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Maryland price-gouging law proceeds despite lawsuit. Learn more.

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Oct. 6, 2017


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Can’t Stop the Ceiling


The Association for Accessible Medicines (AAM) was unable to block a Maryland law from being implemented that will penalize manufacturers for “price gouging.” AAM had filed a lawsuit against the state, but a US District Court judge ruled last Friday the new law could proceed.

As you probably know, Health Policy Weekly has been tracking the Maryland House Bill 631’s (HB 631) progress (here and here). The law requires generic drug manufacturers to notify the state’s Attorney General of any planned price increase, to provide specific details within 20 days of a request from the state, and to include reasons for the price increase. The Attorney General could also order pharmaceutical manufacturers to turn over documents associated with the price increase to see if the hike violates the law (ie, greater than 50% of the drug’s current list price). The Attorney General would be authorized to levy a $10,000 civil penalty for each violation.

AAM believes the law “will hurt patient access to safe, affordable generic medicines in Maryland and the rest of the US, and will create untenable uncertainty for generic drug makers who may be left with no choice but to abandon markets altogether.” As a result, the trade group sued to block the law on the grounds that the law both was lacking enough clarity to be applied under the due process clause and was unconstitutional under the commerce clause of the US Constitution as applied to out-of-state transactions.

AAM stated it would immediately appeal the judge’s decision to let the law proceed to the US Court of Appeals for the Fourth Circuit. HB 631 went into effect as planned last Sunday.

Though the law is limited in scope to generic drugs, it does exert some price-control mechanisms and is intended to serve as a warning to the pharmaceutical industry about price increases. Lawmakers in 30 states have drafted 60 drug price transparency bills as of August, according to the National Academy for State Health Policy.


Unintended Consequences in Cancer Care Delivery Created by the Medicare Part B Proposal: Is the Clinical Rationale for the Experiment Flawed?


The proposed rule relating to the “Medicare Part B Drug Payment Model” has been withdrawn, according to an announcement this Wednesday by the Centers for Medicare & Medicaid Services (CMS). 

Ahead of this decision, Xcenda’s Marlo Blazer, along with AmerisourceBergen colleagues Amy Grogg and Barry Fortner, uncovered potential unintended consequences such a program could generate. Read the details in their Journal of Oncology Practice research article




Jab and Cross to IPAB; Knockout Might Follow


The Senate Budget Committee approved an amendment by Sen. Cory Gardner (R-CO) to its budget that would allow the committee’s Chairman to repeal the Independent Payment Advisory Board (IPAB). IPAB was created by the Affordable Care Act (ACA) to develop proposals that reduce the per capita growth rate of Medicare spending. The board has not yet been formed because healthcare spending has not triggered the spending thresholds required to convene IPAB. There is bipartisan support in Congress to scrap the cost-containment device.

Earlier in the week, the House Ways and Means Committee approved the Protecting Seniors’ Access to Medicare Act of 2017 (HR 849) that would also terminate IPAB.

Of course, there are still hurdles. Each bill must be approved by its respective chamber, and then differences between the House and Senate budgets must be settled via conference committee. And there’s the matter of a “pay for” (estimated by the Congressional Budget Office at $17.5 billion) for IPAB’s repeal. If IPAB is repealed, it would represent a tangible success of the Republicans and many (if not most) healthcare stakeholders.


Advancing Value-Based Contracting—Proceedings From the AMCP Partnership Forum


Free Live Webinar
Wednesday, October 11 | 2:00–3:00 PM ET

Join Amy Duhig, PhD, Vice President, Strategic Market Insights at Xcenda, for a webinar that will summarize the proceedings from AMCP’s Partnership Forum that explored the Value-Based Contracting (VBC) expansion. The webinar will describe: the creation of a consensus definition and guiding principles for value-based contracts; strategies for evaluating, implementing, and monitoring VBCs; and recommendations for mitigating legal and regulatory barriers to VBCs. Learn more



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Wanted: Cabinet Member Who Knows Healthcare and Willing to Fly Commercial


Health and Human Services (HHS) Secretary Tom Price on Friday resigned amid scrutiny over his use of spending more than $1 million in taxpayer money on private and military jets, the White House announced too late last Friday to make last week’s Health Policy Weekly.

In his resignation letter, Price touted the HHS’ work to reform the healthcare system and tackle the opioid epidemic.

