Switch to transparent pricing model expected to save Ohio Medicaid $16 million and increase pharmacy reimbursements $191 million.

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Aug. 17, 2018

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FEATURED STORY
 

Didn’t You Get the Memo? Ohio Looking for PBM Transparency

 
 

This week, the Ohio Department of Medicaid announced it is requiring its 5 managed care plans to terminate contracts with pharmacy benefit managers (PBMs) based on the PBMs’ “spread pricing” methodology. The plans must adopt new practices based on a transparent “pass-through” pricing model and enter into contracts with vendors that can provide services based on the model.

A state-commissioned report showed PBMs billed Ohio taxpayers $223.7 million, or 8.8%, more for prescription drugs in a year than they reimbursed pharmacies to fill those prescriptions. CVS Caremark has the majority of Ohio’s managed healthcare business and is the PBM for 4 of 5 managed care plans. (OptumRx is the other PBM.) The study said PBM fees range between $0.90 and $1.90 per prescription. Instead, CVS Caremark billed the state about $5.60 per script, and OptumRx charged $6.50.

HealthPlan Data Solutions, which performed the analysis, recommended Ohio switch to the pass-through model, finding costs to the state would decrease $16 million while pharmacy reimbursements would increase $191 million.

Under the pass-through model, vendor PBMs will receive administrative fees from the state and must bill the state the same amount they pay pharmacists. Managed care plans are required to make this change effective January 1, 2019.

PBMs and the role they play in drug pricing have been a recent discussion topic, so it is not surprising they are the subject of this policy change. Many states will be watching the implementation of Ohio’s directive—and if Ohio can generate savings.

 

How Policy Impacts Patient Support

 
 

Seismic shifts in the healthcare policy landscape can play a considerable role in altering the need and demand for patient support services offered by manufacturer programs.

Since the inauguration of President Donald Trump, congressional Republicans have launched significant undertakings to reform the laws that govern America’s complex healthcare system. Despite the push, efforts to repeal and replace the Affordable Care Act have fallen short. 

Xcenda’s Ana Stojanovska and Corey Ford, both with the Reimbursement & Policy Insights team, examine the impact of policy changes to patient support in a new Insights article. Read now >

 

 

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LEGISLATIVE UPDATES
 

Can’t Even Give Them a Red Stapler: Clinical Trial Patient Support Bill in MA

 
 

Massachusetts is following California’s lead and considering legislation that aims to improve patient access to and enrollment in clinical trials. Massachusetts bill S.2159 is currently being reviewed by the State Senate Ways and Means Committee. The California Cancer Clinical Trials Program was signed into law in 2016; Texas, Pennsylvania, and Florida are pursuing similar bills.

While the Food and Drug Administration (FDA) provided guidance earlier this year allowing for reimbursement of these services for clinical trial patients such as travel and lodging, childcare, meals, and lost wages, Massachusetts lawmakers are considering more robust coverage. Many clinical trials are struggling to enroll and retain an adequate and diverse patient population because patients cannot afford the costs of these trials. Current federal statutes and regulations forbid manufacturers to pay trial subjects.

The Lazarex Cancer Foundation, which is supporting state efforts to improve access to clinical trials, hopes the various state laws will facilitate the enactment of future federal laws regarding clinical trials that would provide greater access to more patients across various socioeconomic backgrounds via financial support programs, ancillary services, pilot program exposure, and enrollment assistance.

 

Legislative Byte

 
 
 

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REGULATORY UPDATES
 

So Where’s the Motivation? CVS to Use ICER Analysis for Drug Coverage

 
 

In April, CVS Health announced new initiatives the retail pharmacy chain and its PBM business, CVS Caremark, would be launching to reduce the cost of drugs and improve health outcomes. Last Thursday, the conglomerate doubled down by releasing a white paper providing its data-driven insights on topics including drug-cost inflation over time, historical trends of pricing, and pharmaceutical manufacturer profit margins.

