Federal appellate judges dismiss lawsuit against HHS regarding 340B cuts. Learn more.

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July 20, 2018

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FEATURED STORY
 

Not in My House: Court Rejects Lawsuit to Stop 340B Payment Reductions

 
 

On Tuesday, the US Court of Appeals for the District of Columbia Circuit dismissed a suit brought by several hospital associations and hospitals against the Department of Health and Human Services (HHS), challenging cuts to the 340B program. Last year, the American Hospital Association (AHA), America’s Essential Hospitals, Association of American Medical Colleges, and 3 hospitals brought legal action against HHS in response to the nearly 30% reduction in the Medicare Outpatient Prospective Payment System (OPPS) reimbursement rates for drugs purchased under the 340B program, effective January 1, 2018.

In the original suit, the plaintiffs challenged HHS’ authority and methodology in reducing drug reimbursement rates from 106% to 77.5% of the average sales price (ASP). However, to obtain judicial review in a federal court, claims arising under the Medicare Act require the plaintiff to first formally present the claim to HHS and fully exhaust other administrative remedies. Since the suit was filed in the absence of any specific claims for reimbursement and before any financial cuts occurred, the district court dismissed the suit in late December 2017 on the grounds that the preconditions for obtaining judicial review had not been met.

The AHA and other plaintiffs appealed the district court’s dismissal. In their appeal, the plaintiffs contended they had met the requirement for presenting the claim to HHS by filing comments opposing the regulation during the rulemaking process. In addition, the plaintiffs argued they met the conditions for judicial review by making payment demands to HHS following the original dismissal and during the time of the appeal.

In evaluating the plaintiffs’ appeal and looking at precedent cases, federal appellate judges ultimately found the district court was right in dismissing the case based on a lack of subject-matter jurisdiction. The appellate court found that comments filed during rulemaking do not constitute concrete claims, and payment demands made during the course of the appeal process are not applicable, as actions are evaluated at the time the action is brought.

This is certainly not the last we will hear of changes to the 340B program. Rumors are swirling that the Administration will propose further cuts to the program in the calendar year 2019 OPPS proposed rule…expected to be released any day.

 
EYES ON THE BLUEPRINT
 

Bibbity BAPpity Boo. Prince Gottlieb Lays Out the Deets

 
 

On Wednesday, the Food and Drug Administration (FDA) released its Biosimilars Action Plan (BAP), which provides the Administration’s proposed next steps to facilitate the development of biosimilar competition and market penetration. In remarks delivered at the Brookings Institution, FDA Commissioner Scott Gottlieb observed that the action plan is “an important piece of the Administration’s bold Blueprint to Lower Drug Prices.”

The BAP lists 11 “key actions” that the FDA will be taking, including things like standardized review templates specifically for biosimilar and interchangeable products, establishing an Office of Therapeutic Biologics and Biosimilars (OTBB), and final or revised draft guidelines on how to demonstrate interchangeability.

During his remarks at Brookings, Gottlieb bemoaned the lack of competition many observers expected when the Affordable Care Act was passed in 2010, only resulting in savings of “just a fraction of even the most conservative initial estimates.”

Since only 3 of the 11 approved biosimilars are on the market, Gottlieb is right to be concerned about the lagging market. However, the action steps do not directly address the legal and intellectual property framework, one of the largest impediments in getting biosimilars to the market.

 

Emerging Trends in PBM Restrictions on Commercial Copay Assistance

 
 

CBI 6th Annual Reimbursement & Access 2018

Join experts Jim Dickey, Director, Product Experience, Lash Group, and Corey Ford, Director, Reimbursement Strategy & Tactics, Xcenda, at the 6th Annual Reimbursement and Access conference August 15–16 in Philadelphia to learn more about copay accumulator programs and their impact on manufacturers and patients.


Learn more >

 

 

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LEGISLATIVE UPDATES
 

Legislative Byte

 
 
  • Next Wednesday, the Senate Health, Education, Labor, and Pensions (HELP) Committee will vote on the Patient Right to Know Drug Prices Act (S. 2554) that would prohibit so-called “gag clauses” in pharmacy contracts, thus allowing pharmacists to inform consumers if paying the retail price of a prescription drug costs less than their copayment or coinsurance.

HPW Rebuild

 
REGULATORY UPDATES
 

340B: I Always Feel Like Somebody’s Watching Me

 
 

The Government Accountability Office (GAO) released a report this week examining the characteristics of hospitals that participate in the 340B program. The report focused on critical access hospitals, sole community hospitals, and acute care hospitals that treat a disproportionate share of low-income patients, as those types accounted for more than 95% of hospitals participating in the program in 2016.

