President Trump takes dismantling the ACA into his own hands. Learn more.

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Oct. 13, 2017

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FEATURED STORY
 

Let’s Give Them Something to Tweet About, a Little Something to Figure Out

 
 
 

The ABCs of Healthcare: What Is an "Association Health Plan"?

Association health plans (AHPs) have been largely dormant for the last few years and, now with President Trump’s executive order, we thought it might be good to refresh your memory on what they are. An AHP is a private insurance offering for an association or coalition. The theory is that AHPs offer better rates than individuals would be able to find on their own because of the AHPs’ collective purchasing power and their ability to form a larger risk pool. In the past, AHPs were popular with small businesses and individuals because they offered the opportunity to buy into a larger group-market environment. Most were subject to state regulation, but the AHP had considerable freedom to decide in which state to be based. As a result, some AHPs offered minimal benefit coverage. However, the Affordable Care Act mandated that AHPs be subject to the federal regulations for the small group and individual markets, so they had to cover the essential health benefits and could not base premiums on health status.

 
 

On Thursday, President Donald Trump took dismantling the Affordable Care Act (ACA) into his own hands. In the evening, the president confirmed that he will stop subsidy payments to exchange plans. This was on top of signing an executive order (EO) that directs the Secretaries of Labor, Health and Human Services (HHS), and Treasury to expand healthcare insurance options by allowing cross-state association health plans (AHPs), extending the duration of short-term plans, and boosting healthcare reimbursement arrangements.

Expanding Access to AHPs
The AHPs could potentially allow American employers to form groups across state lines, while the administration notes that a “broader interpretation” of the Employee Retirement Income Security Act (ERISA) may allow employers “in the same line of business,” regardless of location, to band together to provide healthcare coverage to their employees through these AHPs. This would allow them to have the benefits of being considered large employer group health plans, which have different mandates.

The EO stipulates that employers participating in an AHP may not exclude any employee from joining the plan, and the AHP cannot develop premiums based on health conditions. Nevertheless, critics are concerned that, while individuals may have lower premium plans, they may not have sufficient coverage.

Expanding Coverage Through Low-Cost Short-Term Limited-Duration Insurance (STLDI)
The EO would also lengthen the term of STLDIs for up to 1 year; currently, insurance companies can only offer these ACA replacement plans for 3 months at a time. Due to their exemption from ACA regulations, these plans tend to be less expensive (and less comprehensive in terms of coverage) than exchange marketplace offerings. Critics of these plans worry that STLDI plans will attract healthy consumers who otherwise would have purchased plans in the exchanges; this flight from the exchanges would leave behind comparatively sicker consumers, thus driving exchange premiums higher.

Boosting Healthcare Reimbursement Arrangements (HRAs)
The EO would also allow employers to cover more out-of-pocket healthcare expenses outside of exchange plans. This could potentially restore employers’ ability to use HRAs to provide tax-free contributions to their employees’ individual-market premiums.

Most changes from the EO will require regulations and/or guidance from the different agencies, so the effects will not be felt for some time and, most likely, will not affect 2018 plan enrollment.

If President Trump decides to proceed with not paying the cost-sharing reductions to insurance companies, the impact for many could be immediate, with out-of-pocket expenses that many consumers cannot afford. Many of the insurance companies participating in the exchanges baked this assumption into their 2018 business plans, but the reality is that the marketplaces are on unstable ground moving forward. It is possible that this could be the deadline that gets Congress to come together and find some form of compromise.

Trump’s actions follow stinging legislative defeats to have the ACA repealed; the president likely felt he needed to take unilateral action to deliver on his promise to the change healthcare market.
boosting healthcare reimbursement arrangements.

 

Join Xcenda at AMCP Nexus 2017 in Dallas

 
 

Xcenda is proud to support the managed care pharmacy community at this year's AMCP Nexus 2017 conference in Dallas, TX.

Our consultants will be on hand to provide their real-world perspectives on the issues that matter most to managed care pharmacy. Meet our payer marketing professionals at booth #503. Join us as we present our award-winning research and findings on Tuesday, October 17 and Wednesday, October 18.

  • The Current Status of Outcomes-Based Contracting for Manufacturers and Payers: An AMCP Membership Survey
  • Cell and Gene Therapy Evaluation and Coverage Challenges
 

 

 
LEGISLATIVE UPDATE
 

Follow the Money: What’s the Value of 340B?

 
 

On Wednesday, the House Energy & Commerce Committee’s Oversight and Investigations Subcommittee held a hearing to examine how covered entities utilize the 340B drug pricing program. The hearing followed the Oversight Subcommittee’s July hearing regarding oversight challenges of the program.

The hearing was split along party lines. Republicans stated that they did not want to eliminate the program but did want more transparency and accountability. They also wanted detailed answers about CEO salaries of disproportionate share hospitals (DSHs) and the number of practices they have acquired. Democrats, on the other hand, asked each witness to explain how patient services would be affected if the 340B program was eliminated.  