In addition to describing existing strategies CVS Caremark has taken to lower drug costs and their impact, the white paper announced 3 new initiatives to reduce out-of-pocket spending by its members:

  1. Allowing insurers contracting with CVS Caremark to exclude any drug launched at a price greater than $100,000 per quality-adjusted life year, as determined by the Institute for Clinical and Economic Review (ICER)
  2. Increasing medication adherence by prompting the government to expand the “preventive” drug list for patients with high-deductible health plans, allowing patients to access more drugs with zero dollar copays
  3. Launching new transparency tools that provide drug costs and coverage information in real time, allowing patients, physicians, and pharmacists to identify individual prescription savings and clinically appropriate alternatives

The use of $100,000 certainly draws a line in the sand that few have been willing to state so boldly. CVS Health’s launch of new strategies and initiatives comes at a time where increasing drug prices and out-of-pocket costs for consumers is a key topic of interest for both the government and commercial industry, and bold cuts to access may be hidden under the cover of cries over drug pricing.

 

We Never Liked Paying Bills Either: NGA Advises States About Paying Less for Drugs

 
 

Last week, the National Governors Association (NGA) released a report outlining strategies for states to address public health crises, such as opioid use disorder and hepatitis C. The strategies focus on increasing access to evidence-based pharmaceutical interventions while ensuring fiscal sustainability of public programs.

The NGA developed the report in response to concerns about the increasing cost growth associated with pharmaceutical products, as specialty medications are a key driver in Medicaid spending. The strategies are meant to offer ideas for states to help address the issue of rising healthcare prices.

Participants from 11 states (California, Delaware, Louisiana, Massachusetts, New Mexico, New York, Ohio, Oregon, Rhode Island, Virginia, and Washington) identified 9 strategies to help provide access to pharmaceuticals at more affordable costs:

  1. Establish a Medicaid spending cap for pharmaceuticals
  2. Pursue alternative payment mechanisms
  3. Consider options for excluding select drugs from Medicaid coverage
  4. Engage in bulk and pooled purchasing
  5. Determine and pay value-based prices
  6. Maximize discounts for the incarcerated population through the 340B drug discount program
  7. Explore whether the federal government would use or acquire patents without permission from the patent holder, in exchange for “reasonable and entire” compensation
  8. Pursue legal and regulatory options to foster greater transparency in the pharmaceutical market
  9. Explore whether the federal government would allow nominal pricing for correctional facilities

In most state budgets, the Medicaid program comprises the largest line item, so the push to control costs is logical. However, at least half of the strategies involve the states maneuvering to simply pay less for the same quantity of prescription drugs. Unfortunately, the list of strategies did not include exploring longer-term planning for the expected increase in drug costs, much like how states develop long-range infrastructure plans.

Interestingly, one of the 2 public-health “crises” the NGA listed—HCV infection—is now a curable condition, with the cost having dropped considerably due to market competition. The report did not suggest an analysis of the savings to states generated by no longer having to fund expensive treatments for a chronic condition.

 

Naga Naga Naga Work Here Anymore: FDA Guidance on Fast-Track Approval

 
 

Over the last several years, the FDA has increased efforts to expedite innovation and patient access of drugs and devices by shortening the development time before the drug is introduced to the public. In its latest effort, announced last Friday, the agency released draft guidance to sponsors regarding the design and implementation of first-in-human (FIH), multiple-expansion cohort clinical trials to fast-track the development of certain experimental cancer drugs.

The draft guidance provides the FDA’s thoughts on the characteristics of drugs and biologics well suited for such an expedited plan, information to include in investigational new drug (IND) application submissions to support cohort objectives, and safeguards to protect patients enrolled in FIH expansion cohort studies.

The benefit of expanded cohort trials is that they merge aspects of each of the 3 phases of clinical trials into 1 continuous phase. Compared to phase 1 clinical trials, which usually include between 20 and 80 patients, expanded cohorts may enroll a few hundred to over a thousand patients.

