Category: Specialty Pharmacy

What You Need to Know about Biosimilars with Brian Lehman, Director, Medical Account Management and Strategic Alliances for Sandoz Inc.

In the first of a series of interviews for the Frier Levitt Government Affairs blog, Executive Director Ron Lanton, Esq. speaks with Brian Lehman, Director, Medical Account Management and Strategic Alliances for Sandoz Inc. about everything Biosimilars – the current biosimilar marketplace, PBMs and biosimilars, and opportunities in the biosimilar marketplace.

Ron Lanton: How have recent FDA policies affected the biosimilars marketplace?

Brian Lehman: My perspective from working with pharmacy benefit managers (PBMs), health plans and employer groups, these stakeholders would benefit from being included in the U.S. Food and Drug Administration’s (FDA) biosimilar education and outreach efforts geared towards patients and the providers who treat them. We included this suggestion in our comments to the FDA Notice of Hearing entitled Facilitating Competition and Innovation in the Biological Products Marketplace.

The need remains for additional FDA-driven, educational efforts to enhance biosimilar understanding among these groups. Doing so could benefit decision making on formulary and utilization management programs.

The FDA has stringent requirements and regulations for the development and approval of all reference biologics and biosimilar medicines.1 The FDA’s authority has the power to help increase payers’ confidence that a biosimilar matches the reference biologic in terms of safety, efficacy and quality via rigorous development and testing processes.

The economic impact for real-world evidence and simulation models is compelling.  Approximately $100 billion worth of biologics are expected to be off patent by 2020, which present a substantial opportunity for biosimilar medicines to create savings for the US healthcare system[i]. Biosimilars may help to provide millions of patients with more affordable and accessible treatment options. They create the potential to save the US healthcare system an estimated $54 billion over 10 years[ii].


RL: What types of obstacles are there for biosimilars in the marketplace?

BL: Only 1 in 18 biosimilars in the U.S. market is currently a success story, and that’s Sandoz Zarxio® (filgrastim-sndz) – the first biosimilar to surpass its reference biologic in market share[iii].  To that end, several health systems, integrated delivery networks and payers have realized savings when switching to Zarxio – including Yale New Haven Health System, Robert Wood Johnson Barnabas Healthcare System and Carolina Blood and Cancer Care[iv],[v],[vi],[vii]. Many obstacles for biosimilars in the U.S. exist along the path that begins with discovery and development; continues with the process of obtaining regulatory approval; and ends with patients accessing their biosimilar for treatment. Of those 18 FDA-approved biosimilars, only seven are available for use.

We’ve observed significant obstacles barring biosimilar medicines getting to market, which hinders patient access and is detrimental to healthcare savings.

It is beyond time that all stakeholders work together to overcome the gridlock and provide additional incentives so more patients can access these important medicines.


RL: Will doctors or PBMs be the deciding factor for how fast biosimilars make it into the market?

BL: All stakeholders play a significant role in fast-tracking the adoption of biosimilars into the US healthcare system. Actions taken by providers, professional societies, payers, healthcare plan administrators, patients and policy makers send signals back to manufactures on why it is important to continue investing in biosimilars.  Positive signals in support of biosimilars and removal of barriers will favorably impact how the US is able to realize savings in healthcare spending and improvements in patient access – now and for the future.

In order to increase support of biosimilars, we need a multi-channel approach focused on amplifying education. The FDA, along with professional organizations, patient advocates and manufacturers play an essential role in educating our community about biosimilars to help earn an equitable level of trust that they expect with reference biologics.


RL: With increasing political scrutiny on high-priced medications such as insulin, are there opportunities for biosimilars within this space?    

BL: Yes- there is a clear unmet need for people with diabetes. Each year, 1.4 million Americans are diagnosed with diabetes. Approximately six million Americans with diabetes use a form of insulin[viii]. Among adults diagnosed with diabetes, some may struggle to afford their insulin, putting them at risk of disease-related complications that drive up healthcare costs.

The good news is that the FDA released guidance to help reframe the narrative. Starting in March 2020, medicines that include insulins will be regulated as biologics versus drugs or small molecules. This will allow manufacturers to file for approval of their insulin medicines via the biosimilar similar pathway. That makes a big difference because currently it is not possible to submit an application for a biosimilar to insulin in the US – a transformative move to promote competition[ix].

