Trump Administration’s proposed budget for 2021 lists several healthcare priorities.

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Feb. 14, 2020

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FEATURED STORY
 

Signed, Sealed, Delivered, I’m Yours: Administration’s 2021 Budget Plan

 
 

On Monday, President Donald Trump released his proposed budget for 2021. The budget is a signal of the Administration’s policy priorities; it is not expected to pass as written. But it does show what the Administration might look to do through regulation if not legislation:

  • A 10% decrease in funding to the Department of Health and Human Services (HHS)
  • An increase in opioid epidemic and mental health spending
  • Reining in Medicare and Medicaid spending and projecting that initiatives to decrease fraud, abuse, and wasted spending can generate $478.5 billion in savings over the next decade
  • More stringent screening of ineligible enrollees and expansion of work requirements to save Medicaid hundreds of billions of dollars over the coming decade
  • Passage of comprehensive drug reform legislation to save $135 billion over the decade (though the Administration has not backed a single bill)
  • The budget also does not contain any mention of dismantling the Affordable Care Act, which has been a longstanding promise of the Trump Administration

The White House has stressed President Trump is not seeking cuts to federal health programs but, rather, is trying to slow their growth. Interestingly, there was not specific mention of how to rein in prescription drug prices—rather, a $135 billion allowance for drug pricing proposals. The presumed intent is to allow Congress latitude to come to a legislative solution. There was no mention of the International Price Index, but the rule remains a cloud over policy watchers.

Democratic reaction across the board was quick to point out broken promises, such as the President not “touching” Medicare or Medicaid. House Ways and Means Committee Chairman Richard E. Neal (D-MA) released a statement:

“Slashing billions from Medicare and Medicaid will only make it harder for Americans to access the healthcare they need. Cutting nutrition assistance and Social Security benefits for the disabled won’t enable people to get back on their feet financially.

“…Democrats have a different vision for our nation’s future, one in which we support Americans’ access to necessities like affordable healthcare, safe housing, and good education….”

While the politicians are toeing the party line and engaging in political posturing, pharmaceutical and device manufacturers are waiting for actual numbers and legislation to react to, and plan with, for 2020 and beyond. Contingency planning has been the modus operandi while the waiting game continues to the elections and possibly beyond. Manufacturers should continue to look at the congressional legislative proposals—particularly those in the Senate—as the best potential path forward on drug pricing initiatives.

 

 

 

Beyond the Promise of Artificial Intelligence in Electronic Benefit Verification

 
 

How has eBV evolved?

While logic-based approaches still have their place, AI has opened up a path to improved access for patients and better service options for providers. Learn how the technology continues to evolve in Lash Group’s new white paper.

Learn more >

HPW Rebuild

 
XCENDA ORIGINAL RESEARCH
 

So You’re Telling Me There’s a Chance?

 
 

In July, we wrote about our work to model Medicare Part D redesign legislative proposals using patient profiles. Given that there have been starts and stops and revisions along the way (and a refocus on the Senate versions given the President’s budget), we wanted to revisit our modeling to look at how patient out-of-pocket (OOP) spending would change in each of the redesign options.

The Medicare prescription drug benefit (Part D) was enacted over 15 years ago and remains a model of private-public partnership with high beneficiary satisfaction. But despite its success, the program needs to evolve to meet the needs of beneficiaries moving forward. Since Medicare Part D was implemented in 2006, utilization of drugs has evolved; while there is high generic utilization, availability of specialty medication options has increased, creating affordability challenges for beneficiaries.

According to the Kaiser Family Foundation, over 1 million beneficiaries had spending in the catastrophic phase of the benefit in 2017, and 5% coinsurance can still equate to hundreds (or thousands) of dollars a month, making the drug unaffordable for many beneficiaries.

There has been momentum in Congress regarding the feasibility of a true OOP cap. Three main proposals have been put forward:

  • Bipartisan Prescription Drug Pricing Reduction Act (PDPRA) of 2019 (S 2543), approved by the Senate Finance Committee
  • House Democrat-driven Elijah E. Cummings Lower Drug Costs Now Act (HR 3)
  • House and Senate Republican-driven Lower Costs, More Cures Act of 2019 (HR 19 / S 3129)

Xcenda was commissioned on behalf of the Council for Affordable Health Coverage to create patient profiles for typical patients with various conditions to determine the impact of the models on patient OOP spending. In addition, we looked at what the average non-low-income subsidy beneficiary would experience under these redesigns due to changes in the pre-catastrophic benefit design.

The results from the full report clearly demonstrate that the OOP caps would create a meaningful step toward more affordable access for beneficiaries who face significant drug spending.