Price’s departure caps a stormy and unusually short tenure. A physician from Georgia who previously served in Congress, Price was subject to attacks during his confirmation hearings from Democrats over his trading of healthcare stocks. After being confirmed in February, he plunged into the frantic, sometimes desperate efforts to repeal the ACA. At a rally in July, President Trump joked he would fire Price if the ACA repeal failed.

President Trump designated Don Wright as the Acting Secretary of HHS. Before the announcement, Wright served as the Deputy Assistant Secretary for Health and Director of the Office of Disease Prevention and Health Promotion. A number of names have been floated in the press for the permanent job—including Scott Gottlieb, current Food and Drug Administration head.


Lower Premiums and Higher Enrollment for MA and Part D Next Year


CMS announced late last Friday that it will be increasing the number of Medicare Advantage (MA) plans and decreasing overall premiums for both MA and Medicare Part D in 2018. CMS Administrator Seema Verma explained these actions will better provide seniors with the flexibility to choose affordable plans that meet their needs, leading to improved overall quality.

As described in an accompanying fact sheet, the average MA monthly premium is predicted to fall from $31.91 in 2017 to $30 in 2018. It is estimated that 77% of MA enrollees who remain in their current plans will have the same or lower premium. The agency expects 20.4 million people, one-third of all Medicare beneficiaries, to enroll in MA in 2018, a 9% increase from 2017 and an all-time high.

Access is also high, with 85% of all Medicare enrollees having access to at least 10 MA plans and 100% continuing to have access to Medicare Part D prescription coverage. It is projected that average Medicare Part D premiums will decrease from $34.70 to $33.50, marking the first decline since 2012.

The popularity of private-insurance options in Medicare is undeniable; next year will mark 13 years of increasing enrollment in MA. Consumers clearly value the additional benefits MA plans can offer, as well as caps on healthcare expenses that Part A and Part B do not provide.


Playing Small Ball


CMS’ price-substitution policy saved the program $5.4 million over the course of a year, according to the most recent information published by the Office of Inspector General (OIG). Released in late September and based on 2015 data, the annual mandated OIG report on quarterly average ASP-to-AMP comparisons detailed the savings accrued as a result of CMS lowering Part B reimbursement for 13 different drugs.

Average sales price (ASP) is the standard for Medicare Part B drug reimbursement; however, the Medicare Modernization Act (MMA) included a mechanism to replace ASPs with a lower calculated rate. The law stipulates that OIG must compare ASPs with average manufacturer prices (AMPs). If the ASP of a drug is found to be greater than the AMP by at least 5% over a certain amount of time, the HHS Secretary is to substitute the ASP with the lower reimbursement rate.

The same report also found that if a more expansive policy had been implemented, Medicare and its beneficiaries would have saved an additional $17 million over 1 year. In light of these latest findings, OIG recommended that CMS expand the price-substitution policy. CMS rejected OIG’s recommendation in favor of considering changes as more data become available.


Loose Change Can Be More Rewarding Than Hitting the Jackpot


Researchers in a study published in this month’s Health Affairs found cutting low-cost services can accumulate savings at a rate twice as much as reducing high-cost services.

The study showed the most costly unnecessary low-cost services included: baseline lab tests for low-risk patients having low-risk surgery; stress cardiac or other cardiac imaging in low-risk, asymptomatic patients; and annual electrocardiograms or other cardiac screening for low-risk, asymptomatic patients. Lab tests for low-risk patients having low-risk surgery total more than $227 million in unnecessary costs, according to the data.

The study authors acknowledged that reducing low-value, low-cost services would require changing physician practice patterns, but even slightly reducing those services generates savings. An additional driver to reducing low-value, low-cost services is that they are not as politically charged as reducing the more high-profile services of lower value, as the former strategy would not present a financial threat to any particular clinical specialty or advocacy group. In a climate desperate to reduce healthcare spending—but also highly sensitive to the NIMBY principle (“not in my backyard”)—pursuing service reductions with dispersed interests could be a winner.


Value-Based Payment Models Faring Well With Early Adopters


A recent study suggests Medicare providers will be more likely to favor and join value-based purchasing programs over the more traditional payment models.

As the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is being phased in, providers will be required to choose either the Merit-Based Incentive Payment System (MIPS) fee-for-service system (FFS) or the Alternative Payment Model (APM) framework, a value-based payment (VBP) system.