We hear a lot about the problem of skyrocketing healthcare costs, but very few are doing something about it. The future of insulin biosimilars will be significant due to the increase in competition that will help bring down prices for patients and the healthcare system.  Anticipating the growing needs for insulin biosimilars, Sandoz entered into an agreement to commercialize biosimilar versions of insulins used in patients with type 1 and type 2 diabetes. (Press release source: This will ultimately result in increased access, adherence and reduced complications for individuals who use insulin.

*Zarxio and Erelzi are registered trademarks of Novartis AG.



[i]GBI Research. $100 billion of revenues up for grabs for drug manufacturers by 2020 as patents for key biologics expire [press release]. March 13, 2017. grabs-for-drug-manufacturers-by-2020-as-patentsfor- key-biologics-expire/. Accessed December 14, 2018.

[ii]Mulcahy AW, Hlávka JP, Case SR. Biosimilar cost savings in the United States: initial experience and future potential. Santa Monica, CA: Rand Corporation, 2017. Available at: February 27, 2019.

[iii]IMS Health Institute for Healthcare Informatics. Delivering on the potential of biosimilar medicines: the role of functioning competitive markets.

pdf?la=en&hash=7705453CF0E82EF41402A87A44744FBF8D84327C&_=1518722219951. Accessed December 14, 2018.

[iv]Evans M. Barnabas and Robert Wood Johnson sign deal to form biggest New Jersey health system. Modern Healthcare Website. Available at: Published July 14, 2015. Accessed October 5, 2018.

[v]Data on file. RWJBH Raw Sales Data. Sandoz Inc. March 2018.

[vi]Davio K. Oncologist sees biosimilars playing a role in the oncology care model. The Center for Biosimilars Website. Available at: Published April 12, 2018. Accessed June 11, 2018.

[vii]Leber MB, Abdelghany O, Miller L. Biosimilar adoption: health system challenges and strategies for success. Poster presented at: 2016 Vizient Clinical Connections Summit, Dallas, TX, September 29, 2016.

[viii]American Diabetes Association. Fast Facts: Data and Statistics about Diabetes. Available at: Accessed February 27, 2019.

[ix]US FDA. Statement from FDA Commissioner Scott Gottlieb, M.D., on new actions advancing the agency’s biosimilars policy framework. Available at: Accessed February 27, 2019.

Will PBM Transparency Help Biosimilar Utilization?

This article originally appeared in Biosimilar Development.

With the list price of newer drugs rising, policy makers are continuing to debate the cost savings biosimilar medications may offer. To date there are 17 FDA-approved biosimilars targeting various disease states. While biosimilars could slow the dramatic rise in the overall drug spend, many questions about them remain such as litigation, interchangeability, and how they will be integrated into the market. The last question is the most intriguing, and it is heavily dependent on the decision of pharmacy benefit managers (PBMs) about their formularies.

PBMs are third-party healthcare plan administrators that manage benefits on behalf of payers. They have the ability to negotiate prescription drug pricing with manufacturers and pharmacies, establish a network of pharmacies to fill prescriptions, and process and pay insurance claims. PBMs are industry middlemen. However, over a relatively short time frame, these middlemen have morphed from claims processors into a few large corporations that control the pharmacy benefits of more than 253 million Americans, as just three PBMs now control 78 percent of prescription drug benefit transactions in the U.S.1

In theory, PBMs are supposed to lower drug costs and increase generic utilization via their formulary controls and negotiated price concessions in which realized savings are passed on to the consumer. Currently, the PBM revenue model of manufacturer rebates, supply chain administrative fees, and pharmacy spread pricing — the difference between what they pay for drugs from a pharmacy and what they get paid by the insurer — has caused an unavoidable conflict in PBMs’ duties to consumers. A product’s placement on a PBM’s formulary is calculated carefully through the gauntlet of these decisions. However, the current dearth of transparency, as well as a lack of consistent regulatory state and federal oversight, has greatly contributed to the increase in prescription drug costs. This leads to the question of whether increased PBM transparency — and the efforts being developed to introduce greater pricing transparency — will positively impact biosimilars.

