We take a look at the current drug pricing rules and what we *might* expect in the next few weeks.

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Mar. 22, 2019

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FEATURED STORY
 

Our Families Love When Rules Drop and We Ignore Them: Waiting for the Next Round

 
 

With the various hearings in Congress, we wanted to provide an update on the scuttlebutt on drug pricing rules and what *might* be expected in the next few weeks.

Rebate Rule: While comments are still not due for the rebate rule, the Administration seems determined to implement the rule in time for the 2020 Part D plan year. In late January, the Department of Health and Human Services (HHS) released a proposed rule on changing the safe harbors for prescription drug rebates with the objective of curbing list price increases. More specifically, the rule would create a new safe harbor from the anti-kickback statute (AKS) for discounts offered to patients at the point of sale and for fixed-fee service arrangements between manufacturers and pharmacy benefit managers (PBMs). In addition, the rule proposes to exclude rebates offered by drug manufacturers to PBMs, Part D, and Medicaid managed care plans from the safe harbor’s definition of a “discount.”

With plan bids due in early June, the timing is aggressive, particularly considering the impact the rule could have on premiums and plan communications to beneficiaries—not to mention the amount of backend contracting that would need to happen between manufacturers and PBMs.

Drug Pricing in TV Ads: Last October, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to include the wholesale acquisition cost (WAC), or “list price,” in all television advertising for any prescription drug or biological product with a list price greater than $35 for a 30-day supply or typical course of treatment. While some companies have begun to voluntarily follow PhRMA’s direct-to-consumer advertising principles, the final rule is under review at the Office of Management and Budget.

Medicare Advantage and Part D Final Rule and the 2020 Advance Notice and Final Call Letter are both expected soon. The call letter should drop April 1 and the final rule shortly after.

And, of course, we’re still waiting to hear about the International Price Index model and if that will turn into a proposed rule.

We’ll be on stand-by bringing you the latest as it drops.

 

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LEGISLATIVE UPDATE
 

Legislative Bytes

 
 
  • Senate Finance Committee Chairman Chuck Grassley (R-IA) has rescheduled a drug pricing hearing with PBMs to April 9. All 5 PBMs—Humana, CVS, Cigna, OptumRx, and Prime Therapeutics—have confirmed they will testify.
  • Sens. Grassley, Amy Klobuchar (D-MN), Mike Lee (R-UT), and Dick Durbin (D-IL) reintroduced the Short on Competition Act that would allow the HHS Secretary to grant expedited reviews and inspections, and temporary importation when there is, or is likely to be, a drug shortage or when there are fewer than 5 competitors in a market for drugs that have been approved for at least 10 years.
  • A total of 73 members of the House of Representatives, led by Congresswoman Barbara Lee (D-TX) and Congressman Will Hurd (R-TX), sent a bipartisan letter to HHS Secretary Alex Azar asking him to withdraw the Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out of Pocket Expenses proposed rule that would modify the Part D program protections afforded to the 6 protected classes.
  • Maine Governor Janet Mills (D) signed into law An Act to Protect Health Care Coverage for Maine Families (LD 1) that codified into state law the patient protections outlined in the Affordable Care Act (ACA).

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THE VALUE CORNER
 

Money Often Costs Too Much: Revised Unsupported Price Increase Protocol

 
 

The Institute for Clinical and Economic Review (ICER) posted a revised protocol for its Unsupported Price Increase (UPI) report last week. ICER has revised the UPI protocol based on stakeholder feedback offered during the draft protocol public comment period and will now begin the initial UPI assessment.

The revised protocol describes how ICER proposes to generate a report of at least 10 drugs that experienced “substantial” price increases over the past 24 months, based primarily on which net price increases resulted in the largest overall budget impact for the US health system. ICER will review changes in the evidence base for these drugs and report if it finds evidentiary support warranting the price increases.

ICER is also seeking input on up to 3 additional drugs that may not qualify for the initial top 10 list but still meet some inclusion criteria for the UPI report. Pharmaceutical companies, patient advocacy groups, and payers representing Medicaid and the private market can submit recommendations via email to publiccomments@icer-review.org on or by 5:00 PM ET on April 19. The UPI report is expected to be published in October. More details about the assessment can be found here.

