Learn more about MedPAC’s vote to move Part B drug payment to a payment in the style of Part D. 

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Apr. 7, 2017


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Editor’s note: Health Policy Weekly will be on hiatus next week for the holidays of Easter and Passover. We will resume publication on April 21.


MedPAC Finds a Solution in Search of a Problem


At its final public meeting before it adjourns until September, the Medicare Payment Advisory Commission (MedPAC) yesterday voted on a package of policy proposals to bring down Medicare Part B drug pricing and spending. Yesterday’s deliberations wrapped up 2 years of work on the topic and culminated in a package of recommendations to ultimately move Part B drug payment to a “market-based alternative” in the style of the Medicare prescription drug benefit (Part D).

The commissioners voted unanimously in favor of the package with 3 phases:

1.   Modify the average sales price (ASP) system in 2018 to:

  • Require all manufacturers of products paid under Part B to submit ASP data, and impose penalties for failure to report
  • Reduce wholesale acquisition cost (WAC)-based payment to WAC plus 3%
  • Require manufacturers to pay Medicare a rebate when the ASP for their product exceeds an inflation benchmark, and tie beneficiary cost-sharing and the ASP add-on to the inflation-adjusted ASP
  • Require the Secretary to use a common billing code to pay for a reference biologic and its biosimilars

2.   No later than 2022, create and phase in a voluntary Drug Value Program (DVP) with the following:

  • Medicare contracts with a small number of private vendors to negotiate prices for Part B products
  • Providers purchase all Part B products at the price negotiated by their selected DVP vendor
  • Medicare pays providers the DVP-negotiated price and pays vendors an administrative fee, with opportunities for shared savings
  • Beneficiaries pay lower cost-sharing
  • Medicare payments under the DVP cannot exceed 100% of the ASP
  • Vendors use tools including a formulary, and, for products meeting selected criteria, binding arbitration

3.   Upon implementing the DVP or no later than 2022, reduce the ASP add-on under the ASP system.

The DVP concept is largely influenced by the failed Medicare Part B Competitive Acquisition Program (CAP) that was attempted and abandoned nearly 10 years ago due to poor program design and even poorer participation. Under the DVP, MedPAC envisions a small number of vendors that would negotiate payment rates with drug manufacturers, but they would not ship the drug to providers. To secure pricing concessions, vendors would be permitted the use of utilization management tools, such as formularies and drug exclusions, step therapy, prior authorization, or risk- and value-based contracts. Binding arbitration between vendors and manufacturers would take place in cases where negotiations fail.

MedPAC staff estimates the package would save the Medicare program between $1 billion and $5 billion over 5 years relative to current law.

Despite the unanimous vote, several commissioners expressed reservations about certain elements of the package, including the potential of the DVP’s arbitration provision to hinder competition for single-source drugs. Others felt the recommendations do not go far enough in tackling pricing issues.

In a letter addressed to the Commission since it unveiled a draft of its recommendation last month, 138 healthcare stakeholders expressed concern that MedPAC’s latest effort to address what it considers a misaligned Part B ASP drug payment model would result in many physicians (particularly those in smaller or rural practices) operating at a loss, or potentially reducing patient access and/or increasing Medicare spending via a shift in care to the hospital setting. And even MedPAC staff suggested much of the estimated savings achieved through the policy changes would result from the reduction of the ASP add-on payments, not necessarily a reduction in drug prices.

While it’s unclear whether MedPAC’s proposal will gain traction in Congress, it comes at a time of ongoing speculation that the Trump Administration is considering a remodeled, CAP-like bidding program to lower drug prices, and also amid a broader, ongoing review of drug pricing by members of Congress across both sides of the aisle.


The Future of FDAMA 114—How Will It Impact Access to Specialty Therapies?


Asembia Specialty Pharmacy Summit | April 30–May 3 | Las Vegas

With increased scrutiny surrounding specialty drug pricing, has the demand for health economic (HE) information and real-world evidence stretched beyond the limitations of FDAMA 114?