The GAO found that the hospitals most likely to benefit from the 340B program are those the program architects originally targeted: rural hospitals and those that serve larger numbers of low-income patients. Almost half (45%) of 340B-eligible facilities are critical access hospitals; an additional 45% are traditional acute care facilities that qualify as disproportionate share hospitals (DSHs) that treat large numbers of low-income or Medicaid patients. The GAO found the majority of hospitals eligible for 340B discounts are in rural areas (62%).

The 340B program, as we have been documenting in Health Policy Weekly (hello, Featured Story up there), has been under scrutiny as lawmakers and Administration officials have been exploring criticisms about how 340B hospitals are directing their program proceeds as well as the enormous growth of the program. This GAO report indicates the appropriate facilities are accessing the 340B program discounts.

 

Sure to be a Hot Topic at Sturgis? Limiting Drug Prices

 
 

On Monday, the South Dakota 6th Circuit Court issued an order to remove a 2018 ballot initiative limiting drug prices. The court determined the initiative lacked the necessary number of valid signatures to qualify it.

The South Dakota initiative had proposed enabling state agencies to arrange for discounted payments of prescriptions, set at rates equivalent to those paid by the Department of Veterans Affairs (VA). The impact of such a law would only apply to persons who obtain prescriptions paid for by the state (ie, Medicaid and state employees).

In January, DC’s Board of Elections deemed the District of Columbia Drug Price Relief Act of 2018, a near-identical ballot initiative, to be unacceptable. The act would have limited the price paid by city agencies for prescription drugs to be equal to or less than the price paid by the VA. Pursuant to existing DC Code, the setting of a price ceiling would violate statutes on funding appropriation through infringement upon elected officials’ authority to distribute payments.

But if other states are a model, even if it were on the ballot, getting it passed might be difficult. Last November, Ohioans firmly rebuffed Issue 2, which proposed mandating state agencies also obtain discounted prescriptions at VA rates. In 2016, California’s Proposition 61, supported by 47% of voters, would have limited state health plans to a maximum payment for prescriptions not to exceed VA rates.

Initiative proponents have suggested confusion and misinformation led voters to act against their best interest. However, opponents counter that such initiatives are unlikely to lead to any cost-savings for voters with cost being shifted onto Medicare and commercial insurance.

With ongoing efforts to educate voters on the potential for states to realize steep discounts, drug price initiatives are expected to continue appearing at ballot boxes and in state legislatures.

 

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:

 

Connected Health: The Next Healthcare Frontier

 
 

Digital health, also known as connected health, has a spotlight shining on it thanks to technological advances, as well as increased venture funding, over the past several years.

In this white paper, we examine the factors health technology manufacturers and healthcare firms must review for reimbursement, evidence requirements, data collection, and timing for payer stakeholder consideration.


Download now >

 

 

 
HEARD ON THE STREET
 

“You will see a lot of action. This is not a one-shot wonder. It’s not like we are going to have one particular policy that will solve all the problems. Over the coming weeks, you will see a lot of initiatives on our end to try and deal with this.”

 – CMS Administrator Seema Verma, discussing how the Centers for Medicare & Medicaid Services is exploring options for helping states deal with the rising cost of drugs in their Medicaid programs, at the POLITICO Pro Summit

Source: “Medicaid looking at ways to help states lower drug cost, Verma says,” Politico, July 17

 

 
POLICY BY NUMBERS
 

+20.1%, +12.6%, +9.8% vs -21.7%, -18.6%, -17.4%

 

GoodRx looked at cash prices of the 500 most commonly prescribed medications in 30 of the most populated cities in the US over the last 12 months (ending April 2018). It found the 3 most expensive cities to purchase prescription drugs are New York (+20.1% above national average), San Francisco (+12.6%), and Los Angeles (9.8%), while the 3 least expensive cities are Columbus, Ohio (-21.7% below national average), Atlanta (-18.6%), and Houston (-17.4%).

Source: “Here are the Most, and Least, Expensive Cities for Prescription Medications,” GoodRx, July 6

 
UPCOMING MEETINGS & CONFERENCES
 

CBI Reimbursement and Access 2018

August 15–16  | Philadelphia, PA
Xcenda’s Corey Ford, MPH, Director of Reimbursement Strategy and Tactics, will team up with Lash Group’s Jim Dickey, Director of Product Experience, to present a session titled, “Emerging Trends in PBM Restrictions on Commercial Copay Assistance.” They will examine and discuss the emerging copay accumulator trends. 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 | Commercialization Solutions | 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:

Reeya Patel | Scott Shields | Stephen Wilson

PRODUCTION:

Laurie Kozbelt | Ellen Olson | Tia O’Brien

 

July 20, 2018

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