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Susan Berson is the Managing Member of the firm’s DC office, serves on the firm’s Policy Committee, and is Division Head of Mintz Levin’s Health Law, Communications, and Antitrust practices as well as ML Strategies. She has significant experience in the health care industry and regularly assists clients by providing industry insight and strategic guidance on the most complex and cutting edge health care issues.

On Friday, after weeks of delay, the President finally delivered his Drug Pricing Speech and released the HHS Blueprint detailing the Trump Administration’s plan to lower drug prices and reduce out-of-pocket costs.

The speech made pointed attacks on “the middlemen” and drug lobbyists. President Trump even called out Secretary Azar’s past role as a drug company executive when calling out drug companies’ role in high drug prices. Continue Reading President Trump Delivers Much Anticipated Drug Pricing Speech

As described in last week’s post, Senator Wyden has introduced the C-THRU Act that seeks to require public disclosure of PBM rebate amounts, establish a minimum rebate percentage that PBMs must pass on to Part D and Exchange Plan clients, and intends to change the definition and/or application of “negotiated prices” under the Part D program.  This post focuses on the portion of the C-THRU Act that relates to Part D negotiated prices.

According to the Summary of The Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act (“Summary”) released by the Senate Finance Committee prior to the release of the actual bill, Part D enrollee cost-sharing is based off the price at which the pharmacy acquires the drug.  The Summary provides the following example:  “a drug maker sets a drug[‘]s price at $100.  Under current law, Part D beneficiaries pay co-insurance based on the $100 price, not the lower price, say, $80, that a PBM negotiates with a drug maker.  Seniors in Medicare ought to benefit from these negotiations.”  This example is inaccurate, ignores the definition of and parties involved in negotiated prices as defined under the Part D regulations, and assumes that Medicare seniors currently do not benefit from manufacturer rebates.  In fact, CMS recently recognized that manufacturer rebates are helping keep Part D enrollee premiums down. Continue Reading C-THRU’s Proposed Changes to Negotiated Prices – A Demonstration of the Part D Program’s Complexities and Misunderstandings

For several years now, the public outcry over the issue of drug pricing and reimbursement has increased in frequency and fervor.   At least one government agency wants you to know that it has been listening and wants to help provide the information necessary to forge a solution.

On Friday February 17, 2017, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued an Online Portfolio on Drug Pricing and Reimbursement, pulling together OIG’s body of work related to drug pricing and reimbursement in HHS programs, including Medicaid and Medicare, since 2010.  Continue Reading OIG Publishes Online Portfolio Highlighting its Body of Work on Drug Pricing and Reimbursement

Just last month the “Improving Transparency and Accuracy in Medicare Part D Spending Act” was introduced in the Senate to amend the Social Security Act.  The bill seeks to prohibit Part D plans (and their contracted pharmacy benefit managers (PBMs)) from retroactively reducing payments to pharmacies for clean claims.  The bill would allow Part D plans and PBMs to reduce an already completed payment to a pharmacy if a claim is found not to be clean.  Not surprisingly, Part D plans would also be allowed to increase payments to pharmacies under the bill.

This seems to be the latest chapter in the war over fees between Part D plans, PBMs and pharmacies.  As discussed here, CMS addressed Part D plans’ and PBM’s practice of charging pharmacies administrative and transaction fees at the point of sale or retroactively in its 2014 Call Letter published in April 2013.  Eventually, CMS amended the definition of “negotiated price” in the Part D regulations to take into account fees paid by pharmacies to Part D plans or PBMs that effectively reduce the price that a pharmacy is paid.  As a result of the change to the definition of “negotiated price” and CMS guidance, Part D plans were no longer allowed to report these fees/reductions in their direct and indirect remuneration (DIR) report if they were reasonably determinable at the point of sale.  Because certain reductions in price or fees charged to the pharmacies are not reasonably determinable at the point of sale, some are still reported by plans as DIR.  The bill introduced in September targets these reductions in price and fees that are applied to pharmacy claims retroactively.

