Kmart to Catamaran: You stiffed us on drug reimbursements

Kmart sued pharmacy benefit manager Catamaran, alleging it “improperly manipulated prescription reimbursements” to make itself “a more inviting acquisition target.” The retailer, part of Sears Holdings, alleges that Schaumburg-based Catamaran cut payments to Kmart pharmacies, dragged its feet on reimbursement rate appeals and did not make changes when the appeals were successful. September 1, 2015 - read more

Draft guidance draws mixed response from industry stakeholders

Early feedback on the Food and Drug Administration’s proposal on naming conventions for biosimilars shows a mixed response. Last week, the FDA published draft guidance recommending that reference biologic products and biosimilars have nonproprietary names that share a core drug substance name and an FDA-designated suffix unique for each product. August 31, 2015 - read more

DEA addresses pharmacists' crackdown fears

The Drug Enforcement Administration (DEA) recently made an appearance at a state pharmacy board meeting to appease pharmacists’ fears of a crackdown on pharmacies. DEA diversion program manager Susan Langston spoke at a Florida Board of Pharmacy controlled substances standards committee meeting about how the DEA has addressed the state’s prescription drug abuse problem, as well as the administration’s relationship with pharmacies. August 31, 2015 - read more

Medicare ACOs saved $411M in 2014, but few earned bonuses

Medicare accountable care organizations generated $411 million in total savings in 2014, but few of the Pioneer and Medicare Shared Savings Program ACOs qualified for bonuses in the second year of the program, according to the latest data from the Centers for Medicare & Medicaid Services. August 26, 2015 - read more

CVS makes bigger push into telehealth

CVS Health has stepped up efforts to provide telehealth services through pilots with a trio of telemedicine technology companies. CVS said that it’s working with American Well, Doctor On Demand and Teladoc to explore how direct-to-consumer telehealth providers, retail pharmacy and retail clinic providers can collaborate to improve patient care. August 26, 2015 - read more

Safeguarding the U.S. drug supply

The Drug Supply Chain Security Act (DSCSA), known as Title II of the Drug Quality and Security Act, enacted in November 2013, promises to transform the way the U.S. supply chain operates by replacing a patchwork of pedigree requirements with an enhanced product-tracing solution for prescription drugs.  August 10, 2015 - read more


State efforts to expand authority for pharmacists

Laws set to go into effect October 1, 2015 in California and January 1, 2016 in Oregon would expand the role of pharmacists, authorizing them to prescribe contraceptives to women over the counter.  California’s law allows pharmacists to obtain additional training to prescribe contraceptives and establishes new training and licensing requirements for these “advanced practice pharmacists.”  Oregon’s law amends the “practice of pharmacy” definition to include prescribing birth control. 

The American Medical Association supports physician-led health care teams, of which pharmacists are members and where “each member of their health care team plays the role they are educated and trained to play.” The National Community Pharmacists Association applauded Oregon and California for utilizing pharmacists’ skills and making “health care more accessible.”

Prescription drug pricing remains top public concern

The pricing of prescription drugs continues to be a priority issue for the American public and policymakers. Following a Kaiser Family Foundation survey in June found that almost three quarters of Americans find the high cost of prescription drugs “unreasonable,” an August Kaiser Foundation poll reported broad bipartisan support for either increased price transparency from manufacturers or allowing Medicare to negotiate drug prices. While 76 percent of Republicans preferred market competition to government regulation, 86 percent of those polled (82 percent of Republicans, 90 percent of Democrats, and 84 percent of Independents) favored making drug manufacturers release information to the public on how prices are set. 

