Maryland’s drug price transparency law gets struck down by a federal appeals court.

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Apr. 20, 2018

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FEATURED STORY
 

Batting on a Losing Wicket: Transparency Laws Dealt a Blow

 
 

Last Friday, a federal appeals court ruled against a 2017 Maryland law designed to deter price gouging of off-patent and generic drugs (House bill 631). The law required health officials to share with the attorney general’s office price information about generic drugs. If the state’s officials could show prices were being raised too steeply, they could seek to order prices down or have fines issued.

The appeals court struck down the law ruling it was unconstitutional because it impacted the prices of transactions occurring beyond Maryland’s borders, a violation of the United States Constitution’s dormant commerce clause.

Maryland Governor Larry Hogan (R), while supporting the bill’s intentions, foreshadowed its eventual failure when he declined to sign it based on his expectation that it was unconstitutional. (Since the Governor did not veto the bill, it passed without his signature.)

The plaintiff in the suit against the bill was the Association for Accessible Medicines, formerly the Generic Pharmaceutical Association. The organization argued the law could hurt competition by deterring companies from making generic drugs and increase prices.

Considering the ruling’s pointed reference to the durability of a similar Maine law, the court’s decision could have a chilling effect on other states adopting similar legislation.

 

Seeing the Value and Transparency of Medicare Part B: 4 Case Studies of Medicare Successes

 
 

As the largest payer of healthcare services in the United States, the Centers for Medicare & Medicaid Services (CMS) often sets the trend for healthcare delivery and reimbursement. Our health policy experts examine 4 areas where we think Medicare has got it right: reimbursing physician-administered drugs, enabling beneficiary choice through Medicare Advantage, looking at total cost of care, and tying payment to quality. Download now

 
 

 
LEGISLATIVE UPDATES
 

(Medicare) Rated “E” for Everyone

 
 

On Wednesday, Senators Jeff Merkley (D-OR) and Chris Murphy (D-CT) introduced the Choose Medicare Act (see bill text and 1-page summary) that would allow businesses and insurance-exchange consumers to buy into Medicare.

Sen. Berkley stated the bill is a type of “public option” that would be sold alongside the option to buy private health insurance. It would be known as “Medicare Part E” and would offer the same benefits as Medicare, but the government would be allowed to negotiate drug prices.

The bill also would make government subsidies potentially more generous than under the exchanges. It would allow people who make up to 600% of the federal poverty level (FPL) to receive subsidies that lower the cost of premiums, compared to the subsidy aid offered under the exchanges that is capped at 400% of the FPL.

Though the bill is unlikely to make any progress under the Republican-controlled Congress, it demonstrates the liberal healthcare proposals offered by then-Presidential candidate Sen. Bernie Sanders (I-VT) still have some traction. The hope is to build momentum for the concept so that if and when Democrats have more political capital, the discussion could be broadened and potentially pass.

 

One Service Not Added to 100 Million Amazon Prime Members…Yet

 
 

On Monday, Amazon indicated it will not be expanding into wholesale pharmaceutical distribution, at least not anytime soon. The company attributed the decision to hospitals already entrenched with existing contracts and their need for a reliable and robust “cold-chain network” to manage refrigerated storage and transport.

While Amazon currently sells Class I and II medical devices, and has applied nationwide for wholesale distributor licenses, its current business approach to healthcare appears to be based on relying on its name, stature, and better-known services, such as cloud and voice technologies.

Reports of Amazon arranging advisory boards composed of hospital executives suggest a longer-term strategy—potentially pursuing contracting with hospital networks or becoming a data-services vendor.

 

Legislative Bytes

 
 
  • Sen. Bernie Sanders introduced a bill to “hold pharmaceutical companies accountable for illegal marketing and distribution of opioid products and for their role in creating and exacerbating the opioid epidemic.”
  • Fred Upton (R-MI), Chairman of the Health Subcommittee of the House Energy and Commerce Committee, introduced a bill to provide equal coverage of in vitro-specific IgE and percutaneous tests under Medicare and Medicaid.

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REGULATORY UPDATES
 

Ready, Set … Almost HCEI Guidance

 
 

At the Pharmaceutical Care Management Association’s (PCMA’s) 2018 PBM Policy Forum, Food and Drug Administration (FDA) Commissioner Scott Gottlieb stated the agency will be “shortly” finalizing its guidance on firms’ communication of healthcare economic information (HCEI) regarding their prescription drugs to payers. The draft guidance was issued in January 2017.