HPW Rebuild

 
THE VALUE CORNER
 

QALY: Can’t Live With It, Can’t Live…Well…

 
 

On Monday, the Pioneer Institute released a new report that suggests using quality-adjusted life-year (QALY)-based methodology to determine value and access of medical treatments violates the Americans with Disabilities Act (ADA). The report specifically notes concerns with the use of the QALY by the Institute for Clinical and Economic Review (ICER) in its cost-effectiveness analyses, stating that it discriminates against patients with chronic or complex conditions. The report concludes that if state Medicaid programs use QALY-based methodology to determine access for therapies, it would violate the ADA by: 1) decreasing the availability of effective treatments for people living with a disability; and 2) increasing the risk of institutionalization of certain people living with a mental disability. Given these potential violations, the authors predict legal challenges based on ADA grounds if QALY-based methodology is adopted by state Medicaid systems.

Last week, the Journal of Occupational and Environmental Medicine published an article about the inclusion of broader “indirect” benefits, such as absenteeism, presenteeism, caregiver burden, and quality of life, in the value assessment process. The researchers surveyed health insurance providers, pharmacy benefit managers (PBMs), employee benefit consultants, and employer groups in the US to understand potential barriers and solutions. They found that inclusion of indirect benefits was of low importance to payers, but of higher importance to employer stakeholders. More than half of stakeholders agreed that consideration of indirect benefits was more likely to occur in chronic medical conditions with increased burden of disease. Both groups agreed that indirect benefits can only be assessed adequately if measurement standards and quantifiable measures are established.

Also last week, ICER’s President, Steve Pearson, and Chief Operating Officer, Sarah Emond, co-authored an article for the California Health Care Foundation titled, “How Independent Assessment of Drug Value Can Help States,” which suggests that ICER reports can help determine how various government programs (eg, transparency initiatives, bulk purchase programs) have effectively aligned drug prices with the benefit they deliver to patients. The authors also recommend that ICER reports can be useful to state policymakers by providing a fair price benchmark while engaging with manufacturers.

If you need assistance with all things ICER or value-related, please contact Linnea Tennant.

HPW Rebuild

 
REGULATORY UPDATES
 

Anti-Valentine’s Announcement:
CMS Intends to Survey Hospitals About 340B Drug Costs

 
 

Last Friday, the Centers for Medicare & Medicaid Services (CMS) published a notice in the Federal Register announcing its intent to survey hospitals and acquire the payment rates for drugs purchased under the 340B program. CMS stated it would plan to use the information collected on acquisition cost to determine future payment rates for these drugs under the program.

The proposed survey request is CMS’ response to the ongoing litigation involving drugs purchased under the 340B discount program and their reimbursement rates. In 2018 and 2019, CMS instituted a nearly 30% reduction in the program by changing the reimbursement rate of 340B drugs from average sales price (ASP) plus 6% to ASP minus 22.5%. A court decision in December 2018 ruled CMS didn’t have the authority to change the payment rate, and, to minimize the impact to federal spending, the court ordered CMS to collect more information to present before a ruling could be made.

Since the notice was issued, industry organizations and stakeholders have already expressed their concerns against the survey. 340B Health, an organization of more than 1,400 public and private hospitals and health systems participating in the program, issued a statement calling for CMS to withdraw this plan and restore Medicare payments to their statutory levels.

In previous comments on the issue, the Association of American Medical Colleges has warned CMS that the collection of this information will cost hospitals a significant amount of time and resources. The American Hospital Association mimics those concerns and has stated that using this information to drastically cut drug reimbursement under 340B will compromise the ability of hospitals to continue the program and will negatively impact patient access.

Although the future of the 340B program remains unclear until the court is presented with more information to reach its final ruling, hospitals, health systems, and other industry stakeholders will continue to push back on reimbursement cuts to the program. And it’s just as evident the Administration will persist in its efforts to institute cuts.

 

How Do I Live Without You? Spending on Drugs Lowers Total Cost of Care

 
 

Recently, Tyme Technologies announced the results of a health economics research study demonstrating that the use of new medicines in the treatment of patients with pancreatic cancer reduced the total cost of care. Details of the study were presented in a poster at the American Society of Clinical Oncology’s 2020 Gastrointestinal Cancers Symposium. Key results include:

  • For every additional $1 spent on innovative medicines for pancreatic cancer between 2009 and 2016, there was a reduction in non-medicine spending of $8 to $9.   
  • Cost of procedures is reduced when budgets are funded toward better pharmacology.
  • Non-drug spending represented the majority of patient care costs.
  • More effective, better tolerated oral therapies for pancreatic cancer may lead to further reduction in total cost of care.

The study suggested further analysis of a larger, longitudinal set of patient-level data is needed to explore more fully improvements on quality of life and the relationship between spending on medical innovation and the reduction in total cost of patient care. The pharmaceutical industry has been saying for years that drug spending can markedly decrease healthcare expenses across the board. This study represents yet another example. Continued efforts along these lines are needed to bolster the life-sciences industry’s image with the general public.