Newer specialty drugs as well as a new class of cholesterol-lowering drugs will ensure that drug pricing continues to be in the public focus. At the end of July, Medicare trustees reported that Part D spending per beneficiary increased 10.9 percent last year and that Medicare would pay $13 billion back to Part D plans in 2015 in reconciliation payments, as spending for several high-cost drugs to treat hepatitis C were not factored into Part D plan bids for the 2014 plan year. Part D plans are evaluating the impact of FDA’s approval of two new cholesterol-lowering drugs, which cost significantly more than the current statins on the market. One pharmacy benefit manager (PBM), Prime Therapeutics, estimates the new cholesterol drugs could cost the U.S. health system, where more than 25 million Americans are on statin drugs, up to $23 billion per year. 

At the federal level, while there has been a push for price transparency or “sunshine” on health insurance companies, hospitals, as well as drug and device manufacturers’ payments and items of value to physicians and teaching hospitals, there has not been a similar interest in extending these transparency measures to drug manufacturer pricing. However, on the state level, there has been movement on both price transparency as well as actual price controls. Drug pricing transparency bills have been introduced in North Carolina, California, New York, Minnesota, and Oregon, and several state legislatures are evaluating bills to establish limits on drug prices:

  • Massachusetts’ legislature is considering SB 1048, to require companies with drugs on a “critical prescription drug list” to disclose costs of production, research and development, marketing and advertisement, prices charged outside the United States, prices charged to Massachusetts purchasers, and prices paid by pharmacy benefit managers. SB 1048 would authorize the Massachusetts Health Policy Commission to cap drug prices determined to be “significantly high.” 
  • In Pennsylvania, Senate lawmakers are considering SB 893, a bill that contains both price transparency provisions as well as price caps. Modeled after the medical loss ratio rules in the Affordable Care Act, which require insurance companies to spend at least 80-85 percent of premiums on medical care, the SB 893 would establish a commission to determine whether drug prices are too high in comparison to the cost of research and development, manufacturing, and marketing drugs. Prices in excess of 20 percent of those manufacturer costs will be found unreasonable, and an insurer shall not be required to pay any among in excess of 20 percent of those costs. The House companion legislation does not contain the price caps. 
  • In Ohio, there were enough signatures on a ballot initiative to force consideration of the Ohio Drug Price Relief Act by the state legislature. The bill would prohibit state agencies that from paying more than the lowest price paid for the same drug by the U.S. Department of Veterans Affairs. The same ballot initiative is circulating for signatures in California, and sponsors are close to the minimum number of signatures required (365,880) to place the initiative on the November 2016 ballot.

These state legislative initiatives are important to watch. The pharmaceutical industry has pushed back against a number of these bills, and the transparency bill in Oregon failed. America’s Health Insurance Plans (AHIP), the trade association for the health insurance industry, has stated that the group is not pushing for price controls and called such efforts “concerning,” but AHIP is supporting efforts to require drug manufacturers to disclose their innovation costs. As these legislative efforts proliferate across the states, it will be instructive to see what form any final bills take, and how effectively the industry trade associations respond. 

As the nation gears up for a presidential election in 2016, with an issue polling as strongly as this, we may see candidates endorse measures to address public concerns, potentially promoting increased transparency measures at a minimum. On September 1, Senator Bernard Sanders (I-VT) became first candidate to unveil a detailed plan to address prescription drug costs. His plan, the Prescription Drug Affordability Act of 2015, would: 

  • instruct the HHS Secretary to negotiate drug prices under Medicare Part D;
  • allow importation from Canada;
  • require drug companies to report pricing information to HHS, including costs for research and development as well as expenses offset by tax credits or funded with federal grants;
  • restore the minimum rebate on Part D drugs for low income Medicare beneficiaries;
  • require generic manufacturers to pay an additional rebate should their drug prices rise faster than inflation;
  • prohibit “pay-for-delay” arrangements when branded drug manufacturers pay generic drug makers to delay bringing a competitor medicine to market; and
  • terminate any remaining market exclusivity for any product involved in a federal fraud settlement.