Matt Sarnes, PharmD, Senior Vice President of Commercial Consulting, and Jay Jackson, PharmD, MPH, Senior Vice President of Scientific Consulting, will present, “The Future of FDAMA 114—How Will It Impact Access to Specialty Therapies?” at the upcoming Asembia conference. They will shed light on recent recommendations shared with the FDA, new research regarding payers’ requests for data, common practices and challenges in producing and sharing this information, and the emerging role of providers as they take on more economic risk for their patients.

Read more



There’s a New President, So Let’s Try This Again


In a press release issued Tuesday, US Representative Lloyd Doggett (D-TX) included a letter that he and 50 Democratic lawmakers sent to President Trump. The letter urges the President to keep his promise to lower prescription drug prices by using statutory authority created by the Bayh-Dole Act in 1980. A similar letter was sent to President Obama during his administration.

The signees assert Trump should invoke the statute’s “march-in rights” provision, as they believe high drug prices meet the conditions in which “action is necessary to alleviate health and safety needs which are not being reasonably satisfied” as well as when the benefits of the taxpayer-funded “pharmaceutical research” are not “available to the public on reasonable terms.”

When funding from taxpayers contributes to a new drug patent, the Act gives the federal government the right to step in and demand the patent holder to license it to a third party when the benefits are not available on reasonable terms. These terms have not been well defined, nor have march-in rights been invoked. Therefore, the letter’s authors ask the President to have the National Institutes of Health publish public guidelines on the conditions that are likely to require it to invoke march-in rights, stating that “transparent guidelines would discourage drug price gouging and create a more competitive market for drugs developed using tax dollars.”

The Democrats state this action will be effective because it will give pharmaceutical manufacturers clear guidance about when march-in rights would apply—thus, allowing them to operate in a way that would avoid the measure being taken. They believe it would curb drug price gouging and foster a more competitive market for drugs that fall under these guidelines. They also encouraged the President to take action by informing him this health and taxpayer protection issue was not addressed by the previous administration, implying it would also be a political win for him.


We Might See Clearly Now: Reform of Medicare LCD Process


Last week, Senators Johnny Isakson (R-GA), John Boozman (R-AR), Debbie Stabenow (D-MI), and Thomas Carper (D-DE) introduced S.794, an attempt to improve transparency and accountability within Medicare’s local coverage determination (LCD) process. Medicare administrative contractors (MACs) issue LCDs that limit coverage for a particular item or service in their jurisdictions only.

S.794 would revise the following aspects of the LCD process:

  • Transparency. All contractor meetings where LCDs are discussed must be open to the public, with minutes made publically available.
  • Evidence. Contractors must disclose all evidence considered when drafting an LCD.
  • Rationale. Contractors must disclose the reasons for the coverage determination.
  • Reconsideration. The LCD reconsideration and appeals process would be revised to allow for a qualified disinterested party to provide a secondary review.
  • Adoption. MACs would be prohibited from adopting an LCD from another contractor without public review or input from the provider community.

S.794 has been referred to the Senate Committee on Finance.

According to the President of the College of American Pathologists Richard C. Friedberg, these reforms are intended to ensure contractors “do not supersede physician medical judgment and deny patients access to medically necessary care.” The Advanced Medical Technology Association (AdvaMed) also released a statement supporting the proposed improvements in transparency, accountability, and stakeholder input under S.794.

As reported in the March 31 issue of Health Policy Weekly, the Centers for Medicare & Medicaid Services (CMS) issued a notice instructing all Medicare contractors to put all LCD revision and development on hold until further notice.

The hold directive from CMS is expected to slow the determination process for coverage, coding, and payment and potentially delay adoption of a new products, services, and indications. However, should S.794 become enacted, coverage guidance should become much clearer and allow interested parties to challenge the MACs’ LCDs more easily.


Texas House Takes a Mental Health (Parity) Day


Last Tuesday, the Texas House passed (130-12) bill CSHB 10 that would give the state more authority to enforce state and federal mental health parity rules with health insurers that provide both physical and mental health benefits. For consumers who believe their carrier is wrongly denying coverage, the bill would also offer more help by creating an ombudsman at the state Health and Human Services Commission.

