Notes from Joe
Jack be Nimble, Jack be Quick
By Joe Pugliese
Twenty-eighteen ended with a federal judge on 12/14 making a partial summary judgement declaring the Affordable Care Act (ACA) unconstitutional and then just before Christmas, we joined other 340B covered entities in a conference call with CMS Administrator Seema Verma to discuss the agency’s International Pricing Index (IPI) proposal that would target the most expensive pharmaceutical products and set reimbursement based on the average market price from 10 countries around the world.
The pace of change or at least proposals is not slowing down as we get into 2019. On February 6th, the Department of Health and Human Services released a proposed rule that would prohibit PBM rebates. Read on in the newsletter for a summary of the rule. This is the latest attempt by the Trump Administration to tackle a significant health policy challenge that we know all too well – expensive drug prices and unaffordable out-of-pocket costs.
It is not clear which, if any, of these items will be enacted. The judge’s ruling on the ACA has already been appealed and may be overturned. As I understand it, the IPI policy is complicated at best and has met with resistance by many directions, including from the 10 countries that would go into the basket of prices. The last proposal seems like it has the best opportunity to be adopted. Even if it is that will certainly not be the last word on the topic; the private sector has proven to be faster and more nimble than the government in adapting to changes in the marketplace.
We can all agree that we are not certain what will come next. I hope we can also all agree that like our commercial competitors, we commit to being nimble, agile and ready to adapt to a changing environment. We will always make sure that patient care does not suffer and rather, we will ensure that our ability to maintain and expand patient care remains intact. One recent success was in California, where after significant advocacy from HTCs and the patient community, MediCal positively declared they recognized the value of the comprehensive care model for people with bleeding disorders. I was asked what I thought about this development and all I could say was it was about time! After HTCs were shut out in Florida and dumped in Arizona my simple response was “it was well overdue.” Congratulations to all of the HTCs in California that made a compelling case for supporting the comprehensive care model.
This success and the success the Alliance payer group is having on your behalf is creating additional opportunities. Opportunities generally have a short half-life; when they come knocking on your door, please say yes!
The Trump Administration Wants to Put an End to PBM Rebates
By Elizabeth “Issie” Karan
The Hemophilia Alliance is following new developments in the regulation of the drug industry. On January 31, 2019, the Trump Administration announced proposed changes to safe harbor protections under the Anti-Kickback Statute (AKS), which could impact prescription drug markets and indirectly the 340B Discount Drug Program. The overall goals of the proposed rule are to lower out-of-pocket costs for consumers and reduce government drug spending in Federal health care programs.
The Department of Health and Human Services (HHS) proposed modifications to the AKS safe harbor for discounts which would exclude pharmaceutical manufacturer rebates (and other price reductions) provided to plan sponsors under Medicare Part D, Medicaid managed care organizations, or pharmacy benefit managers (PBMs) under contract with them. The proposed rule indicates that the prohibition on price reductions does not extend to those required by law (e.g. rebates under the Medicaid Drug Rebate Program). In addition, HHS proposed two new safe harbors for point-of-sale reductions in price on prescription pharmaceutical products and PBM service fees.
HHS wants to eliminate rebates to plans and PBMs since they believe that rebates contribute to higher drug costs for patients and increase federal spending on drugs. In the preamble to the proposed rule, HHS described how rebates reduce costs for plans but may not reduce out-of-pocket costs for beneficiaries since out-of-pocket costs may be based on the list price of the product before the rebate adjustment. Additionally, HHS voiced concerns regarding the lack of transparency in the rebate systems, requesting stakeholder feedback on the issue and the lack of compliance with program rules. HHS proposed that this amendment go into effect January 1, 2020.
HHS also plans to add two new safe harbors to the AKS, including for point-of-sale reductions and for payments for services to PBMs from manufacturers. HHS argues that point-of-sale reductions pose less risk of fraud to federal health care programs and could incentivize giving discounts directly to consumers. HHS would require that the price reduction be set in advance, not involve any rebates, and be completely reflected in the price charged to the consumer at the point-of-sale. For the new safe harbor for services fees to PBMs, HHS would allow manufacturers to pay PBMs for services furnished directly to the manufacturer but not for services related to the PBM’s work with health plans. For this safe harbor to apply, the PBM and the manufacturer would need to have a written agreement in place that meets certain standards. Additionally, the payments must be consistent with fair market value, be fixed and not based on a percentage of sales, and not be determined in a manner that takes into account the volume or value of any referrals or business.
Abolishing plan and PBM rebates could indirectly impact covered entities in the program although nothing in the proposed rule makes direct changes to the 340B Drug Discount Program. Simply put, plans and PBMs will be making less money and will want to correct for that shortfall somehow. In the coming months, we anticipate proposals for fee schedules and services payments from parties impacted by the proposed rule which reflect these losses. Meaning, plans and PBMS will likely increase their charges and costs in the coming year. HTCs should remain vigilant and contact the Hemophilia Alliance with questions or concerns.