Several Model PBM Legislation Efforts

With PBMs playing such a major role in biosimilars and their potential formulary placements, are any policies regarding PBM transparency being discussed? The most discussed and arguably most aggressive form of PBM policy making has come from the National Council of Insurance Legislators (NCOIL). In December 2018, NCOIL approved their model PBM bill to address several marketplace concerns regarding PBMs. The model bill:

• prohibits gag clauses

• outlines several issues an insurance commissioner can regulate including maximum allowable cost list, medical loss ratio (MLR) abuses, prohibited  market conduct practices, and network adequacy requirements

• requires a PBM to obtain a license from the state insurance commissioner, and allows the commissioner to perform oversight functions to ensure compliance with the model act

• does not provide an Employee Retirement Income Security Act of 1974 (ERISA) exemption for PBMs.

According to my conversations with NCOIL, the organization highly encourages state legislatures to use its model language and is lending its expertise if any opportunities to share its findings with state legislators present themselves.

In addition to NCOIL’s work on PBMs, the National Academy for State Health Policy (NASHP), a nonprofit, nonpartisan forum of state health policy leaders, has been actively engaged in this issue by drafting a model PBM bill. NASHP has developed two PBM models: model A enables states to directly regulate PBMs and gives states flexibility to identify which agency should oversee PBMs, while model B allows states to regulate PBMs through their state insurance departments. Model B is modeled after Montana’s Senate Bill 71, which was introduced this year. It addresses similar issues of outlawing gag clauses and providing transparency about conflicts of interest and information about rebates. The goal is to hold PBMs more accountable to interested stakeholders such as pharmacies, payers, and the general public for their actions.

The ultimate question is whether these efforts at creating PBM transparency will benefit biosimilars. I believe the answer is yes, but only because biosimilars may be an accidental beneficiary. As more biologics are introduced onto the market, whether rightly or wrongly, the perception is that this class of drugs will be higher in price due to improved outcomes and more intense manufacturing protocols. It can be argued that biosimilars may have the wind at their back with PBM formulary preference since they are expected to bring down biologic prices as a result of competition. While we are waiting to see if this hypothesis plays out, the push for PBM transparency is on, and these policies pushed by NASHP, NCOIL, and others could force additional insight into how products are priced and placed on formularies. If the goal of PBM transparency is to force prices down and level the playing field for market participants, this would also likely be a net positive for the use of biosimilars. This is all provided that biosimilar manufacturers actually price their products lower, similar to what the market expects from generic drugs; although generics and biosimilars are quite different from one another.

Additional Efforts Promoting Transparency In Drug Pricing

While PBMs will likely be the main driver of biosimilar utilization in the marketplace, another source is quietly gaining a lot of influence in the market on whether drug prices are becoming too expensive. The Institute for Clinical and Economic Review (ICER) is an independent nonprofit research institute that produces reports analyzing evidence on the effectiveness and value of drugs and other medical services. ICER has been increasing its comments on drug values over the last several months and recently surprised many in the industry with the announcement of its collaboration with the Department of Veterans Affairs (VA) Pharmacy Benefits Management Services to support VA coverage and price negotiations with drug manufacturers. Not many expected the government to utilize a group like ICER to determine whether a drug’s price was justified. With the administration pushing for more opportunities for the government to negotiate drug pricing, ICER could potentially spread its influence into other government programs such as Medicare Parts B and D, which could upend our current reimbursement structure.

ICER has an important public comment period that just closed on drug prices. Their draft protocol titled the “Unsupported Price Increase” (UPI) report analyzes significant prescription drug increases and looks to determine whether new clinical evidence exists that could be used to support those increases. Once finalized, the protocol will guide the development of the first of these annual reports, currently scheduled for release in October 2019.