Public Health Committee Chairman Walter “Four” Price (R) told state House members that the bill was not meant to expand insurance coverage for mental health services and that it would not raise premiums or create new mandates. However, he said it will direct the state Health and Human Services Commission and the Texas Department of Insurance to evaluate mental health benefits coverage and expand the department’s authority to enforce mental health parity rules for large-group plans to include small-group and individual plans as well.

The state Senate version of the bill (SB 10) is still pending in its Business & Commerce committee.

Mental health is one of a handful of issues with bipartisan support. The National Alliance on Mental Illness (NAMI) ranked Texas 45th among states in the country for access to mental health services. The bill comes as both chambers try to overhaul how Texas provides access to services and care for mental health patients.


That Old Chestnut: Republicans (Try to) Resurrect ACA Replacement


Republicans began the week with a second attempt to repeal and replace the Affordable Care Act (ACA), with Vice President Mike Pence and other White House officials (but not President Trump) offering some concessions to the House Freedom Caucus Monday evening.

Freedom Caucus members related that Pence and others offered changes to allow states to choose to apply for waivers to repeal 2 ACA regulations: essential health benefits and “community rating,” which prevents insurers from charging sick people higher premiums. Those opposed to the ACA argue these 2 regulations are driving up premiums.

However, moderate conservative Representatives reported they had a different take on the White House offering, indicating the changes would be less sweeping. As Tuesday progressed, the 2 factions could not agree on a compromise.

Little progress was made throughout the week. Yesterday afternoon, the House Rules Committee voted to add an insurance stabilization fund to its repeal bill. The amendment would set aside $15 billion through 2026 to reimburse health plans for their most expensive customers’ medical bills, in an attempt to lower premiums across the individual health insurance market. At press time, little was known on how the Freedom Caucus felt about the amendment.

Regardless of any progress to be made through yesterday, there will not be a vote until at least the middle of the month. The House’s 2-week recess began yesterday, and the Senate’s begins today. Although when they return, avoiding a government shutdown is likely to be the priority.


Worthy of a Cat Nap: CY 2018 MA Rates and Final Call Letter Released


Earlier this week, CMS released the Announcement of Calendar Year (CY) 2018 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter and Request for Information (RFI), which outlines changes to the 2018 Medicare Advantage (MA) and Part D programs.

The release includes an RFI on any concise, complete, and clear ideas that stakeholders have for improving the Medicare Part C and Part D programs. The RFI comments are due on April 24, 2017; CMS is “soliciting ideas for regulatory, sub-regulatory, policy, practice, and procedural changes to better accomplish transparency, flexibility, program simplification, and innovation in Medicare Advantage and Part D.”

MA payments were finalized with a 0.45% increase on average for 2018, which ultimately will translate to a revenue increase of about 2.95%. Another area of note is within the MA Employer Group Waiver Plans (EGWP). For 2018, CMS considered paying EGWPs based on individual market bids. But CMS will continue to employ the bid-to-benchmark ratios used for 2017 payment (based on a 50/50 blend of EGWP bids and individual market plan bids) for 2018.

On the Medicare prescription drug benefit side, things are steady state. The Benefit Parameters remain as proposed, and some changes are suggested to Star Ratings, but, based on our initial read, Part D is mostly unchanged. One area of interest involves CMS seeking voluntary information about tiering exceptions (volume, approved/denial and appeal rates, etc). The specialty tier threshold remains at $670.

While CMS will include the current “beneficiary access and performance problems” measure in the 2018 Star Ratings, CMS plans to remove the measure from the 2019 Star Ratings and introduce a revised measure for the 2019 display page that removes enforcement actions from this measure. CMS is also reversing course and not requiring plans to put hard edits (cumulative morphine equivalent dose [MED] point of sale edits) on opioid prescriptions. Additionally, CMS is aligning the Overutilization Monitoring System (OMS) overutilizer identification criteria with the recently updated Centers for Disease Control and Prevention (CDC) Guideline for Prescribing Opioids for Chronic Pain.


