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

As we noted previously in our introductory blog post on the 2017 User Fee Act (UFA) reauthorization process, the first UFA hearing on Capitol Hill was convened on March 2, 2017 by the House Energy & Commerce Committee’s (E&C) Subcommittee on Health.  That hearing focused on the UFAs specific to generic drugs and biosimilar biological products.  Since then, Congress has held several more UFA hearings, and multiple FDA-related bipartisan bills that could become important to this process have been introduced.  So it’s time for an update on how things are going with the UFA reauthorizations. Continue Reading FDA User Fee Hearings Picking Up Steam on Capitol Hill

This week, in their “Future of the Affordable Care Act” series on our Employment Matters blog, my colleagues Alden Bianchi and Edward Lenz provided an analysis of the major provisions of the American Health Care Act (“AHCA”).

Introduced on March 6, 2017, the AHCA is the first concrete legislative proposal detailing the initial provisions designed to repeal and replace the Affordable Care Act.  As Alden and Ed discuss, the bill currently is the subject of widespread media scrutiny and intense criticism.  The bill is not final and will likely face numerous changes, including the last minute proposals changes of the past 48 hours.  The March 6th version offers an outline of Republican priorities in the regulation of health and health care financing, which include a strong bias in favor of market-based solutions and aversion to most (but not all) government intervention in the health care markets.

Check out their full analysis on The Future of the Affordable Care Act Week 7: The American Health Care Act, here. Continue Reading Future of the Affordable Care Act and the American Health Care Act

The President has released a “budget blueprint” for fiscal year 2018. Although there are many aspects of the budget blueprint to digest, several budget items signal that government health care fraud enforcement remains a priority under the new administration.

  • Overall, the President’s 2018 budget requests $69.0 billion for the Department of Health and Human Services (“HHS”). According to the blueprint, this a $15.1 billion or 17.9% decrease from the FY 2017 annualized level.
  • However, the budget blueprint increases funding for the Health Care Fraud and Abuse Control (HCFAC) program, which is designed to coordinate federal, state and local health care fraud and abuse enforcement efforts.
  • Specifically, the blueprint proposes $751 million of discretionary funding for the HCFAC program, which exceeds FY 2017 funding by $70 million, according to the budget blueprint.
  • The budget blueprint explains that additional funding for the HCFAC program “has allowed the Centers for Medicare & Medicaid Services in recent years to shift away from a ‘pay-and-chase’ model toward identifying and preventing fraudulent or improper payments from being paid in the first place.”

In a proposed budget that cuts HHS funding by nearly 18%, the increase in HCFAC funding stands out. The President’s budget affirms a trend that we have observed away from “pay-and-chase” toward proactive data analysis. As discussed in a prior post, recent False Claims Act cases strongly suggest that growing experience with data mining has given enforcers greater confidence in their ability to identify potential fraud and abuse. As a result, proactive data analysis could lead to a greater number of FCA cases originating with government investigators instead of through qui tam FCA actions.

Since the 21st Century Cures Act became law on December 13, 2016, we have been blogging on regulatory and clinical areas affected by its provisions (see herehere and here). On March 14, 2017, FDA made further progress on its Cures Act obligations by releasing in the Federal Register a proposed list of Class II devices that may be exempted from premarket notification (or 510(k)) requirements. The list is currently open for public comment until May 15, 2017.  Under the Cures Act, the final list of exempted devices must be published by July 11, 2017.

Continue Reading Cures Act Developments: FDA Proposes Class II Device Exemptions

In a February 24th blog post, we described Medicaid block grants and per capita caps in terms of A x B = C to demonstrate how those payment policies work.  ‘A’ is the amount a state is paid per beneficiary, ‘B’ is the number of beneficiaries in a given state, and ‘C’ is the total state payment from the federal government.  We have since been asked by numerous providers to describe the nuts and bolts of how a per capita cap, the current Medicaid financing structure in the proposed American Health Care Act, would work.  For the Medicaid provider, the nuts and bolts of how they are paid would change very little while the amount they are paid might change a lot.  Continue Reading Provider Payments Under a Medicaid Per Capita Cap

In the alphabet soup that is health and FDA law and policy (if you don’t know what we mean, are you sure you should be reading this blog?), one acronym that doesn’t get a lot of respect is “UFA.” This is the first is a series of blog posts that aim to educate and inform our readers about why the UFA acronym matters and how the UFA legislative process may be particularly significant in 2017.

UFA stands for “User Fee Act,” of which there are many flavors in this modern era – from the old-timer Prescription Drug User Fee Act (PDUFA), born in 1992, to the more toddler-ish Biosimilar User Fee Act (BsUFA) that joined us in 2012. Other important UFAs for the U.S. health care system and stakeholders are the Medical Device User Fee Amendments (MDUFA), which were enacted first in 2002, and the Generic Drug User Fee Amendments (GDUFA) that launched at the same time as their biosimilar companion. Continue Reading Let the 2017 “UFA” Games Begin!

Last week, the Medicare Payment Advisory Commission (the “Commission”) debated a package of policy reforms that would change the way Medicare reimburses physicians for Medicare Part B drugs. In the midst of calls to lower drug prices, the Commission has been developing its Part B reform package over the last two years and now, finally, appears poised to move forward with a vote at next month’s meeting.

Medicare Part B drugs are a multi-billion dollar benefit and typically include higher cost specialty drugs that are administered in a physician’s office on an outpatient basis. Drugs covered under Medicare Part B are reimbursed through a so-called “buy and bill” approach. That is, the physician buys the drugs and bills Medicare for their use. Medicare pays the provider the average sales price (“ASP”) of the drug plus a markup of 6% of the ASP.  The 6% markup is generally considered compensation to physicians for the storage, handling, and other administrative costs associated with these specialty drugs. Continue Reading Medicare Advisors Debate Part B Drug Payment Reforms

As we’ve previously discussed on Health Law and Policy Matters, agencies within the Department of Health and Human Services (DHHS) pushed through several final rules towards the end of the Obama Administration (see here and here). However, since taking office, President Trump has followed through on his campaign promise to significantly roll back Federal regulations and has taken several actions aimed at slowing and reversing agency regulatory processes, including processes at the DHHS sub-agencies CMS and FDA. These executive actions are creating a climate of uncertainty for regulated industries and their stakeholders. Continue Reading Trump Executive Orders Create Uncertainty for Health Care & Pharmaceutical Industries

On March 6, House Republicans revealed The American Health Care Act. It is their plan to repeal and replace the Affordable Care Act. The bill changes the structure of Medicaid financing from the Federal Medical Assistance Percentages (FMAP) system, in which states and the federal government each pay a percentage of Medicaid funding, to a per capita system.

Under current law, states get paid by the federal government for their Medicaid programs based on the amount of services they provide.  As we stated in a previous post, that has created an incentive for states to use supplemental payment streams to maximize per service revenue.  Under a per capita cap, states will be paid based on population.  They get paid for every person on their Medicaid rolls regardless of the amount of services the individuals use.  Therefore, states will now have an incentive to maximize their rolls.

This creates what we will call “The Walking Dead problem.” Continue Reading The Walking Dead in Medicaid