Generic drug pricing

There are also efforts to increase price transparency for generic drugs. The National Community Pharmacists Association (NCPA) commissioned a survey of voters and found that 72 percent of likely voters, after hearing arguments for and against the provisions of H.R. 244, the MAC Transparency Act, supported transparency legislation to require PBMs to update generic drug reimbursements to independent community pharmacies. The survey pollster, Robert Green of Penn Schoen Berland reported that “Across age, gender, and party lines voters agree that forcing community pharmacies to blindly fill prescriptions without knowing how much they will be reimbursed is wrong.” 

As with efforts related to prescription drug pricing outlined above, there is a greater level of activity in the states than at the federal level. According to NCPA, 24 states have enacted legislation to address the need for greater transparency for generic drug pricing and reimbursement. Earlier this year, Arkansas enacted a law to mandate that pharmacies be reimbursed for generic drugs they dispense at or above the pharmacy acquisition price. The law also requires PBMs to have an appeals process in place for pharmacies paid less than their costs to obtain a generic drug. The Pharmaceutical Care Management Association is suing Arkansas to halt implementation of the law, charging that it seeks to guarantee pharmacists make a profit on each generic drug they dispense, removes any incentive for pharmacists to seek out the lowest price for a drug, harms competition among wholesalers, all driving increased costs for consumers and employers.  

Medicare instructs Part D plans to promptly share standard contract terms with pharmacists 

In guidance released August 13, the Centers for Medicare & Medicaid Services (CMS) directed Part D plans to comply quickly with pharmacist requests, after September 15, for standard network terms and conditions for participation in a plan’s standard pharmacy network. CMS notes that by mid-September, plans should have a signed contract with CMS and should have provided CMS with information about their network, for posting on the Medicare Plan Finder. Accordingly, CMS notes that plans should also be able to share such information with requesting pharmacies. CMS directs plans to “provide the applicable standard terms and conditions document to the requesting pharmacy within two business days of receipt of the request.” Plans should similarly be able to provide CMS with this same data within two days of any such request. 

CMS directions to the Part D plans are aimed clarifying Medicare Part D’s any willing pharmacy (AWP) requirement and preventing the confusion that arose late last year, when incorrect pharmacy information regarding Aetna’s 2015 Medicare Part D plans was posted on Medicare Plan Finder and Aetna websites. CMS fined Aetna $1 million and instituted a corrective action plan. 

Congressional activity on lock-in policies

On July 10, the U.S. House of Representatives passed the 21st Century Cures Act (H.R. 6) to accelerate the drug and device discovery, development, and delivery process so that cures may reach patients faster. H.R. 6 contained “lock-in” provisions, to allow Part D plan sponsors to institute a drug management program limiting the number of prescribers and pharmacies that could provide frequently abused drugs to Part D beneficiaries. These “lock-in” policies would be optional for Part D plans, ensure beneficiary access to critical medications in plans that elect to institute a drug management program, and allow for beneficiary appeals of the policy. The Secretary of HHS would be directed to hold a stakeholder meeting for input on issues related to drug management programs. 

The Senate has been working on a related “Innovation” effort which reportedly improves upon the House-passed “lock-in” provisions, adding additional beneficiary protections and oversight.  The Senate Committee on Health, Education, Labor and Pensions is expected to release draft legislation on this issue in September or October.

At the end of July, Senators Pat Toomey (R-PA), Sherrod Brown (D-OH), Rob Portman (R-OH), and Tim Kaine (D-VA) introduced the Stopping Medication Abuse and Protecting Seniors Act, S. 1913. Senator Toomey stated that the intent of the bill is “to prevent inappropriate access to opioids and improve patient care for at-risk beneficiaries.” Modeled after provisions in Medicaid and commercial plans, S. 1913 would identify a beneficiary with a history of drug abuse in Medicare Part D and Medicare Advantage and “lock-in” that beneficiary to one prescriber and one pharmacy. The bill also encourages physicians, insurers, and Part D plans to assist beneficiaries in seeking substance abuse treatment.