The ICER process for this is interesting. According to the draft protocol, “ICER proposes to generate an annual report of up to 13 drugs that have experienced substantial price increases over a two-year time period. ICER will review changes in the evidence base for these drugs, and report on whether potential evidentiary support for price increases was found.”2 Further, ICER states, “These UPI reports are not intended to determine whether a price increase for a drug is fully justified by new clinical evidence or meets an ICER value-based price benchmark. Instead, we will focus the analysis on whether or not substantial new evidence exists that could justify its price increase.”3

Manufacturers will have an opportunity for input. “Specifically, ICER will ask each manufacturer for the following information [which may be submitted under ICER’s policy on academic-in-confidence data]:

• New clinical evidence over the prior 36 months that demonstrates improved clinical or economic outcomes

• New evidence relating to comparator therapies that the manufacturer believes indicate new evidence of relative clinical advantages of their drug

• Other potential justifications for a price increase, including information within the prior 36 months related to:

– a large increase in costs of production

– large price savings attributable to the drug in other parts of the health system

– all other reasons deemed relevant by the manufacturers.

Additionally, manufacturers will have four weeks from time of notification to provide input.”4 Overall, I believe reports like these will play a key role in determining whether a biologic — or biosimilars — will be priced too high based on the clinical value it provides.


  1. National Community Pharmacists Association (NCPA). The PBM Story, What they say, what they do, and what can be done about it.
  2. Institute for Clinical and Economic Review. Unsupported Price Increase Assessment, Jan. 17, 2019, pg. 1
  3. Institute for Clinical and Economic Review Unsupported Price Increase Assessment, Jan. 17, 2019, pg. 2
  4. Institute for Clinical and Economic Review Unsupported Price Increase Assessment, Jan. 17, 2019, pg. 5

2019 Specialty Drug Pipeline & Policy Outlook: A Glimpse into Potential Blockbuster Drugs and the Policies that Govern Them Webinar Recording

The market has recently witnessed an acceleration of several new classes of drugs that were approved by the FDA. With specialty drug spending showing no signs of slowing down and the drug pricing debate raging in Congress, what are the current drugs in the specialty pipeline that stakeholders can take advantage of? Most importantly what policies are being developed that will govern accessibility and reimbursement for manufacturer, specialty and home infusion stakeholders?

In this recorded webinar, Ronald W. Lanton III, Esq., Executive Director of Frier Levitt Government Affairs, discusses:
• Overview of current policy
• Discussion of upcoming possible blockbuster medications
• Examination of market trend opportunities
• Guidance on next steps

By the end of this presentation, participants will be able to:
• Understand the current policy in place
• Identify new possible blockbuster medications in the specialty pipeline
• Comprehend new developing policies that will govern accessibility and reimbursement for manufacturer, specialty and home infusion stakeholders

Contact Frier Levitt Government Affairs today.

Don’t Ignore the Steady Drumbeat of Drug Importation

This article was originally posted on Specialty Pharmacy Times.

We are living during a time in which we are witnessing the possibilities of curative medications and their significant improvement on patient outcomes. However, these breakthroughs have come at the price of higher-cost medications, leading to a vigorous debate about the value of improved outcomes in terms of time and spending.

One way that policymakers and industry insiders have constantly considered to lower drug prices has been through importation. This would theoretically lower drug prices by allowing market players from outside the United States to compete. Although this idea is intriguing, there undoubtedly are obstacles, such as safety concerns and federal law. However, this has not stopped the recent activity we have seen in Congress and on the state level.

Let’s consider the latest policy ideas on the subject of importation.

First, let’s examine the current law for importation, as this subject depends on whether a medication is manufactured as an unapproved drug versus an unapproved drug imported via a consumer. The FDA’s enforcement on unapproved medications intended for commercial use is evident within its guidance. The United States Federal Food, Drug, and Cosmetic Act prohibits interstate shipment of unapproved new drugs, including importation. The act allows the FDA to refuse admission of any drug that “appears” to be unapproved, which forces the importer to prove the desired drug has been approved by the FDA or be subject to FDA enforcement actions.1

However, the FDA’s viewpoint on personal importation of unapproved drugs is different, with several factors considered by agency personnel when determining whether to enforce the act or take action against the importer.

The FDA will allow importation of a drug when its intended use is unapproved for a serious condition that does not have an effective treatment available domestically through commercial or clinical means, there is no known commercialization or promotion to US residents by distributors of the drug, the drug is not considered to pose an unreasonable risk, and the individual seeking to import the drug affirms in writing that it is for personal use—typically in quantities under a 3-month supply—and provides the name and address of the US-licensed doctor responsible for treatment or proof that the drug is for the continuation of a therapy that began in a foreign region.

