinicians’ A-APM involvement; in theory, this should encourage smaller practices to participate in A-APMs. MedPAC also proposed moving the $500 million per-year fund (from 2019 to 2024) that MACRA created to reward clinicians with “excellent performance” on their MIPS scores to the A-APM program, which would make MIPS less attractive to clinicians.

Though MedPAC has no legislative or regulatory authority, its recommendations are often well regarded by policy makers. With its nod toward introducing competition in the Part B program, the DVP, in particular, may appeal to Republicans wanting to appease constituents’ desires for action on drug prices and also wanting to avoid imposing governmental dictates as much as possible.

 

SCOTUS Busts a Move in Biosimilar Patent Dance

 
 

On Monday, Supreme Court Justice Clarence Thomas delivered the unanimous opinion of the Supreme Court of the US (SCOTUS) ruling in Sandoz v. Amgen, permitting biosimilar applicants to provide commercial marketing notice to reference product manufacturers before FDA approval. The ruling sides with Sandoz on the issue, reversing the Federal Circuit decision, and will allow biosimilar applicants to come to market 180 days earlier.

Sandoz argued in the case that requiring to wait until a biosimilar receives FDA approval before being able to give the 180-day commercial marketing notice to the reference-product manufacturer provides the innovator company with an additional 6 months of product exclusivity than was provided by the Biologics Price Competition and Innovation Act (BPCIA). Sandoz believed the 6-month window of additional sales was an unfair windfall.

On a side note, Justice Breyer issued a concurrent opinion that states the FDA may interpret the language of the BPCIA and the FDA may have the authority to modify or depart from SCOTUS’ interpretation of the pathway. While FDA representatives stated in oral arguments they are not interested in weighing in on the matter, this could open the door for future interpretation by the FDA.

In addition to allowing pre-FDA approval marketing notice, SCOTUS also stated it does not have the authority to issue a federal injunction, which would hold commercial marketing for 180 days after FDA approval, due to Sandoz’s failure to comply with the biosimilar pathway patent dance. State law may permit injunction; however, a state-law injunction might be pre-empted by federal law, and the Federal Circuit will need to decide state-injunction questions.

While the dance may have stopped Monday at the federal level for this case, California’s Federal Circuit will be deciding if state laws may permit injunctive relief to force patent sharing.

While some lauded the ruling, stating it will bring biosimilars to market sooner, others believe the ruling may delay biosimilars coming to market by causing more confusion and litigation in the biosimilar approval pathway.

 

Dazed and Confused, Enrollment Drops in Exchanges

 
 

This week, CMS released healthcare exchange enrollment numbers for 2017. Based on data from the open enrollment period (November 1, 2016 through January 31, 2017) through March 15, 2017, 1.9 million customers out of 12.1 million originally enrolled during the same period did not pay their initial premiums. The number of 10.3 million exchange customers who “effectuated” is below the HHS 2017 enrollment goal of 11.1 million.

Through analysis of exchange data, CMS determined the primary reason for the high turnover is high premium costs. For example, in 2013 the average premium for a healthcare exchange plan was $232 (pre-assistance). Currently, the average monthly premium is $476 (pre-assistance).

In addition to the premiums’ high prices, issuer exits from certain state exchanges have contributed to the exodus. Inability to qualify for financial assistance was also cited as a reason by many customers who signed up but did not effectuate. One positive from the data is that, of the population that effectuated, 49% dropped due to gaining healthcare coverage through an employer.

Although not mentioned by CMS, another contributing factor in the turnover could also be the enrollees’ response to incoming President Trump’s directive to the IRS to not enforce the mandate penalty, thus leading some enrollees, who had joined solely to avoid paying the penalty, to leave. Anticipation for a change in the healthcare law may also have been a factor.

 

Wait for It… Employer-Based Medical Costs Continue to Increase

 
 

This week, in an analysis of medical cost trends in the employer-based market, PwC projected a 6.5% growth rate for 2018, up 0.5% from 2017. Modification to benefit plan design and the network size may push this rate down to 5.5%.

The 3 key dynamics identified as cost drivers were:

  • Inflation due to the growing economy
  • Slowing growth in high-deductible employer-based health plans
  • Fewer branded drugs coming off patent protection

PwC noted the continuing political pressure on drug prices, along with some innovative employer strategies to reduce waste, may potentially offset some of these spending increases.

For the last half decade, employee premium increases have averaged twice the rate of wage growth, and, likewise, national healthcare spending continues outpacing the gross domestic product (GDP). Employer strategies such as high-deductibles, increased cost-sharing, and preventive care may no longer be enough to contain costs. As a result, PwC believes employers may begin to consider new kinds of contract arrangements with providers and an expanded use of non-physicians.

