Month: October 2017

This article was originally published in New Hampshire Business Review. Republished with permission.

The D.C. policy shift away from higher Medicaid spending will push many states to turn to waivers

The past year has been one of questions regarding health care. Will the Affordable Care Act be repealed? Will significant drug price legislation occur? But the most important question on the minds of many state policymakers is what happens to Medicaid, and Medicaid’s future will be heavily tied to the usage of the 1332 waivers.

Many states use waivers when they are making changes to their Medicaid program. Usually, states use Section 1115 of the Social Security Act (the 1115 waiver), which is a broad authority available to states for changes to Medicaid and the state Children’s Health Insurance Program (CHIP) that govern issues such as benefits, delivery systems and eligibility.

The question is, how is this different from the 1332 waiver?

Section 1332 of the ACA permits a state to apply for a State Innovation Waiver to pursue innovative strategies for providing their residents with access to high-quality, comprehensive, affordable health insurance while retaining the basic protections of the ACA. This waiver is not as clearly defined as the 1115 waiver and can give states more flexibility in how they use their Medicaid federal funds. State Innovation Waivers are approved for five-year periods and can be renewed. Waivers must not increase the federal deficit. Changes implemented by these waivers involve issues such as changes to health insurance exchanges, qualified health plans, premium tax credits and cost-sharing subsidies, as well as the individual and employer mandates.

This year, over 20 states have considered legislation on how to implement 1332 waiver application process. New Hampshire is included in this discussion, as the state this year enacted HB 469.

According to the National Conference of State Legislatures, the bill has several components. The law’s intent “is to preserve the state’s status as the primary regulator of the business of insurance within New Hampshire and the constitutional integrity and sovereignty of the state of New Hampshire under the Tenth Amendment. The commissioner may request that the board of directors of the association develop a plan of operation to support the affordability of health insurance in the individual market. The proposal may include resumption of the risk adjustment program, reopening of the high risk pool, creation and operation of a reinsurance program, or other such program. The commissioner is authorized to submit an application on behalf of the state to the U.S. Treasury, and if required, to the U.S. Secretary of Health and Human Services, to waive certain provisions of the Act, as provided in section 1332 of the (ACA), or any other applicable waiver provision. Establishes a continuous quality improvement program for pharmacies; also authorizes vaccines to be administered by pharmacists.”

In the midst of health care policy uncertainty, we are seeing a more definitive call for congressional risk-shifting onto state policymakers, and the Trump administration has outlined five health care policy pillars that emphasized greater consumer and state involvement.

While the administration discussed issues like new tax credits, health savings accounts, retaining the most popular ACA provisions and allowing insurance across state lines, the most important pillar has been greater state flexibility for Medicaid. This has unnerved some state policymakers, including states that rely heavily on ACA subsidies for Medicaid expansion. Shrinking the federal budget for other priorities now means that Congress and the Administration foresee a larger amount of accountability for governors and state legislatures on Medicaid spending.

While the House and Senate versions of the ACA repeal were vastly different, both contained the aforementioned aspects of risk-shifting toward the states. Issues such as Medicaid block grants, per capita caps and 1332 waivers were discussed in great detail, and while neither bill passed both chambers to date, it is becoming increasingly apparent that states will now have to consider greater cost-containment protocols. This is seen as more states adopt new ways to use the currently undefined 1332 waiver as a way to achieve more self sustainability.

The policy shift away from higher Medicaid spending will push many states to create new programs using the 1332 waivers. So far, there is no indication that the Centers for Medicare and Medicaid Services will limit the state’s power by denying waivers.

In the future, Medicaid policy may depend on these waivers as a means to distribute resources within the program. Anyone who is connected to health care should start to pay attention to their state’s 1332 waiver and plan accordingly.

For some time now, the PHARMA space has been witnessing an increased amount of scrutiny around the appropriateness of high drug prices. The argument that the Pharmaceutical Research and Manufacturers of America makes that improved science and outcomes equals premium pricing versus the payers philosophy of cost containment have left many questions for the rest of the supply chain-especially specialty providers and patients.

Although these two philosophies can be justified in their own ways, this argument has been aggravated by companies such as Turing Pharmaceuticals that have unjustifiably used extremely high drug prices to take advantage of a short term market opportunity. Not surprisingly, these developments have prompted varied responses from both industry and policymakers.

The question on many minds today is what can be done about high drug prices? To date, there has not been an effective response. Thus far we have witnessed Allergan’s new industry transforming social contract with its patients that promised to increase prices on branded drugs by single digits.

There have also been several hearings on Capitol Hill debating importation and Medicare negotiation, multiple state bills that target R&D transparency from brand manufacturers and a controversial new law in Maryland that allows the Attorney General to prosecute generic companies who raise prices to an unconscionable level. It remains to be seen whether any of these ideas will have a significant contribution to lowering drug prices to help increase patient access.

The most interesting development has come from a new approach outlined by the new FDA Administrator Scott Gottlieb, MD. In June 2017, Dr. Gottlieb announced the first two new steps commencing the Agency’s new Drug Competition Action Plan that is designed to lower drug pricing by increasing competition within the prescription drug marketplace and fostering the entry of lower priced alternative medicines.

The first step witnessed the Agency publishing a list of off-patent, off-exclusivity drugs without an approved generic. Part I of the list identifies those drug products for which the FDA could immediately accept an ANDA without prior discussion. Part II identifies drug products involving legal, regulatory, or scientific issues which should be addressed with the Agency prior to submission of an ANDA. The list shows active ingredients that lack generic competition.

The second step is outlined in the Agency’s Center for Drug Evaluation and Research’s Manual of Policies and Procedures, which describes how the review of abbreviated new drug applications (ANDAs), ANDA amendments, and ANDA supplements will be prioritized for review within the Office of Generic Drugs (OGD) and the Office of Pharmaceutical Quality (OPQ). This document is designed to expedite the review of generic drug applications until there are three approved generics for a given drug product.

“The agency is revising the policy based on data that indicate that consumers see significant price reductions when there are multiple FDA-approved generics available,” the FDA stated in a June 2017 press release.

These aforementioned policies dovetail into the public notice that FDA has announced titled “The Hatch-Waxman Amendments:Ensuring a Balance Between Innovation and Access.” According to the FDA, “this public meeting is intended to provide the public an opportunity to submit comments concerning administration of the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act (FD&C Act) to help ensure the intended balance between encouraging innovation in drug development and accelerating the availability to the public of lower cost alternatives to innovator drugs is maintained.”

It will be interesting to see what policies will be culminated from this blockbuster meeting. Will the FDA’s approach be the silver bullet to an issue that has yet to be tamed? It may be too early to tell. Thus far we have not seen a regulator take aggressive steps such as this to reign in price. However; while the FDA’s intentions may be good, it still cannot regulate drug prices because of our free market system.

Dr. Gottlieb’s deterrence policies may be a first step into creating a more consumer friendly environment for patient access to these much needed medications. For now it will be good for specialty to continue watching this situation in order to forecast how these market and government policies can help you better care for your patients.

For more insights like this, contact Frier Levitt Government Affairs today.

We would like to thank the National Association of Specialty Pharmacy (NASP) for allowing us to present at this year’s Annual Meeting.

Our presentation, Biosimilars: Price, Policy and Outlook, had the following objectives:

• Identify the definition of biosimilars
• Outline the difference between biosimilars and generics
• Describe the FDA’s outlook on biosimilars
• Explain the supportive policy environment being put into place for biosimilars
• Discuss the outlook for biosimilars as interchangeability policies and legislation evolves

For more information regarding Biosimilars, contact us today.