Thus, although the FDA does have preferences on commercial versus personal importation of unapproved prescription drugs, the law is flexible on allowing for certain situations.

Recently, the FDA weighed in on the idea of importation. FDA Commissioner Scott Gottlieb, MD, who has been very aggressive in implementing new policies in an attempt to lower costs across the supply chain, last year announced a new working group that would examine importation. Gottlieb’s approach is to consider importation through the lens of alleviating drug shortages from single-source manufacturers.

“We want to examine whether, under these narrow conditions, the additional market competition from the short-term importation of foreign versions of the drug may complement the FDA’s current efforts and help meet near-term patient need in the [United States] until new competition is able to enter the domestic market,” Gottlieb wrote in a statement on the FDA website in July 2018. “To pursue these considerations, we’re forming a work group to explore various policy frameworks that, through the exercise of enforcement discretion or otherwise, would involve the importation of drugs under circumstances that meet these criteria and that would be suitable substitutes for the FDA-approved version of the medically necessary drugs. We will consider whether and how the foreign versions of these medicines can be imported with adequate assurances of safety and effectiveness.”2

Gottlieb added that a policy involving importing drugs would be a temporary measure until adequate competition enters these categories and any resulting policy would need to be structured to eliminate the risk of counterfeit or unsafe drugs entering the US supply chain.

Congress already has a few initiatives on importation:

• The Affordable and Safe Prescription Drug Importation Act would instruct the HHS secretary to issue regulations allowing wholesalers, licensed US pharmacies, and individuals to import qualifying prescription drugs manufactured at FDA-inspected facilities from licensed Canadian sellers. After 2 years, the secretary would have the authority to permit importation from countries in the Organisation for Economic Co-operation and Development that meet specified statutory or regulatory standards that are comparable to US standards. The bill would not permit importation of controlled substances, anesthetic drugs inhaled during surgery, or compounded drugs.

• The Safe and Affordable Drugs from Canada Act would permit the importation of prescription drugs from approved pharmacies in Canada.

• If enacted, HR 447 would allow for the importation of affordable and safe drugs by wholesale distributors, pharmacies, and individuals.

New FDA Proposed Rule Looking to Define the Term “Biological Product” Seeks Comments

The Food and Drug Administration (FDA) is out with a new proposed rule targeting pharmaceutical manufacturer and specialty pharmacy stakeholder interests. With the new proposed rule, the FDA is looking to amend its regulation that defines “biological product” to incorporate changes made by the Biologics Price Competition and Innovation Act of 2009 (BPCI Act), and provide an interpretation of the statutory terms “protein” and “chemically synthesized polypeptide.” Under this interpretation, the term “protein” would mean any alpha amino acid polymer with a specific, defined sequence that is greater than 40 amino acids in size. A “chemically synthesized polypeptide” would mean any alpha amino acid polymer that is made entirely by chemical synthesis and is greater than 40 amino acids but less than 100 amino acids in size.

The comment period for the new proposed rule on biologics is now open. The deadline to comment is February 25, 2019.

Biologics is a cutting-edge sector within the healthcare industry. Since biologics are not traditional drugs, they will need their own classification as they become more utilized. Reimbursement and regulatory oversight involving safety of biologics will depend on how the term “biological product” is defined in this proposed rule. Pharmaceutical manufacturers and specialty pharmacy stakeholders can participate in this decision by submitting comments. Contact Frier Levitt Government Affairs today to have your voice heard on this very important topic.

Diabetes: Statistics, Policy and New Drugs to Fight It


It is no secret that diabetes is having serious repercussions on our country. According to the Centers for Disease Control (CDC), 30.3 million people in the United States have diabetes. 23.1 million people have been diagnosed with the disease thus far while 7.2 million people are undiagnosed. Additionally, the CDC’s 2015 statistics state that diabetes is also the 7th leading cause of death.

There are two types of diabetes; type 1 and type 2. Only 5% of the population has type 1 diabetes, as it is commonly diagnosed in children and was formerly known as juvenile diabetes. In type 1 diabetes the body does not produce insulin. Type 2 on the other hand is the most common. In type 2 the body does not use insulin properly. This is known as insulin resistance. The pancreas starts to produce more insulin to keep up with glucose levels in the body though over time it can not produce enough to keep glucose levels stable.