 

Information Buffet (AKA, Other Stuff That Caught Our Attention)

 
 

We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:

  • Congressional Research Service releases report on PDUFA VI (2017 reauthorization)
  • CMS Chief Actuary releases “Estimated Financial Effect of the American Health Care Act of 2017”
  • Because they never rest. Institute for Clinical and Economic Review (ICER) releases evidence update covering new information about the comparative clinical effectiveness of evolocumab that has been released since the original 2015 ICER report on PCSK9 inhibitors was issued; meanwhile, its final report on treatments for atopic dermatitis provides policy recommendations to support appropriate patient access to dupilumab
  • USC’s Schaeffer Center releases white paper, The Flow of Money Through the Pharmaceutical Distribution System, coupled with Health Affairs blog post
  • 269 provider and patient groups send letter to HHS Secretary Price requesting protection of Part B program for reimbursing providers for drugs and biologics administered by physicians
 
HEARD ON THE STREET
 

“[The AHCA] is a great plan…. [It] is something very, very incredibly well-crafted.”

 

– Donald Trump, praising the passage of the AHCA by the House, May 4

 

“[The AHCA] is mean.”

 

– Donald Trump, speaking to Republican Senators, June 14

 
POLICY BY NUMBERS
 

45

 

In 2018, 45 counties in the US could be without insurers for the insurance exchanges.

Source: “For the First Time, 45 Counties Could Have No Insurer in the Obamacare Marketplaces,” The New York Times, June 9

 
UPCOMING MEETINGS & CONFERENCES
 

2017 BIO International Convention

June 19–22 l San Diego, CA
Join experts from World Courier and Xcenda at the 2017 BIO International Convention in San Diego. This annual conference, hosted by the Biotechnology Innovation Organization (BIO), is the largest global event for the biotechnology industry and attracts the biggest names in biotech. Visit the World Courier booth at #5408. In addition, Jennifer Snow, MPH, Director of Health Policy at Xcenda, will moderate a panel titled, “The Whole Picture: Consideration of Personalized Medicine in Value Assessment Frameworks” on June 22 at 10:15 AM PT. Learn more

 

ThoughtSpot 2017

July 19–22 l Las Vegas, NV
ThoughtSpot, the annual conference and trade show by Good Neighbor Pharmacy, is a 4-day event for independent community pharmacies where you’ll receive practical and clinical education to help you diversify your revenue streams and optimize your core business, plus exclusive deals and discounts on product purchases. The insights and expertise you’ll experience at ThoughtSpot will help you build a better business, find growth opportunities, and maintain your status as a preferred healthcare destination in your community. Learn more

 

2017 Pharmaceutical End-to-End Supply Chain Management Summit
4th Annual Specialty Network Design and Channel Optimization Summit

July 24–25 l Philadelphia, PA | Part of Pharma4
Matt Sample, Senior Director, Secure Supply Chain at AmerisourceBergen, will present, “Utilize Serialization and Traceability Data to Ensure End-to-End Supply Chain Visibility.” He will discuss standardized product packaging and serialization, show how to integrate data standards within the commercial supply chain for enhanced visibility, and review the methods to secure the data and ensure interoperability throughout the end-to-end supply chain. Donna Gilbert, Vice President, Specialty and Branded Strategic Accounts, Global Sourcing and Manufacturer Relations, AmerisourceBergen, will also contribute insights on the Stakeholder Roundtable titled, “Collaborate to Achieve Streamlined Approaches to HUB Design and Channel Optimization.” Learn more

 

4th Annual Patient Support Services and HUB Design Summit
2017 Patient Services Compliance Summit

July 24–25 l Philadelphia, PA | Part of Pharma4 
Join Derek Cothran, Vice President, Strategic Account Management at Lash Group, as he presents a session titled, “Achieve Brand Goals With the Optional Approach to Patient Support Services and Product Distribution.” Donna Gilbert, Vice President, Specialty and Branded Strategic Accounts, Global Sourcing and Manufacturer Relations, AmerisourceBergen, will also contribute insights on the Keynote Stakeholder Roundtable titled, “Internal Big Picture: Explore Strategies Used to Ensure Patient Centricity Through HUB Design, Channel Optimization, Compliance, and Distribution.” Learn more

 

The Bioprocessing Summit

August 21–25 l Boston, MA
World Courier, part of AmerisourceBergen, is proud to be a sponsor of The Bioprocessing Summit 2017. In its ninth year, the conference focuses on upstream and downstream processing, analytical development and quality, formulation and stability, cell and gene therapy production, and manufacturing. Visit World Courier at booth #308. Learn more

 

HPW Rebuild

 

Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that affect the healthcare industry.

 
 
 
 

HPW Rebuild

 
FEATURED CONTRIBUTORS
 

EDITOR-IN-CHIEF:
Jennifer Snow
Director,
Health Policy
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

Peyton Howell, MHA
President | Global Sourcing & Manufacturer Relations | AmerisourceBergen Corporation

Amy Grogg, PharmD
Senior Vice President | Strategy & Commercialization | AmerisourceBergen Specialty Group

Tommy Bramley, PhD, RPh
President | Xcenda

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Reimbursement & Policy Insights | Xcenda

CONTRIBUTING AUTHORS:

Aaron Dancy | Jennifer Le | Scott Shields | Debbie Stanton | Diane Wilson | Stephen Wilson 

PRODUCTION:

Laurie Kozbelt | Ellen Olson

HPW Rebuild

 

June 16, 2017

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