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:

  • Aetna and Wellmark announced they will not offer plans on the Iowa state exchange in 2018
  • CMS Administrator Seema Verma is recusing herself from the agency’s pending decision on Kentucky’s Medicaid work mandate waiver
  • The Trump Administration has named Jeffrey H. Anderson as Director of HHS’ Office of Health Reform
  • Kansas House fails to override Gov. Same Brownback Medicaid expansion veto

Does Cognitive Bias Affect Healthcare Decision Makers?


According to behavioral economists, decisions can be affected by cognitive biases or systematic deviations from rational judgment when processing information. Cognitive biases have been demonstrated across a wide variety of people and contexts, but do they affect payer decisions? 

Recent Xcenda research demonstrated that payers deviated from choosing the optimal treatment option when clinical trial data were presented in relative vs absolute risk terms.

Learn the full details of our AMCP gold medal-winning poster, “Relative vs Absolute Risk Framing in Healthcare Decision Making: A Survey of United States Payers.”





“We should try to design policies that prevent those abuses because we don’t want to be playing whack-a-mole with companies and going after them one-by-one. What I want is a framework in place that prevents those kinds of things from happening so people can’t use the regulatory process as a commercial arbitrage to gain unfair advantages.”

– FDA commissioner nominee Scott Gottlieb telling Sen. Tammy Baldwin (D-WI) how he wants to create policies to prevent pharmaceutical manufacturers from abusing the FDA approval process to prevent competition

Source: “Food and Drug Administrator Confirmation Hearing,” C-SPAN, April 5




Three-quarters of the public, including a majority of Trump supporters, want President Trump to try to make the ACA work.

Source: “Kaiser Health Tracking Poll—April 2017: The Fall of the AHCA and Next Steps for the ACA,” Kaiser Family Foundation, April 4


Asembia Specialty Pharmacy Summit 2017

April 30–May 3 l Las Vegas, NV
Join Xcenda at the largest US conference for specialty pharmacy. Matt Sarnes, PharmD, Sr. Vice President of Commercial Consulting, and Jay Jackson, PharmD, MPH, Sr. Vice President of Scientific Consulting, will present, “The Future of FDAMA 114—How Will It Impact Access to Specialty Therapies?” at the upcoming Asembia conference. Meet leaders and experts from AmerisourceBergen at booth #316. Learn more


ISPOR 22nd Annual International Meeting

May 20–24 l Boston, MA
Join Xcenda’s Jay Jackson, PharmD, MPH, Senior Vice President of Scientific Consulting, as he moderates a Tuesday lunchtime symposium titled, “FDAMA 114 and the 21st Century Cures Act: Insights From Payers and Manufacturers, and Implications for the Exchange of Health Care Economic Information,” at the ISPOR 22nd Annual International Meeting in Boston May 20–24. Visit us at booth #817 to meet with our global HEOR team and learn more about our award-winning research. Learn more


2017 ASCO Annual Meeting

June 2–6 l Chicago, IL
Join leaders and experts from AmerisourceBergen at ASCO’s Annual Meeting in Chicago. This meeting brings together more than 30,000 oncology professionals from around the world to discuss state-of-the-art treatment modalities, new therapies, and ongoing controversies in the field. Visit AmerisourceBergen’s booth at #6135. Learn more


2017 BIO International Convention

June 19–22 l San Diego, CA
Join leaders from World Courier 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. The convention offers key networking and partnering opportunities while providing insights and inspiration on the major trends affecting the industry. Visit the World Courier booth at #5408. Learn more


2017 Pharmaceutical End-to-End Supply Chain Management Summit

July 24–25 l Philadelphia, PA
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. 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.


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 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


Dan Cadle | Bernard Falkoff | Stacie Heller | Scott Shields | Jennifer Snow | Stephen Wilson


Laurie Kozbelt | Ellen Olson


Apr. 7, 2017


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