There are many policy aspects to diabetes. The first involves shadow pricing. Shadow pricing is when one company raises its wholesale price for a diabetes medication and then others follow suit over time. With insulin it started with a price hike of Lantus and then a similar increase for Levemir. This has caused several lawsuits to start against Eli Lilly, Novo Nordisk and Sandoz for their alleged dealings in price fixing. The plaintiffs in this case are accusing these three insulin manufacturers of raising list prices in order to gain favor among pharmacy benefit managers (PBMs). These lawsuits are now in Federal District Court as a class action suit. Also the federal government has started to investigate shadow pricing in Congress.

Medicaid and Medicare have been negatively impacted by the effects of diabetes. Medicaid is paying more for insulin and the price hikes for insulin are affecting dual eligible patients in regards to the Medicare donut hole. Many states are strapped for budgetary funds and may start to not cover certain insulin that is more expensive.

Additionally, there are no generics for insulin. Insulin is considered a biologic and not a small-molecule drug. Biosimilars are the only option here and are only up to 30% cheaper than the available brand in the market. Currently, there are only three major insulin manufacturers, which creates not only lack of competition but also issues with patient access.

The National Clinical Care Commission Act was signed into law this year and establishes a public/private commission. This commission will assess current federal programs that support clinical care for diabetes. The commission is also charged with finding inefficiencies and gaps in these programs and will provide recommendations to both Health and Human Services (HHS) and Congress.

Nevada’s approach to diabetes was an interesting one this year as the state passed its version of price transparency specifically targeted at the disease. The state’s new drug pricing law targets diabetes products and requires PBMs and manufacturers among other things to disclose certain pricing and rebate information. This law was signed into law after it was first vetoed by Governor Sandoval (R-NV), as the first draft had much stricter language against price gouging. Both PhRMA and BIO are currently suing the state by arguing that the law creates a constitutional violation and violates patent protection law and trade secrets by asking for price and rebate information. We’ll see how these arguments turn out.

There are Congressional bills currently on point:

H.R. 3124/S.1299 titled the Preventing Diabetes in Medicare Act of 2017 proposes to reduce the occurrence of diabetes in Medicare beneficiaries by extending coverage under Medicare for medical nutrition therapy services to such beneficiaries with pre-diabetes or with risk factors for developing type 2 diabetes.

H.R. 3271/S.1914 titled the Protecting Access to Diabetes Supplies Act of 2017 targets diabetic supplies within competitive bidding. Specifically, the bill requires the Centers for Medicare & Medicaid Services (CMS) to:
– Use specified data to determine whether a bid satisfies certain requirements related to volume of coverage with respect to such products
– Reject a bid if the bidder does not demonstrate its ability to furnish such products in a manner consistent with its bid
– Establish a process to monitor the extent to which an entity continues to cover the product types included in its bid

The Centers for Medicare and Medicaid Services (CMS) may terminate a contract if it determines that an entity, for reasons other than product discontinuation or market-wide shortage, fails to maintain ready access to such products included its bid. Additionally, the bill specifies that an entity furnishing such products to beneficiaries under the program: (1) must furnish to each beneficiary a brand of strips that is compatible with the beneficiary’s home blood glucose monitor, (2) may not attempt to influence or incentivize a beneficiary to switch the brand of either type of product, and (3) must contact and receive a request from a beneficiary no more than 14 days prior to dispensing a refill to the beneficiary.

H.R. 1617 titled the Promoting Access to Diabetic Shoes Act proposes to permit nurse practitioners and physician assistants to satisfy the documentation requirement under the Medicare program for coverage of certain shoes for individuals with diabetes.

Lastly, there are more medical advances on the way to help combat diabetes. The Food and Drug Administration (FDA) has approved Medtronic’s “artificial pancreas” which is the company’s first hybrid closed loop system. The system is the first to both monitor blood glucose levels and adjust insulin levels for type 1 patients. This is all part of the FDA’s plan to encourage development of an artificial pancreas device system, an innovative device that automatically monitors blood glucose and provides appropriate insulin doses in people with diabetes who use insulin. These are devices only and not an actual synthetic pancreas.