The hearing comes scant weeks before the Centers for Medicare & Medicaid Services (CMS) is considering finalizing its proposal to change the 340B payment structure by paying 340B-participating hospitals at average sales price (ASP) less 22.5% for drugs acquired under the 340B program. The day before the hearing, the advocacy group Alliance for Integrity and Reform of 340B released a report stating hospitals that recently joined the program offered less charity care than before they joined the program

 

See You, See Me, See Us Together in Price Transparency

 
 

On Monday, California Gov. Brown (D) signed another prescription-related measure viewed by the industry as an indirect price control tool. While not directly setting prices, SB 17 is intended to create transparency by requiring the disclosure of sensitive information.
 
Under SB 17, manufacturers must issue notices of price increases at least 60 days in advance to both public and private purchasers and, specifically:

  • Notify the state if the increase in the wholesale acquisition cost (WAC) exceeds $40 by 16% in a 2-year period
  • Advise the state with specified information related to the manufacturer’s pricing rationale
  • Report to the state within 3 days of release to the market any new drug priced above Medicare’s specialty drug threshold
  • Explain marketing and pricing plans used in the launch of the new drug and the estimated volume of patients

Insurers are also affected by SB 17. All health plans in California are now required to disclose pricing information to state agencies, and to make publicly available the:

  • 25 most commonly prescribed drugs
  • 25 most expensive drugs
  • 25 drugs with greatest annual increase in spending  

This year, over a hundred similar bills on drug pricing have been introduced in state legislatures. Enacting SB 17, the most aggressive of these, may set a trend and become the template for legislators seeking more comprehensive measures. Notable variants of SB 17 have surfaced in Nevada (SB 539), Maryland (HB 631), and Pennsylvania (HB 161).

States should expect a long uphill battle in the courts. Last month, the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Association (BIO) filed suit against the Nevada disclosure bill concerning insulin rebates from manufacturers to pharmacy benefit managers, noting this “violates patent rights and jeopardizes trade secrets.”

On their website, PhRMA addresses SB 17, noting how such approaches have no actual effect on the cost of prescriptions but are counterproductive and conceal the true cost of prescriptions from the public. The Association for Accessible Medicines (AAM), also commenting on SB 17, points out that such legislation will harm patients, decreases competition, and “fails to recognize that the business model of the generic industry, in which low-cost medicines can fluctuate in price while continuing to decline overall, is vastly different from brand drugs.”

 

If You’re Signing 1 Bill That Ticks Off Pharma, Might as Well Sign 2

 
 

On Monday, California Gov. Brown (D) signed AB 265, an anti-coupon measure restricting various pharmaceutical manufacturer inducements that promote brands over generics.

Specifically, AB 265 prohibits manufacturers from offering any “discount, repayment, product voucher, or other reduction in an individual’s out-of-pocket expenses” for any prescription if a lower-cost generic is covered under the individual’s health insurance.
Likewise, the prohibition applies:

  • To any prescription covered by the individual’s health insurance on a lower cost-sharing tier designated as “therapeutically equivalent”
  • If the “active ingredients” are available without prescription at a lower cost

The law does not restrict any manufacturer from “offering a pharmaceutical product free of any cost.”

This prohibition is seen in other market sectors. Federal law disallows coupon promotion under Medicare and Medicaid. Massachusetts enacted a prohibition on the practice 5 years ago, and similar bills are now pending in New Jersey (SB 2769) and New Hampshire (HB 443).

A main criticism of manufacturer coupons is that, while patients are protected from cost-sharing, manufacturers are sheltered from pricing pressures while continuing to seek full reimbursement. In place of a single patient, the costs are shifted to the entire group, ultimately driving up premiums. In a 2016 University of California Los Angeles (UCLA) study, the authors suggested that coupons enabled manufacturers to hide price hikes, increase sales of branded drugs, and raise prices faster than drugs without coupons.

However, as reported in the August 18, 2017 issue of Health Policy Weekly, studies have shown that switching stable patients with chronic conditions from brands to generics results in increased treatment cost over time.

 

Ana Stojanovska Featured in PharmaVOICE

 
 

A Rare Journey: Managing the Regulatory Landscape

“Orphan products have a far greater impact on plans than their small patient populations would suggest. Given this, payers are weighing the potential impact of expanded indications and how treating larger patient populations with these drugs would increase the budget impact on their plans.”

Securing approval for an orphan drug is only the first step in a product’s journey; the next is ensuring reimbursement. Read more about how manufacturers can overcome the reimbursement challenge in this month’s PharmaVOICE, featuring insight from Ana Stojanovska, Vice President of Reimbursement & Policy Insights at Xcenda. Learn more

 

 

 
REGULATORY UPDATES
 

Seeing Stars: CMS Releases 2018 Star Ratings

 
 

On Wednesday, CMS released the Star Ratings for 2018 Medicare Advantage (MA) plans and prescription drug plans (PDPs). The Stars program is intended to help beneficiaries compare the quality of health and drug plans being offered through the online Medicare Plan Finder tool. MA and Part D plans are given a rating on a 1- to 5-star scale, with 1 star representing poor performance and 5 stars representing excellent performance.