Earlier this week, ICER also announced that it appointed new members to each of its 3 independent evidence appraisal councils: the California Technology Assessment Forum (CTAF), the Midwest Comparative Effectiveness Public Advisory Council (Midwest CEPAC), and the New England Comparative Effectiveness Public Advisory Council (New England CEPAC).

Lastly, yesterday ICER released a Draft Evidence Report assessing the clinical effectiveness and value of SPRAVATO (esketamine) for treatment-resistant depression.

As always, if you need assistance with all things ICER or value-related, please contact kristen.migliaccio@xcenda.com.

 

Managing the Growing Expansion of Copay Accumulators

 
 

Over the past 2 years, PBMs and commercial health plans have launched copay accumulator adjustment programs, an insurance design with potential adverse impacts on patients’ adherence to prescribed therapy regimens.

Xcendas Corey Ford, MHA, Director, Reimbursement & Policy Insights, explores the recent trends around copay accumulators, the impact on patients, and solutions for consideration in a new issue brief titled, “Rolling Back the Tide: Deploying a Consultative Approach to Tackle the Growing Expansion of Copay Accumulators.

Download the issue brief >

 

 

 

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REGULATORY UPDATES
 

Stop the Presses: CBO Reports Specialty Drugs Are Expensive

 
 

On Tuesday, the Congressional Budget Office (CBO) released a report highlighting Medicare Part D and Medicaid spending on specialty drugs between 2010 and 2015. Specialty drugs typically have higher prices than nonspecialty drugs and are used to treat complex, chronic, or rare conditions. Over the years, specialty drugs have accounted for a growing share of Medicare Part D and Medicaid spending. Net spending on specialty drugs in Medicare Part D and Medicaid rose to $32.8 billion and $9.9 billion in 2015, respectively.

Key findings highlighted in the report include:

  • In 2015, brand-name specialty drugs accounted for approximately 30% of net spending on prescription drugs under Medicare Part D and Medicaid, but they only accounted for about 1% of all prescriptions dispensed in the programs.
  • Total spending on specialty drugs and specialty drug share of total net drug spending increased under both programs from 2010 to 2015, rising from 13% to 31% in Medicare Part D and from 25% to 35% in Medicaid.
  • The net prices paid for brand-name specialty drugs are much higher in Medicare Part D than in Medicaid, which are attributable to substantially larger rebates in Medicaid than in Medicare Part D. The weighted average price across the 50 top-selling brand-name specialty drugs in Medicare Part D was $3,600 per standardized prescription vs $1,920 under Medicaid.
  • Average annual net spending on specialty drugs per Medicare Part D beneficiary tripled from 2010 to 2015, rising from $11,330 to $33,460.

As Medicare and Medicaid are 2 large purchasers of prescription drugs, these findings and the increases in spending on specialty drugs have implications for the federal budget. Rising prescription drug prices and rebate payments have been under public and government scrutiny in recent months, and the current Administration has been targeting reducing federal spending and cost of prescription drugs.

For a detailed analysis of the CBO report, see the Working Paper.

 

MedPAC and Manufacturers (Finally?) Agree on Something

 
 

Late last week, the Medicare Payment Advisory Commission (MedPAC) released its March 2019 Report to Congress, one of 2 annual reports (the other in June) that are the primary outlets for Commission recommendations. While these recommendations are strictly advisory, they often are considered in future policy changes. Below are some of the recommendations from the March report.

Part D

Despite the acknowledged successes of the program (stable premiums, improved access to prescription drugs, high satisfaction), MedPAC remains concerned that changes to Part D’s coverage gap and manufacturer discounts, combined with the expanding role of high-cost medicines, may be eroding plans’ incentives for, and ability to achieve, cost control as more enrollees reach the catastrophic phase of the benefit. They were critical of last year’s legislative change to move more of the coverage gap burden to manufacturers and not plan sponsors.

The Commission believes measures to increase the financial risk that sponsors bear (such as those recommended by MedPAC in 2016) are also needed so plan sponsors have greater incentive to use the new management tools and keep Part D financially sustainable for beneficiaries and taxpayers.