Some plans and PBMs have been reducing the amounts paid to pharmacies by tying pharmacy payments to performance metrics that are determined after the claims have been paid.  Tying performance metrics to payments is something that CMS has appeared to be in favor of, so it is unclear what type of support the bill will receive from the agency.  If plans are no longer able to tie payment to performance in a way that results in some pharmacies receiving decreased payments, some plans may try to negotiate lower initial pharmacy prices and then pay performance “bonuses” to the pharmacies that it determines meet the required performance metrics.  It is unclear whether receiving less money initially or receiving more money upfront but having some of it at risk will be better for pharmacies.

This legislation has little likelihood of passage in 2016.  However, the current political conversation regarding drug pricing is certain to draw in PBMs as both the drug industry and pharmacists call for greater transparency.  Next year might be a busy year for PBMs as they will likely need to address other legislative proposals aimed at pricing and transparency.

 

It is hard to believe that it is now four days and counting until our May 10, 2016 Pharmacy Industry Summit, here in our DC offices.

Here in Washington, it seems everyone has an idea on a drug “fix”:  amendments to the provisions governing Medicare reimbursement, new rebate requirements, changes to price reporting measures, revisions to the 340B Drug Discount Program, etc.  Proposals are interesting, but will Congress actually do anything?  If anything is actually going to pass, it has to get through the Senate.

Our Summit’s working lunch presentation is a Congressional Staff Panel, moderated by Alex Hecht, VP of Government Relations at ML Strategies.  The scheduled panelists include Mark LeDuc, Staff Director for the Senate Special Committee on Aging; Grace Stuntz, FDA Policy Advisor for the Senate HELP Committee; and Matt Kazan, Majority Staff for the Senate Finance Committee.

If you are interested in hearing what they have to say about what may, or may not happen, in the coming months, it is not too late to register to attend the Summit.  Registration can be completed on our Summit Microsite.  We hope to see you there.

Five days and counting until our May 10, 2016 Pharmacy Industry Summit, here in our DC offices.

Following our first panel discussing Drug Pricing Challenges and Opportunities, the second panel, which Theresa is moderating involves a subject near and dear to the heart of many of our clients: The New Wave of Value-Based Pricing and Contracting.  Manufacturers, insurers, PBMs, and health care providers all would like to consider value-based options for pharmaceutical purchases, but may be intimidated by potential legal and regulatory roadblocks.

So we were thrilled when Josh O’Harra, Assistant General Counsel at Lilly, and Jennifer Kowalski, Vice President of Anthem’s Public Policy Institute, agreed to join Theresa to discuss the growing body of value-based pricing benchmark models and how payors and manufacturers are responding to the opportunities and challenges presented by value-based contracting arrangements.

It is not too late to join us and the other Senior Counsel and Policy Executives who are registered to attend the Summit.  Check out the Summit Microsite  and click on the registration tab to complete your registration.  We look forward to seeing you there.

We are thrilled that our inaugural Pharmacy Industry Summit is now less than a week away.  The Summit is next Tuesday May 10th, 2016, here in our DC offices.  Since we started planning for the Summit many months ago, this hottest of topics that we chose to cover, drug pricing, has become even hotter.

The stage for our day will be set by our opening panel: State of The Industry – Drug Pricing Challenges and Opportunities.  The panelists include Andy Cosgrove, VP of Policy for the Pharmaceutical Care Management Association; Matt Eyles, EVP of Policy & Regulatory affairs for America’s Health Insurance Plans; and, Stacie Maas, Senior VP, of Pharmacy Practice and Government Affairs, American Pharmacists Association.  Moderated by Rodney Whitlock, ML Strategies Vice President and former Health Policy Advisor to Senator Grassley, this panel will discuss and consider the root causes of rising drug prices and the myriad of proposed fixes, and try to predict the realities of legislative change.  This panel is sure to spark lively discussion and set the tone for an interesting and thought-provoking day.

Registered attendees for the Summit include Senior Counsel and Policy Executives for insurers, PBMs, drug manufacturers, pharmacies, hospital systems, and other health care providers.  It is not too late to join them.  Please take a look at the full Summit agenda, study the list of participating speakers, and click on the registration bar on the Summit microsite to complete your registration. We look forward to seeing you there.