MA Plans
In a press release, the agency touted the broad availability of quality options: In 2018, approximately 73% of Medicare Advantage enrollees with prescription drug coverage will be in plans with 4 and 5 stars compared to 69% in 2017. Approximately 44% of MA plans offering prescription drug coverage will have an overall rating of 4 stars or higher in 2018.

The number of MA plans available to individuals to choose from across the country is increasing from about 2,700 to more than 3,100—and more than 85% of people with Medicare will have access to 10 or more MA plans.

PDPs
CMS also noted the improved access to highly rated PDPs. In 2018, approximately 47% of enrollees in stand-alone prescription drug plans will be in plans with 4 and 5 stars compared to 41% of enrollees in 2017. Approximately 52% of PDPs will have a rating of 4 stars or higher in 2018.

The combination of increased access to higher-rated MA plans and PDPs, coupled with decreased monthly premiums (as addressed in last week’s Health Policy Weekly), could be good news for CMS and beneficiaries, especially since CMS projects enrollment in MA plans at an all-time high in 2018.

 

FDA Advances the Cause

 
 

Rare disease research has substantial hurdles, such as study recruitment and funding. Designed to help face the challenge of limited financial resources for rare disease research, the Orphan Products Clinical Trials Grants Program awards grant funding for clinical studies on products that could result in or contribute to the Food and Drug Administration (FDA) approval of products for rare diseases. In 2016 alone, the program supported 3 products approved to treat rare diseases.

The FDA recently awarded over $30 million dollars in grants to fund 15 clinical studies and 6 natural history studies of rare diseases this month to researchers through the Orphan Products Clinical Trials Grants Program. While this program has funded more than $390 million in clinical research for rare diseases since its creation in 1983, this is the first year the FDA has allocated grants to study the natural history of rare diseases to inform medical product development.

The diseases supported by these awards this year include rare forms of cancer, including glioblastoma and anaplastic astrocytoma, Prader-Willi syndrome, multidrug-resistant tuberculosis, Friedreich’s ataxia, and pregnancy and lactation-associated osteoporosis.

The FDA hopes reducing the financial risk of developing these types of drugs will boost competition and translate to lower prices.

 

Forget Federal Policy; Making it Happen at the State Level

 
 

Earlier this week, the National Academy for State Health Policy (NASHP) awarded grants totaling $300,000 to support policy development to address rising prescription drug costs. Three states were awarded the grants and, in addition to the funds, NASHP will provide technical and strategic assistance to support policy execution and dissemination of the results. The grants will continue through January 2019.   

NASHP is an independent academy of state health policymakers with a mission of helping states achieve excellence in health policy and practice. In addition to the grants, the organization maintains a Center for State Rx Drug Pricing hub as a comprehensive repository of information to support this mission.

Grants were awarded to Colorado, Delaware, and Oklahoma for their policy proposals:

  • Colorado will conduct an average acquisition cost survey to develop a new payment model for physician-administered drugs
  • Delaware will create a common preferred drug list for select drug categories to be used across state agencies and hospitals
  • Oklahoma will be one of the first state Medicaid programs to enter into a value-based purchasing agreement with a manufacturer (the state is currently working to identify the most appropriate drug for this approach before entering contract negotiations)

NASHP’s grants are the latest in a trend of increasing action at the state level to address prescription drug prices given the federal government’s level of inaction.

 

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:

 
HEARD ON THE STREET
 

“It’s a matter of when [Amazon enters the business of selling prescription drugs], not if. We expect an announcement within the next 1 to 2 years.”

 

– David Larsen, analyst at investment bank Leerink Partners

Source: “Amazon Is Headed for the Prescription-Drug Market, Analysts Say,” Bloomberg, October 6

 
POLICY BY NUMBERS
 

90% | 80% | 57%

 

Nearly 90% of exchange and Medicaid navigator organizations say they are expecting to lay off staff. More than 80% said they would cut back their enrollment efforts and events, and 57% said they would limit the number of people who are devoted to more complicated enrollment cases.

Source: “Data Note: Changes in 2017 Federal Navigator Funding,” Kaiser Family Foundation, October 11

 
UPCOMING MEETINGS & CONFERENCES
 

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

 
 
 

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

 
 
 
 
 
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 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

CONTRIBUTING AUTHORS:

Andrew Gaiser | Scott Shields | Diane Wilson | Stephen Wilson

PRODUCTION:

Kylie Matthews | Ellen Olson

 

Oct. 13, 2017

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