HHS Secretary Alex Azar defended the Trump Administration’s plan to change the way drugs are paid for under Medicare Part B.

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Jan. 18, 2019

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I’m Serious (and Stop Calling Me Shirley): Azar Defends IPI

 
 

On Tuesday, Health and Human Services (HHS) Secretary Alex Azar defended the International Pricing Index (IPI) model, the Administration’s plan to change how drugs are paid under Medicare Part B by indexing prices to those charged in a selected group of other countries.

Speaking at an event sponsored by the Council for Affordable Health Coverage, Azar defended the Administration’s efforts to influence drug pricing behavior, stating there were 57% fewer price increases since the release of the President’s drug pricing blueprint last May through the end of 2018, compared with the same period in 2017.

Explaining that the IPI model would take 5 years to be fully implemented, Azar asserted that glide path would allow manufacturers to “negotiate a price more in line with what Americans pay.” In situations where manufacturers cannot negotiate a higher price abroad so they can increase the Medicare price, he said:

“[T]hey may have to continue giving cheaper prices overseas and take a cut in Medicare reimbursement. The ultimate results here will be driven by forces in the drug market and decisions drug companies make in response to them. Their fate is in their hands.”

Azar asserted the IPI model introduces a “new competitive dynamic” to the international framework. He believes the purchasing power of Medicare provides manufacturers a new reason to reject other countries’ pricing offers if they are excessively low. In fact, he said:

“Now that we’ve put forth this model, from now on, no drug company will ever agree to a discount in Europe without considering how it might affect the price they get in the United States.”

Azar also stated the IPI model would “harness” biosimilar competition, but he did not offer a logical path to that end. He discussed how the so-called “rebate wall” discourages biosimilars from capturing market share but did not provide a bridge to explain how the IPI model would affect large rebates to reference biologics.

When the potential IPI model was introduced last October as an Advance Notice of Proposed Rulemaking (ANPRM), the Administration suggested a speedy path to reviewing comments, issuing a proposed rule, and then implementing the model in 2020. That timeline sounds increasingly difficult for a launch next year, as public sentiment appears to be turning against the IPI model. Many of the comments to the ANPRM indicated disapproval, and the Part B Access for Seniors and Physicians (ASP) Coalition sent a letter to Congressional leaders co-signed by 339 patient and provider groups expressing concerns about it. Nevertheless, this Administration is nothing if not defiant, so a public stance against it may not be persuasive.

 

You Can Tell Me, I’m a Doctor: BCBSNC Launches Value Model

 
 

Earlier this week, BlueCross BlueShield of North Carolina (BCBSNC) announced plans to implement a new payment system, Blue Premier, in collaboration with 5 state-run health systems (Cone Health, Duke Health, UNC Healthcare, Wake Forest Baptist Health, and WakeMed). Blue Premier is a value-based model of care with 3 overarching objectives (improving health outcomes, enhancing the patient experience, and lowering costs) utilizing a 3-pronged approach to:

  • Change payment methods for healthcare
  • Prioritize primary care
  • Improve integration of mental and behavioral health practices

By 2020, BCBSNC wants 50% of its members to have a primary care provider accountable for all of their care, ultimately hoping to get all members covered under value-based contracts within 5 years. Also, BCBSNC recently entered into a partnership with Aledade, a start-up that helps to support primary care physician-led accountable care organizations (ACOs). This new partnership will support these ambitious goals by providing more resources and creating the opportunity for better data sharing to improve care management while, at the same time, improving patient health outcomes.

Instead of traditional fee-for-service, payments under the Blue Premier program will be linked to providers and hospitals over time and will be based on their ability to manage the total cost of care and overall performance, measured by industry quality standards. Also, the Blue Premier program will include health systems in a “shared risk financial model” with joint accountability, where everyone benefits from cost savings if quality goals are met, and everyone is penalized from losses, if they fall short.

This change is reflective of the shift in perspective of the US healthcare system over recent years from volume to value. It will be interesting to see what happens with this new payment model, particularly with the explosion and popularity of retail clinics that offer many of the same services primary care providers offer, but with more convenient appointment times, walk-ins, and shorter wait times.

 

A Bluebird Day: Good for Skiing, Bad for Fishing…Good for Value?

 
 

At last week’s J.P. Morgan Healthcare Conference, biotech company Bluebird Bio announced a plan to use a value-based pricing arrangement for its experimental gene therapy for a rare inherited blood disease, beta thalassemia, that results in reduced production of hemoglobin. After an initial charge to the insurer, the remaining payments of the high-price drug could be paid in installments over 5 years. Additionally, if the experimental infusion does not lead to improved health, the 1-time payment is all Bluebird would receive. The company would also only raise prices of the infusion at most at the rate of inflation tracked by the Consumer Price Index (CPI).

Bluebird calculated the intrinsic value of its treatment at $2.1 million. The company has not determined (or, perhaps, publicized) its price.

Bluebird’s drug was designed to replace the effective gene in 1 infusion, and small studies have shown there is potential for patients to need fewer or even no need for blood transfusions; however, the longevity is unknown. If regulators approve the drug for use in Europe, it could be available there later this year. In the US, the Food and Drug Administration (FDA) could approve it for use as early as 2020. But that would also mean an insurer would need to be open to this outcomes-based pricing arrangement that would be the first of its kind. There seems to be interest, as Harvard Pilgrim of Massachusetts is in discussion about that arrangement with Bluebird and other manufacturers of new gene therapies.

 
 

New Infographic: Medicare Part B: Do Providers Choose Treatment Based on Payment?