The FDA has also approved two combination products that contain long-acting insulin and glucagon-like peptide 1 (GLP-1) receptor agonists. These are the first of their kind of once a day injections to combine these drugs.

Jardinance is the first diabetes drug to be approved for the reduction of risk of cardiovascular death in relation to diabetes. No other diabetes medication has been approved for any sort of cardiovascular benefit, while Basaglar is the first biosimilar of Lantus that has been approved by the FDA. This is not a generic and is not available to be switched out for Lantus by the pharmacist. A physician needs to prescribe it directly and there are no interchangeable biosimilars at this time.

In conclusion, we will wait to see what will happen with the shadow pricing issue as well as how Congress will deal with higher drug prices. Additionally, next year could possibly bring a smaller budget for Medicare and Medicaid further affecting patients with this chronic disease.

What are DIR Fees?

DIR fees and how specialty pharmacies can respond – Mediware Information System

Although Direct and Indirect Remuneration (DIR) Fees aren’t new, their application has been increasingly vague since they were introduced as a way to track the impact of rebates and price adjustments on Medicare Part D drugs. Unfortunately, the fees’ original intent has been obscured because DIR has become a catch-all for various fees charged by pharmacy benefit managers (PBM).

However, you have the ability to determine what charges can correctly be considered DIR fees. In addition, when incorrect DIR fees are levied, there are tools you can use to fight unjust charges.

Originally, DIR fees served a valid purpose—to address price concessions that ultimately impacted Medicare Part D drug costs but weren’t captured at the point of sale. Rebate savings must be passed from the PBM to the payer. Sometimes, pharmacists receive clawbacks from PBMs that masquerade as DIR fees. These fees, which are charged after the medication has already been dispensed, negatively impact pharmacies’ operating margins. You simply can’t plan for fees incurred after claim adjudication, and that raises uncertainties as you try to establish revenue projections and work within operating margins.

Counteract the unknowns with tools that help you plan for potential DIR fees prior to the point of sale. These are McKesson’s myHealthMart mobile app, which includes DIR estimator functionality, and AmeriSourceBergen’s DIR Fee Estimator tool, which is available to members of AmerisourceBergen’s pharmacy services administrative organization.

While flat dollar fees are standard in retail pharmacy, DIR fees are generally assessed as percentages in the specialty setting. Because of the high prices of specialty medications, PBMs may charge thousands of dollars for a single claim rather than the flat fee, which often ranges from $5 to $15.

Rather than accept these exorbitant fees, some pharmacies have chosen to take steps to fight back. Here are some steps pharmacies can use:
– Review contract terms, PBM performance metrics, and medication therapy management information to determine if the fees assessed are consistent with the standard operating agreement.
– Collect and aggregate historical data to create a compelling argument for your CMS regional offices. By showing a holistic picture of your organization’s lost revenue over time, you can show the harm DIR fees have caused your business. The goal isn’t to complain about monetary loss but to advocate for regulation that allows you to accurately anticipate future fee amounts.
– Diversify your services to include more options that do not incur DIR fees, so, with fewer unknowns, you can more easily plan your business’ financial future.

Contact us today for more information about fighting DIR Fees.

Allergan’s Social Contract May Have Changed The Drug Price Debate

As our specialty drug supply chain continues to get more sophisticated and newer drugs produce more effective patient outcomes, we continue to witness the philosophical tug of war between manufacturers and payers over costs. This contentious fight has indirectly brought to light examples of extreme drug price increases within the specialty sector.

We all remember Turing Pharmaceuticals, who became the prime example of excessive price increases when the company’s CEO, Martin Shkreli, made a controversial decision to increase the price of the drug Daraprim from $13.50 to $750 overnight—after Turing acquired the rights to the drug. This represented an increase of more than 5000%.

Since 2015 we have witnessed policymakers become a lot more aggressive in trying to oversee how much of a price increase in medications is appropriate. Thus far we have seen several Congressional pricing hearings involving both brand and generic manufacturers, increased chatter of fighting price increases via importation and Medicare negotiation, a new Drug Competition Plan from a now active FDA Administrator, to the possibility of solving this issue with an Executive Order. Even with all these policies being discussed, future increased drug spending shows no signs of slowing. Express Scripts; the nation’s largest pharmacy benefit manager’s 2016 Drug Spend Report has forecasted the following trends for 2017-2019.