 

You Raise Me Up: Higher-Demanded Rebates Lead to Higher Prices

 
 

A recent study by the Leonard D. Schaeffer Center for Health Policy & Economics found a greater than 1:1 correlation between manufacturer rebates and drug list prices. The Schaeffer Center theorized that manufacturers raise list prices in order to compensate for the large rebates expected from PBMs.

In recognition of the disparate coverage challenges faced by single- and multi-source drugs, the Schaeffer Center dichotomized their evaluation by the respective source types. In both groups, the study found a statistically significant correlation between change in rebate and list price; however, single-source drugs, which do not face generic competition, were found to have the strongest correlation. Collectively, a $1.00 increase in rebate correlated to a $1.17 increase in list price. While the study did not measure for causation, the supposition is that increased rebates cause manufacturers to increase list price in parallel. Patients rarely benefit from these rebates; in fact, increased list prices increase patient copays, deductibles, and OOP costs.

The PBM market, dominated by 3 players, creates an environment where formulary exclusion by even 1 large PBM markedly reduces manufacturer market access. As a result, manufacturer pressure to secure formulary inclusion is high, granting PBMs strong leverage to demand favorable rebates.

Manufacturer rebates help PBMs to increase profit margin, but the financial benefits rarely trickle down to patients. In order to increase patient access, rebates can be passed down to insurers and the beneficiary population. However, this shared-savings dynamic is uncommon in the current PBM market.

Given the findings, the authors suggest that increased regulation and oversight could encourage competitive behavior. In addition, increased transparency may encourage the flow of rebate savings through PBMs so insurers and their beneficiaries also benefit.

 

(Everything I Do) I Do It For You: Importing More Than Bryan Adams From Canada

 
 

In December 2019, the Trump Administration proposed a plan to allow states, drug wholesalers, and pharmacies to import certain cheaper drugs from Canada. The pharmaceutical industry has fiercely pushed back against the Administration’s importation proposal, calling the plan a “scheme” with “no way to guarantee the safety of drugs that come into the country from outside the United States’ gold-standard supply chain.” As importing drugs from Canada has become a topic of interest, several states have begun to develop drug importation programs amid reports citing Canadian drug shortages.

The National Academy for State Health Policy (NASHP), which works with states to design and implement wholesale prescription drug importation programs, examined the Canadian drug shortage. According to Canada’s drug shortage database, NASHP found that both brand name and generic drug shortages are often partial and limited in duration. A 2018 independent analysis conducted by a Canadian non-profit policy research organization determined that generic drugs accounted for 77% of the Canadian drug shortages between 2013 and 2016.

Considering most of the drugs that states plan to import are high-cost, brand-name prescription drugs—and not generics—NASHP downplayed concerns about potential drug shortages in Canada limiting Americans’ access to imported drugs of choice.

As federal and state agencies continue to receive pressure from consumers on rising prescription prices, drug importation will likely be discussed as a potential solution. The pharmaceutical industry and manufacturers will need to submit comments regarding the risks of such programs and be a part of this ongoing discussion, as most Americans will not intuitively understand how the supply chain is not designed to incorporate importation easily.

 

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:



 

Xcenda’s MCN Forum in Houston: Your Path to Payer Market Insights

 
 

MCN Forum | Tuesday, April 21 | Houston, TX

Looking for payer input to refine your clinical, market access, and/or health economic and outcomes research plans?

Xcenda is hosting a 1-day event in Houston, TX on April 21. Learn more about the Managed Care Network (MCN) Forum.

Learn more >

 
HEARD ON THE STREET
 

“This year, our efforts around innovation and reducing burden will involve another long-standing problem in the healthcare system…prior authorization. The prior authorization process became indefensible years ago. Patients are frustrated and doctors are sick of pointlessly wrangling with insurance companies. Prior authorization requirements are a primary driver of physician burnout, and even more importantly, patients are experiencing needless delays in care that are negatively impacting the quality of care they receive.… The Trump Administration is once again ready to take action to support doctors and patients. We will reduce administrative waste, increase patient safety, and free physicians to spend time caring for their patients.”

 – CMS Administrator Seema Verma, explaining that the Trump Administration plans to reform prior authorization regulation

Source: “Speech: Remarks by CMS Administrator Seema Verma at the American Medical Association National Advocacy Conference,” February 11

 
POLICY BY NUMBERS
 

$5,892

 

Average employer-sponsored insurance spending rose to $5,892 per person in 2018. This spending growth outpaced 2017’s growth due to continued price growth combined with an uptick in utilization.

Source: “HCCI Releases 2018 Health Care Cost and Utilization Report,” Health Care Cost Institute, February 13

 
 

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:

Doug Cook
President | Commercialization Services & Animal Health

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:

Maureen Holmes | Reeya Patel | Scott Shields | Diane Smith | Jennifer Snow | Ryan Sullivan | Linnea Tennant

PRODUCTION:

Laurie Kozbelt | Ellen Olson

 

Feb. 14, 2020

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