 
 

What do Medicare claims data reveal about physician-administered drugs? Our study found no strong positive correlation between drug payment and utilization. View our infographic to learn more:

View infographic >

 

 

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LEGISLATIVE UPDATE
 

Even the Egg Gang Can’t Distract From Congressional Focus on Drug Pricing

 
 

On Monday, the House Oversight Committee’s ranking Democrat, Elijah Cummings (D-MD), announced the start of a comprehensive investigation into the drug industry’s pricing practices.

The committee sent letters to 12 companies, whose drugs the committee identified as the costliest to Medicare Part D, the costliest per beneficiary, or having the greatest increase over a 5-year period. While the full letters were not publicly released, Cummings indicated the committee is requesting information and documents regarding price increases, strategies to preserve market share, and investments in research and development.

Particular scrutiny over insulin products in the committee’s list echoes recent concerns from the American Medical Association (AMA). Last July, the FDA also weighed in with new regulatory guidance to facilitate competition among insulin products and bring generics to market.

Increasing pressure over pricing practices is not limited to brand manufacturers. Last month, details of an ongoing investigation into allegations of price-fixing involving at least 16 generic companies were revealed.

The Oversight Committee is scheduled to begin holding a series of panel hearings, starting with industry experts and analysts on January 29. No specific witnesses have been announced at this time.

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REGULATORY UPDATES
 

Good Luck, We’re Counting on You: FDA Supports Cell and Gene Therapies Development

 
 

On Tuesday, the FDA announced plans to release several guidance documents this year related to development of:

  • Gene therapy products for inherited blood disorders such as hemophilia
  • Gene therapy products for certain neurodegenerative diseases
  • Cell-based gene therapies such as CAR-T cells and other cellular therapy products
  • Cell-based regenerative medicine products
  • Innovative trial design by which individual researchers can pool their clinical data after following a common manufacturing protocol and thereby develop a more robust dataset for purposes of gaining a Biologics License Application

The FDA is also planning a public meeting on the complexities associated with manufacturing for products like CAR-T cells, the initial cell therapy approved for use. An expedited approval pathway process may allow these products to enter the market quicker. The requirements for follow-up clinical trials after entering the market may be key for acceptance by patients, providers, and payers, given concerns about unintended changes to patients’ genomes and the longevity of treatments.

These efforts are in preparation for possibly 20 new product submissions expected in the next few years. Plans to add 50 clinical reviewers to the current team of application reviewers will help with processing such an influx of applications. The only thing for which the FDA did not plan is the partial government shutdown that could impact the agency’s intentions of getting in front of these new product submissions. Funding for the review of new products, which comes from user fees (which can be used but cannot be collected during the shutdown), are expected to run out in early February.

 

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:

  • The Institute for Clinical and Economic Review (ICER) posted the following documents for review by the public:
    • A draft protocol for a new type of analysis called an “Unsupported Price Increase” (UPI) report to annually assess whether the most significant prescription drug price increases are supported by new clinical evidence
    • A draft scoping document for the assessment of treatments for Duchenne muscular dystrophy
  • On January 28, the Congressional Budget Office will release its annual “Budget and Economic Outlook” report, providing updated economic and budget projections from 2019 to 2029.
  • Walgreens Boots Alliance and Microsoft are establishing a strategic partnership, committing to a 7-year agreement to fund research and development efforts to improve healthcare and lower costs by building healthcare solutions to transform healthcare delivery.
  • The Georgetown University Health Policy Institute put out a report on how to address Medicaid prescription drug costs.


 

Navigating Medicare Part D: Approaches to Addressing Beneficiary Affordability and Access Challenges

 
 

Xcenda reimbursement and health policy experts collaborated with MAPRx on a new report on Medicare Part D. The program is as popular and robust as ever but poses significant challenges that result in increased out-of-pocket costs and limited access for millions of beneficiaries.

MAPRx is calling on Congress and the Administration to address the challenges facing Part D by enacting solutions proposed in this paper.

Download report >

 

 

 
HEARD ON THE STREET
 

“International Pricing, also known as International Reference Pricing (IRP) or External Reference Pricing (ERP), is not a suitable price control mechanism for ensuring an appropriate and competitive price environment for biosimilar medicines. Biosimilar medicines operate in a highly competitive market environment. Medicines for Europe Biosimilar Medicines Group considers that policies other than ERP are more appropriate to stimulate competition in the off-patent market.”

Source: Biosimilars Medicine Group (Brussels) in its comments to HHS on the Advance Notice of Proposed Rulemaking (ANPRM) International Pricing Index (IPI) model

 

 
POLICY BY NUMBERS
 

70%

 

Seventy percent of Americans maintain a negative view of the US healthcare system.

Source: Gallup Poll

 
UPCOMING MEETINGS & CONFERENCES
 

CBI PAP 2019: 20th Annual Patient Assistance & Access Programs

March 4–6 | Baltimore, MD
Join Xcenda and Lash Group at the upcoming CBI PAP 2019 Conference in Baltimore, MD March 4–6. Xcenda’s Vice President of Reimbursement and Policy Insights and Editor-in-Chief of Health Policy Weekly, Jennifer Snow, MPH, will deliver the state of the industry address titled, “The Evolving Healthcare Landscape and the Impacts on Patient Access and Affordability.” Lash Group President Tommy Bramley, PhD, will deliver the conference’s keynote on “Empathy and Expertise—Evolving Patient Support Programs in the Digital Age.”  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
Vice President,
Reimbursement and
Policy Insights,
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 | Commercial Consulting | Xcenda

CONTRIBUTING AUTHORS:

Isabell Kang | Jenna Kappel | Scott Shields | Jennifer Snow | Stephen Wilson

PRODUCTION:

Laurie Kozbelt | Ellen Olson

 

Jan. 18, 2019

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