The authors were interested in how providers would choose between MIPS, a familiar FFS scenario but with risky payment adjustments, and APMs, with their guaranteed 5% bonuses but a completely new structure. To help give them a clearer understanding of who participates and who does not, they explored how experience with pay-for-performance or public reporting will influence physician participation.

The study reviewed provider participation in 3 VBP models:

  • Medicare’s version of an accountable care organization (ACO), the “Medicare Shared Savings Program”
  • The public reporting of quality metrics, “Physician Compare”
  • The usage of electronic health records, “Meaningful Use Participation”

The authors found that prior provider success with performance incentives and public quality reporting were “strongly and significantly” linked to higher provider adoption of APMs.

While Medicare already offers APM participants a 5% incentive payment starting in 2019, the authors recommend Medicare also consider additional incentives for providers with little exposure to value-based models. Otherwise, there could be a broad divide between incentive-savvy providers and those with little to no prior exposure to VBP or public reporting who will continue not engaging in Medicare reforms at the same rate.


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:

  • Oh Snap. CMS officially withdraws proposed rule on Part B Drug Payment Model
  • CMS requests 30-day public comment period on revisions to manufacturer submission of ASP data for Part B drugs
  • Your Weekly ICER Update. The Institute for Clinical and Economic Review (ICER) delivered its own 1-2 punch combo with a draft evidence report on treatments for tardive dyskinesia and a report confirming there is inadequate evidence to compare the outcomes of poly ADP-ribose polymerase (PARP) inhibitors for ovarian cancer, which highlights their poor cost-effectiveness
  • The Health Care Transformation Task Force releases The Transformation to Value: A Leadership Guide, a “reference for business leaders to use when building and executing their own transformation blueprints”


“Today’s announcement is welcome news for seniors, ensuring the Obama administration’s experiment that would have limited the critical care they and other Medicare beneficiaries need, will not be resurrected in the future. We are pleased the previous administration did not proceed with their plan, and we commend the Trump administration for going a step further and wiping the flawed proposal from the books for good. It’s also a win for health care providers, ensuring their work to serve vulnerable patients is not disrupted. We look forward to continuing our work to ensure CMMI and Medicare are working to meet the needs of the patients they serve.”


– Senate Finance Committee Chairman Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Greg Walden (R-OR), and House Ways and Means Committee Chairman Kevin Brady (R-TX), in a joint statement regarding the Trump administration’s decision to withdraw the Center for Medicare and Medicaid Innovation’s (CMMI) proposed Part B Drug Payment Model, October 3




Fewer than 3 out of 1,000 Express Scripts members met or exceeded $50,000 in prescription drug costs in 2015 and accounted for more than 20% of total prescription drug costs. The number of people with greater than $50,000 in prescription costs increased 35% from 2014 to 2015.

Source: “Super spending—US trends in high-cost medication use,” Express Scripts, October 2017


AMCP Nexus 2017

October 1619 l Dallas, TX
Join Xcenda at this year’s AMCP Nexus 2017 conference in Dallas, TX. AMCP Nexus 2017 will explore perhaps the most transformative change taking place in healthcare: how we pay for healthcare and the emergence of value as the defining factor and goal. Xcenda’s team of experts can help you navigate the value landscape and maximize access for your product. Visit Xcenda’s booth in The Exchange at #503, or contact us to schedule a meeting at the conference. Learn more


ISPOR 20th European Congress

November 48 l Glasgow, Scotland
Join Xcenda’s Jay Jackson, PharmD, MPH, Senior Vice President of Consulting Services, as he moderates a Tuesday lunchtime symposium titled, “Practical Implications of Value-Based Pricing and Emerging Value Frameworks in Health Technology Assessment,” at the ISPOR 20th European Congress in Glasgow, Scotland. Visit us at booth #602 to meet with our global HEOR team and learn more about our award-winning research. Learn more


13th Annual Personalized Medicine Conference

November 14–16 l Boston, MA
Join Jennifer Snow, MPH, Director of Health Policy, at the 13th Annual Personalized Medicine Conference in Boston as she moderates a panel titled, “Precision Valuation: A Discussion of How Value Assessment Frameworks Can Account for Personalized Medicine.” Learn more


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


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Jennifer Snow
Health Policy

Scott Shields
Associate Director,
Health Policy



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

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

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


Andrew GaiserStewart Kaufman | Scott Shields | Stephen Wilson


Laurie Kozbelt | Ellen Olson

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Oct. 6, 2017


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