While an expedited process with a larger sample size could lead to a more efficient drug development process and the potential for fewer development costs and less lag time, hurdles exist. Pharmaceutical companies and researchers would have to balance the desire to help patients with life-threatening diseases gain access quickly to new treatments, while at the same time consider the potential risks associated with a large number of patients who could be exposed to drugs with unknown efficacy. Additionally, the FDA notes another potential challenge would be the possibility of missing critically important information due to the expedited trial design.

Based on the draft guidance, pharmaceutical companies will need to invest in new standards to protect patients and plan ahead to meet with the FDA before they go too far down the road in developing an FIH multiple-expansion cohort trial. For patients, the potential impact of accelerated access to experimental cancer drugs using the expanded cohort trial could be substantial, especially for those patients with a disease that has no cure. The FDA is seeking comments on the draft guidance and the potential advantages and roadblocks by October 10.

 

(No) Jumping to Conclusions: CMS Proposes Changes to MSSP

 
 

Last Thursday, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to change the Medicare Shared Savings Program (MSSP) beginning in July 2019, the main thrust of which is to streamline the reporting tracks for the participating accountable care organizations (ACOs).

CMS would compress the existing Track 1, Track 1+, Track 2, and Track 3 into 2 tracks, BASIC and ENHANCED. The BASIC track would allow eligible ACOs to participate under a 1-sided, upside-only agreement for 1 to 2 years; after which, risk levels would be incrementally increased. At the highest risk level, the BASIC track would qualify as an Advanced Alternative Payment Model under the Quality Payment Program. The ENHANCED track is based on the MSSP’s existing Track 3. Both tracks would include agreement periods of no fewer than 5 years.

The current Track 1, Track 1+, and Track 2 would be discontinued for future applications.

The proposed rule also implements a number of provisions from the Bipartisan Budget Act of 2018, including flexibility in beneficiary assignment methods, expansion of telehealth services, and establishment of a beneficiary incentive program. CMS proposes to require ACOs to attest that a certain percentage of clinicians are using 2015 edition certified electronic health record technology.

Comments on the proposed rule are due October 16. Additional information is available in the CMS fact sheet and press release.

 

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
 

“For all its complexity and labyrinthine mathematical formulae, this case turns on a simple concept: Some things take a bit of time to sort out. The Department’s efforts to predict Medicare costs for patients across the Nation each fiscal year is fraught with variables, estimates, and uncertainties. The Medicare statute recognizes that difficulty by requiring the Department to model results that fall between 5% and 6% of total projected payments, without mandating that the Department actually hit the bullseye each year.”

 – Patricia Ann Millett, US Circuit Judge of the US Court of Appeals for the DC Circuit, filing a unanimous opinion of the 3-judge panel for Billings Clinic v. Azar, in which a group of hospitals lost a legal challenge to an old formula CMS used to calculate outlier payments

 

 
POLICY BY NUMBERS
 

1 in 4

 

According to an analysis by the Centers for Disease Control and Prevention (CDC), 25.7% of noninstitutionalized adults in the US (representing an estimated 61.4 million persons) have a disability. Mobility was the most prevalent type of disability (13.7%), followed by cognition (10.8%), independent living (6.8%), hearing (5.9%), vision (4.6%), and self-care (3.7%).

Source: “Prevalence of Disabilities and Health Care Access by Disability Status and Type Among Adults—United States, 2016,” Morbidity and Mortality Weekly Report, CDC, August 17

 
UPCOMING MEETINGS & CONFERENCES
 

AMCP 2018 Nexus

October 22–25 | Orlando, FL
Xcenda is proud to support AMCP at this year’s AMCP Nexus conference in Orlando. Meet with Xcenda’s team of experts and consultants at booth #407. Students are also welcome to join our team at the Residency and Fellowship Showcase on Wednesday, October 24, 5:00–8:00 PM ET. 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:

Maureen Holmes | Isabell Kang | Jenna Kappel | Reeya Patel | Irene Sheynis | Scott Shields

PRODUCTION:

Laurie Kozbelt | Ellen Olson

 

Aug. 17, 2018

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