Last week, the Centers for Medicare & Medicaid Services (CMS) released its 2017 Advance Rate Notice and draft Call Letter (“2017 Draft Call Letter”) for the Medicare Advantage (“MA”) and Part D programs.  With the final 2017 Call Letter to be released April 4, 2015, CMS is providing interested stakeholders until this Friday, March 4th to provide comments.

The 2017 Call Letter proposes a variety of updates to the program, many that are designed to improve the accuracy of payments to plans serving beneficiaries dually eligible for Medicare and Medicaid (“dual eligibles”).  Of note, CMS proposes updates to the risk adjustment model used to calculate payments to MA plans and to the Star Rating system used to evaluate plan performance.  CMS stated that these proposed changes reflect the public comments received when it shared research findings on the accuracy of the CMS-HCC model for paying dual eligible beneficiaries and the impact of socioeconomic factors on the Star Ratings and solicited input.  A few of the interesting 2017 proposals include: Continue Reading CMS Releases 2017 Advance Notice and Draft Call Letter

As we start a new year, let’s take a look back at a few hot topics that emerged in the managed care industry in 2015 and will likely be drivers of developments in 2016.

Industry Consolidation – The Changing Landscape

2015 was a year of significant activity for MCOs large and small. In addition to proposed mergers among some of the largest payors, smaller MCOs are also consolidating with other MCOs, as well as service providers, in an attempt to leverage purchasing power and integrate care models. As we discussed in our Pharmacy Industry year in review, consolidation reshaped the traditional PBM industry paradigms with a move away from stand-alone PBMs to MCO and provider-affiliated PBMs.

Competition Scrutiny

Moving into 2016, we will learn whether the proposed consolidations will be approved and whether the trend will continue. The government will also generally continue to scrutinize health care competition, paying close attention to the proposed mergers among Aetna/Humana and Anthem/Cigna. In early 2015, our colleagues highlighted the FTC-DOJ workshop examining health care competition where the agencies’ worked together to identify and examine the potential competitive implications of strategies currently used by providers and payors seeking to reduce costs and improve quality.

We are also beginning to see competition scrutiny expand beyond the regulatory agencies. For example, the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law held hearings examining competition in the PBM industry, while the Central District of Illinois District Court permitted a small regional hospital’s antitrust challenge to its largest competitor’s exclusive dealing contracts with payors to move forward. Continue Reading The Managed Care Industry – 2015 Year in Review

With 2015 coming to a close, we wanted to provide a recap of the major updates impacting the pharmacy industry and what pharmaceutical manufacturers, pharmacy benefit managers (“PBMs”), and pharmacies might expect in 2016.  This past year saw significant changes in the pharmacy industry.  From multiple high-profile mergers changing the PBM landscape, to the recent controversy over drug pricing, the pharmacy industry was in the national spotlight for much of 2015.  Meanwhile, federal and state enforcement continued to focus on pharmaceutical manufacturers, PBMs, and pharmacies.  We also saw the first biosimilar approval in 2015, significant updates to the 340B program, an increased focus on value-based purchasing, and additional state legislation focusing on PBMs.

Industry Consolidation – Changing PBM and Payor Landscape

There was a significant wave of merger activity in the PBM and payor industry in 2015, with pharmacy chains acquiring PBMs and long term pharmacies, as well as mergers among some of the largest payors.  This consolidation has reshaped the traditional PBM industry paradigms with a move away from stand alone PBMs to payor and provider affiliated PBMs.  This consolidation and alignment with payors and providers has been driven by a need to increase negotiating power and create economies of scale in the face of rising drug costs and fewer drug discount opportunities.  In addition, PBMs and payors are looking to adapt to new forms of payment encourage by the Affordable Care Act.  The Affordable Care Act has spurred CMS and private payors to focus on value-based purchasing and pricing.  Entities with integrated payor and provider operations (including expanded access to data critical for analytics) may be in a better position to save costs and compete in the market.

Moving into 2016, it is unclear if this merger frenzy will continue and if we will see additional consolidation among some of the stand-alone PBMs.  Nonetheless, this increased merger activity may lead to more competitive pricing and negotiating power among PBMs, as well as a new focus on the use of contract terms with performance based results. Continue Reading The Pharmacy Industry – 2015 Year In Review