Tag: Drug importation

Forecasting Alert: The Drug Rebate Rule

Posted on May 17, 2019 by - Government Affairs

Frier Levitt Government Affairs (FLGA) has been made aware of a recent CBO report regarding a proposed rule on Rebate Safe Harbor. Here is what stakeholder need to know:

What is the proposed rule and what does it do?

HHS Secretary Azar proposed a new rule that will eliminate a Safe Harbor to the federal Anti-Kickback Statute that provides legal protection for rebate arrangements allowing drug makers to pay PBMs to secure their drugs position on PBMs’ Medicare formularies. The goal of eliminating this Safe Harbor, and replacing with a new one, is to ultimately lower prescription drug prices for patients and Medicare and to upend the complicated structure for how drugs are priced. If passed, the proposed rule has the potential to dramatically impact pharmacies’ acquisition price and pharmacy reimbursement rates. It could also potentially alter distributor profit margins, as well as impact the commercial space.

In addition to eliminating the current Safe Harbor, the proposed rule also creates a new Safe Harbor protecting discounts offered to patients at the pharmacy counter and would also protect fixed fee services arrangements between manufacturers and PBMs. The impact of such fixed fee service arrangements is another aspect stakeholders must carefully consider.

What did the CBO Report Reveal About the Proposed Rule?

Earlier this month, the Congressional Budget Office (CBO) released its score of the proposal and found that the proposed rule would increase Part D premiums and federal spending by $177 billion between 2020 and 2029. Interestingly, CBO stated that it “expects that rather than lowering list prices, manufacturers would offer the renegotiated discounts in the form of chargebacks.”

Who is the CBO?

The CBO is a crucial and highly influential voice in determining how policy is developed by looking solely at the cost Congressional bill or a regulatory agency’s proposal. According to the CBO, the CBO since 1975 has been produced independent analyses of budgetary and economic issues to support the Congressional budget process. Each year the agency’s economists and budget analysis produce dozens of reports and hundreds of costs estimates for proposed legislation. The CBO is strictly nonpartisan. It conducts objective, impartial analysis and hires employees without inquiring about political affiliation. They do not make policy recommendations, and each report summarizes the method underlying the analysis.

Looking Forward

At this point the direction of the rebate rule is unknown. The comment period closed on April 8th and we are currently waiting for information from HHS. There are rumors on the Hill that due to the costs of this rule, there may be hesitation to continue forward with it. There has also been talk of a potential policy around out of pocket spending caps in Medicare Part D, as well as the discussion of drug importation in the wake of Florida’s latest legislative enactment.

With so much uncertainty in Congress and in the state legislature, it can be tempting to feel overwhelmed and not plan anything at all. While the status quo may feel comfortable, it will eventually change and you need to be ready. FLGA has its finger on the pulse of the various moving federal and state policy parts. Contact FLGA today to discuss the next steps for you or your organization.

Don’t Ignore the Steady Drumbeat of Drug Importation

Posted on March 14, 2019 by - Specialty Pharmacy

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.