The draft guidance also addresses the dissemination of information about investigational drugs and devices to payers before FDA approval or clearance of such products. Dr. Gottlieb pointed out how such HCEI, including about off-label uses, “can support more flexible drug pricing and coverage agreements, including indication-based payments.”

Clarification about communication of HCEI—contained in the 21st Century Cures Act—is eagerly awaited by the pharmaceutical industry. In November 2016, the FDA held a 2-day meeting to explore potential changes in its communications policies for drug and device manufacturers. Some participants and attendees raised concerns that such communication could subvert the FDA’s approval and clearance process, but Dr. Gottlieb is clearly favoring efforts to encourage a dialogue between the 2 informed stakeholder groups, rather than the FDA stifling such discussions.

 

Acting as Bundled Payment Guinea Pig Can Leave You Spinning Your Wheel

 
 

A new report in the Journal of Oncology Practice showed that oncology bundled payments that include drug costs could destabilize the cancer-care delivery environment. According to research performed by Milliman for the American Society of Clinical Oncology (ASCO), reimbursement under bundled payment models that include Medicare Part B and Part D costs would vary more due to patient mix than by care quality.

Practices that treat a larger proportion of molecularly or clinically complex patients compared to the average patient in the bundle would earn reimbursement far below the expected fee-for-service (FFS) payments. Conversely, practices treating less complex cancer patients would receive reimbursement that is well above the expected FFS payments.

The oncology bundled payments would also penalize practices with lower patient volumes; they would face a reimbursement loss of 10% or more, the report showed.

Researchers uncovered the findings using an economic model for patients with advanced stage III colon cancer and metastatic non-small-cell lung cancer. They paired the simulation with Medicare reimbursement rate data from the first quarter of 2016.

This study shows that oncology bundled payments that incorporate drug costs into financial benchmarks could encourage practices to send patients with complex cancer diagnoses to other organizations for treatment, exacerbating the shift in care to the outpatient setting and disrupting care for cancer patients.

 

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:

 

Amanda Forys Contributes Indication- and Reference-Based Pricing Insights in Biosimilar Development

 
 

Indication- and Reference-Based Pricing: A Positive for Biosimilar Manufacturers?

With biosimilar approvals expected to increase, reference-based pricing presents opportunities for the US biosimilar market. Amanda Forys, Senior Director of Reimbursement Strategy Insights, discusses how biosimilar manufacturers can stay on top of ever-changing pricing trends. Learn more

 
 

 
HEARD ON THE STREET
 

“Why do you even need a pharmacy benefit manager [PBM] today? They are sort of a relic and, therefore, have an incentive to be obstructionist.”

 

– Wayne Winegarden, PhD, Senior Fellow of Pacific Research Institute

Source: “3rd Annual National Policy and Advocacy Summit on Biologics and Biosimilars,” Alliance for Patient Access, April 17

 
POLICY BY NUMBERS
 

8.3% → 3.7%

 

The PBM CVS Health reported it faced an average wholesale price increase of 8.3% for specialty drugs in 2017 but kept that drug cost growth down to 3.7% for payers via: indication- and outcomes-based contracting; cost-cap-based rebate approaches; and managing patient adherence, symptoms, and comorbidities.

Source: “CVS Health Kept Drug Price Growth Nearly Flat and Improved Medication Adherence for PBM Clients in 2017,” CVS Health, April 5

 
UPCOMING MEETINGS & CONFERENCES
 

AMCP Managed Care & Specialty Pharmacy Annual Meeting

April 23–26 l Boston, MA
Join AmerisourceBergen companies, US Bioservices and Xcenda, at AMCP’s Annual Meeting at the Boston Convention and Exhibition Center, April 23–26. Meet with our specialty pharmacy and commercialization experts at the largest gathering of managed care professionals who work, lead, and innovate in the ever-changing world of pharmaceutical management. Visit AmerisourceBergen at booths 316 and 321. 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
Senior Director,
Health Policy
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

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

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

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:

Stew Kaufman | Scott Shields | Stephen Wilson

PRODUCTION:

Laurie Kozbelt | Ellen Olson

 

Apr. 20, 2018

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