– Overall annual drug spending to increase 10% to 13% over the next three years, net of rebates
– Trend will remain around 30% year over year through 2019 for inflammatory conditions, reflecting expected increases in both cost and utilization
– The forecasted diabetes trend of 20% reflects continued cost and utilization trend for insulins, as well as increased utilization of DPP-4 and SGLT2 inhibitors, which are prescribed as additive therapy for controlling blood sugar
– The use of oncology medications by patients as maintenance therapy will result in increased utilization of expensive medications, and a forecast of 20% trend through 2019. Additionally, the increasing prevalence of self-administered oncology medications will lead to higher utilization and cost through the pharmacy benefit.
– Spend for hepatitis C will continue to decline, though not as sharply as in 2016. Current and future hepatitis C patients will benefit from increased access to these therapies and unit cost decline.

One has to wonder where this debate would have been had it not been for Allergan’s industry changing announcement. On September 6, 2016, CEO Brent Saunders published a blog post titled “Our Social Contract With Patients,” outlining his company’s new pledge against dramatic prices. In vowing to maintain a fair pricing policy, he explained that the company would be limiting annual price hikes to single digit increases and says that increases will not happen without a significant increase in costs as products near patent expiration. Soon after, Allergan was followed by Novo Nordisk and Abbvie in making similar announcements, along with other manufacturers who began to disclose policies intended to be more transparent about drug costs.

While Allergan’s blog post was not likely a silver bullet for resolving this complicated issue, it may have opened the door to much needed insight about how products are priced. At this point it may also be too early to tell the aftermath of such an industry changing announcement. This type of disclosure will likely be helpful as policymakers continue to closely monitor developments around drug prices.

In closing we live in a world of active policymakers. In order to thrive in this type of environment, your organization should be willing to embrace strategic consulting along with utilizing government affairs to help ensure that your long term strategies remain in place. Contact us to learn more about how our innovative solutions can help you stay ahead of the competition.

Medicare Part B: The Home Infusion Switch To ASP and What is Next

Part B

At the end of last year there was a significant switch for home infusion from AWP to ASP + 6 in Medicare Part B. This switch happened through the Cures Act which also created a mechanism for a special home infusion service payment. In order to pay for this new payment, CMS urged Congress to change the AWP payment for home infusion drugs to the industry standard of ASP +6. Doing so created smaller payments for home infusion and the switch was effective in 2017. The service payment will not be in effect until 2021. There is legislation currently in Congress that addresses the gap before the service payment is effective.

The House of Representatives has passed the Medicare Part B Improvement Act of 2017 (H.R. 3178) which would create a temporary transitional payment, beginning January 1, 2019, for services related to Medicare Part B Durable Medical Equipment (DME) infusion drugs before a permanent payment structure, that was part of the 21st Century Cures Act, is finalized in 2021. The bill is currently in the Senate.

H.R. 3163, introduced by Health Subcommittee Chairman Pat Tiberi (R-OH) and Rep. Bill Pascrell (D-NJ), creates a transition payment for home infusion therapies for Medicare beneficiaries to ensure there is no gap in care.

It is not clear when this legislation will take the next step forward. CMS may lag behind the 2021 deadline in creating regulations for the service payment. Additionally, Congress may be preoccupied with the debt ceiling debate that could further delay the legislation. If you have questions, contact us today.

Accreditation Commission for Health Care Webinar Presented by Frier Levitt Government Affairs

We are pleased to announce our new August 22nd 2-3 EST webinar through the Accreditation Commission for Health Care (ACHC) titled Retail to Specialty: How Legislative and Regulatory Issues Affect Drug Reimbursement.

As the prescription drug market becomes more sophisticated, patients, PhRMA and payers will rely more on the expertise of a community pharmacist. Consequently, the pharmacists must also continue to evolve in order to remain competitive and service biological products as well as be familiar with a rapidly changing reimbursement environment. Participants will learn the following in this presentation:
Discover what is happening in the specialty drug market
Learn how payers are reimbursing pharmacies that are expanding to serve specialty patients
Become familiar with the necessary accreditation
Learn suggestions about what disease states to start with
Understand the current state and federal policies surrounding specialty medications