Hospital Inpatient and Outpatient Services

MedPAC had the following recommendations for Congress:

  • Replace Medicare’s current hospital quality programs with a new hospital value incentive program (HVIP) that:
    • Includes a small set of population-based outcome, patient experience, and value measures
    • Scores all hospitals based on the same absolute and prospectively set performance targets
    • Accounts for differences in patients’ social risk factors by distributing payment adjustments through peer grouping
  • For 2020, update the 2019 Medicare base payment rates for acute care hospitals by 2%

Medicare Advantage (MA)

MedPAC’s research showed MA enrollment is more heavily concentrated, as the top 10 MA organizations (ranked by enrollment) had 74% of total enrollment in 2018, compared with 61% in 2007.

MedPAC shared 2 concerns with the MA Star Rating system:

  • The star ratings are determined at the contract level, which may cover very wide areas, and therefore may not be a reliable indicator of the quality of care provided in an individual’s local area and may not sufficiently capture variation in quality among subgroups of the Medicare population.
  • The “tournament” design of the Star Rating system, in which contracts’ star ratings are determined relative to one another, results in plans not knowing in advance what level of performance is needed to achieve specific star ratings.

Overall, MedPAC felt many indicators of the MA program are positive, as evidenced by the growth in enrollment, increased plan offerings, and extra benefits that were at a historically high level.

While Congress has no obligation to adopt MedPAC’s recommendations, the Commission is an influential body that, especially in recent years, has seen many of its recommendations find their way into law.

 

VA Says (Hep) C-Ya

 
 

On Monday, the Department of Veterans Affairs (VA) announced that nearly 97,000 veterans have been cured of the hepatitis C virus (HCV) and that all remaining HCV-positive veterans are expected to complete treatment over the next 2 months. Previously, treatment required weekly interferon injections for up to a year, with low cure rates (35% to 55%) and physical and psychiatric side effects leading to frequent early discontinuation.

In early 2014, after estimating that less than 7% of veterans were cured, the VA initiated an aggressive oral antiviral treatment program due to the arrival of highly effective, less-toxic, all-oral, direct-acting antivirals. The VA implemented this aggressive program to find all undiagnosed veterans in VA care with HCV, link them to HCV care, and offer them treatment with the revolutionary therapies.

Veterans cured of HCV with these medications were also 84% less likely to develop liver cancer.

This dramatic success spotlights the transformative effects prescription drugs present. In 2 months, the VA’s expenses to treat HCV will plummet, allowing those financial resources to be deployed elsewhere. Additionally, the VA’s expenses to treat liver cancer will also drop over the long term. While financing these medications in the short term can be painful for an organization, the long-term benefits for beneficiaries and organizations are clear. Of course, the VA is a unique organization in that it will see the long-term benefits, while many plan sponsors remain concerned that patients filter in and out of their plans.

 

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
 

“It’s been 30 days and we only just now have a meeting scheduled to talk. Time’s up, give us our money….

“Our review of PBM practices throughout state government is still ongoing. These are the first raindrops, but there’s a storm a-comin’.”

– Ohio Attorney General Dave Yost, announcing a lawsuit against OptumRx to recover what he asserts are overcharges to the state for the cost of prescription drugs negotiated by PBMs

Source: “Yost Files Lawsuit to Recover Nearly $16 Million in Prescription Overcharges,” March 18

 

 
POLICY BY NUMBERS
 

−1.2% | 1.1%

 

Drug price growth was −1.2% in February, the lowest since September 1972. The 12-month moving average stands at 1.1% growth, which is low, but not historically so.

Source: “March 2019 Health Sector Economic Indicators Briefs,” Altarum Institute, March 15

 
UPCOMING MEETINGS & CONFERENCES
 

AMCP Managed Care & Specialty Pharmacy Annual Meeting

March 25–28 | San Diego, CA
Join AmerisourceBergen companies, US Bioservices and Xcenda, at AMCP’s Annual Meeting at the San Diego Convention Center, March 25–28. Meet with our specialty pharmacy, commercialization, and market access 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 booth 818. 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:

Anuja Kanaskar | Reeya Patel | Scott Shields | Jennifer Snow | Steve Wilson

PRODUCTION:

Laurie Kozbelt | Ellen Olson

 

Mar. 22, 2019

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