The proposed rule can be found here, and comments are due April 8, 2019. The Alliance is considering whether and how to comment on the proposed rule and will share any comments with the membership.
By Jeff Blake
Over the last two years, the Payer Team has established strong relationships with several national insurance brokers and consultants. These brokers and consultants work with employers, mostly employers with self-insured health plans, to manage their health plan expenditures and design. This month’s newsletter article focuses on “Lessons Learned”.
So, what have we learned over the last two years?
- Employers are focusing on better managing high costs complex claims – including hemophilia. All eyes are on HTCs, products prescribed and dispensing pharmacy practices.
- Some manufacturers are providing rebates for clotting factor to health plans and PBMs.
- Clotting factor reimbursement from payers is getting more competitive. Our competitors want to grow their business just like our HTC pharmacies. The rates our competitors are charging payers is decreasing, so to remain competitive HTC pharmacy must continue to review their clotting factor reimbursement rates and potentially decrease their rates to remain competitive with payers.
- Self-insured employers and their brokers and consultants are very willing to work with HTCs and their pharmacy programs to reduce the cost of clotting factor. Many times, this requires an individual Letter of Agreement (LOA) between the employer’s health plan and the HTC. The Alliance is providing this service to members at no charge. We are able to leverage the fact that we represent all 107 HTCs. We are also able to bring these opportunities to HTCs that have not started a program, perhaps because they do not see a starting point.
- The payer team typically receives 2 – 4 broker/consultant requests each week. We have experienced and learned several things from these requests.
- 5% – 10% of the time the HTC and their pharmacy program are already providing the clinical and pharmacy services. No changes are necessary – the employer has the best deal.
- The remaining 90% – 95% of the time there is an opportunity for the HTC and their pharmacy program to get new business.
- We are most likely to win the business for the HTC pharmacy when the Hemophilia Alliance and the relevant HTCs can respond to these opportunities quickly – within 5 – 10 business days – and with competitive pricing for clotting factor.
- When it takes us longer than 2 weeks to respond to employers, brokers/consultants and other payers, their interest in our response has significantly declined and they have moved on to other hot items. Often, we cannot get them re-engaged in our proposal.
So, what is next? During March, the Payer Team will be offering a current pricing practices and competitive landscape webinar. Stay tuned for more information about this upcoming webinar.
Reminder: Please Register for the Spring Meeting!
By Sean Singh
Our Spring meeting will be held in Washington in conjunction with our Hill Day this year. We realize that combining the meeting and Capitol Hill Day visits is very convenient for our members who have limited time to travel – it allows you to participate and learn at the member meeting and then also educate policymakers about HTCs and our community.
For the Hill Day, we hope to have as many HTCs participate as possible so that we can educate as many Members of Congress and their staffs about HTCs as possible! We especially want to target Senators and Representatives that serve on the Congressional committees with jurisdiction over 340B policy, the Senate Health, Education, Labor and Pensions (HELP) Committee and the House Energy and Commerce Committee. So, if you are from any of the following states, please especially consider joining us this year: AK, AL, CA, CT, DE, FL, GA, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MT, NC, NH, NM, NV, NY, OK, OR, PA, SC, TN, TX, UT, VA, VT, WA, and WI. Also, please remember that the Alliance is also encouraging HTCs to invite one of your patients to join us in Washington. If you would like to invite a patient, please contact me.
To register your attendance and make your hotel reservation, please click here.
Here is the general schedule for the event:
Sunday April 28th
Hemophilia Alliance Board Meeting
Networking Reception – This session held in the evening gives you the opportunity to network with peers and discuss issues that are pertinent to you and your centers. It leads to topical conversation and a dialogue that benefits our community.
Monday April 29th
General Meeting – The daylong session will be filled with updates from the Alliance on all of the challenges, opportunities and threats facing HTCs and strategies to address them. We expect that this session will be lively and interactive.
Networking Dinner and Hill Day prep – This session will provide all of the details and training you need to meet with Members of Congress and their staff member to educate them about your centers, patients and the community. Telling your story has never been easier with the guidance of our Advocacy team led by Ellen Riker and Johanna Gray.
Tuesday April 30th
Hill Day – Following a breakfast briefing, we will head in teams to Capitol Hill to visit members of the House of Representatives and Senate and their staff. We will schedule your appointments and provide you with information that will make the day’s visits easy and enjoyable. Meetings will end in the late afternoon. Return trips from Washington DC should be planned for Tuesday evening or Wednesday.
Team Alliance Contact Information
We work for you! Please don’t hesitate to contact any of us with any questions or concerns: