New York State Senator James Skoufis, Chair of the Senate Committee on Investigations & Government Operations, in coordination with Senator Gustavo Rivera, Chair of the Senate Committee on Health, has released the Final Investigative Report: Pharmacy Benefit Managers in New York. The report comes after the Committee opened an investigation into the practices of Pharmacy Benefit Managers (PBMs) in New York State in January 2019.
Some key findings of the report include:
• One of the key mechanisms by which PBMs generate revenue is through spread pricing • The lack of transparency and oversight of PBMs has created an environment in which PBMs are able to engage in self-dealing to the detriment of consumers across New York State • New York State must take immediate action to regulate the practices of spread pricing, MAC appeals, mail order operations, and reimbursements • The New York State Comptroller should perform a full audit of all dollars paid to PBMs via spread pricing
Legislative recommendations provided by the report include:
• Regulate the practices of spread pricing in all pharmacy benefit contracts • Enhance the transparency of MAC appeals • Require the licensing and registration of PBMs to enhance accountability and oversight by instituting a fiduciary duty for their clients • Prohibit PBMs from mandating that patients use specialty and mail order pharmacies • Providing for the adequate and transparent reimbursements for pharmacies • Require PBMs to pass-through all discounts or rebates received from drug manufacturers to its Medicaid managed care clients
This is definitely not the last time New York, or any other state, will develop policies to help regulate abusive PBM practices. Frier Levitt Government Affairs (FLGA) is constantly monitoring new state PBM policies and working with pharmacy stakeholders nationwide to have their voices heard. Contact FLGA today to learn more about getting involved.
Over the last week, three states- Alabama, Illinois and Louisiana- sent legislation to their respective Governor’s to sign aimed at fighting back against Pharmacy Benefit Managers (PBMs). Highlights of the pending legislative bills include:
Effective January 1, 2020, a PBM must be licensed by the Commissioner. The legislation also prohibits gag clauses. Furthermore, a health plan may not include a provision that requires an enrollee to make a payment for a prescription drug at the point of sale in an amount that exceeds the lessor of:
1. the contracted co-payment amount; or 2. the amount an individual would pay for a prescription if that individual were paying with cash.
This bill states that a contract between a health insurer and PBM must:
1. Require the PBM to update maximum allowable cost pricing information and maintain a process that will eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data 2. Prohibit the PBM from limiting a pharmacist’s ability to disclose the availability of a more affordable alternative drug 3. Prohibit the PBM from requiring an insured to make a payment for a prescription drug in an amount that exceeds the lesser of the applicable cost-sharing amount or the retail price of the drug
• Prohibits PBM spread pricing unless the PBM provides written notice consisting of spread pricing transparency to the insurer • Provides the Board of Pharmacy with PBM oversight • Requires PBM licensure • Strengthens maximum allowable costs (MAC) requirements • Creates a PBM monitoring advisory council • Prohibits unfair or deceptive trade practices by PBMs including prohibits them from patient steering to a PBM owned pharmacy without disclosure and prohibits penalizing beneficiaries or inducing them to use a pharmacy that is PBM owned • Prohibits retroactive denials or reductions in pharmacy claims that have already been approved by the PBM
This legislation provides a model for other states on ways to combat abusive PBM tactics.
Frier Levitt Government Affairs (FLGA) monitors new legislative developments for pharmacy stakeholders and provides tools to help keep them “in the know.” Contact FLGA today to learn more about new legislative developments and for help preparing legislation that will get you back on track to attaining a level playing field for your respective state(s).
Senators Alexander (R-TN) and Murray (D-WA) of the U.S. Senate Health, Education, Labor and Pensions Committee, have introduced the introduced the Lower Health Care Cost Act as their proposal to decrease health care costs. This large piece of legislation will address issues such as surprise medical billing, prescription drug prices, and vaccine hesitancy.
The bill addresses patent protections to open markets to generic medications. In addition, the bill tackles PBM business practices by requiring PBM transparency through mandated quarterly reports from PBMs regarding fees, costs, and rebate information, as well as limits their spread pricing practices.
Senator Alexander has stated his desire for the bill to get to the Senate floor by July 2019.
With laws and regulations changing all the time, it is imperative for healthcare and life sciences stakeholders and organizations to be proactive instead of reactive.
Frier Levitt Government Affairs (FLGA) offers a hybrid service flexible with an organization’s changing needs. FLGA monitors and forecasts issues of importance for healthcare and life sciences stakeholders, including state and federal legislation and regulation, all presented in a concise, easy to understand and time friendly format. FLGA’s monitoring and forecasting services allow stakeholders to stay educated and engaged on new developments before the trends become mainstream.
Contact FLGA today to get “in the know” and start preparing for the changes ahead.
A coalition of over 40 state attorneys general and Puerto Rico have filed a federal lawsuit in Connecticut against several of the largest generic drug manufacturers as the coalition alleges the defendants conspired to manipulate prices for more than 100 prescription drugs that target chronic disease states such as HIV, diabetes, oncology and arthritis.
According to the lawsuit, the AGs reference how the generic pharmaceutical industry has a “fair share” agreement where they have “operated pursuant to an understanding among generic manufacturers not to compete with each other and to instead settle” for a fair share. “Rather than enter a particular generic drug market by competing on price in order to gain market share, competitors in the generic drug industry would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anticompetitively high prices.” In alleging industry discussion, negotiation and collusion among the industry over the years, the suit goes into describing Teva and other co-conspirators involvement.
Additionally, the AGs allege in the suit that, “At the zenith of this collusive activity involving Teva, during a 19-month period beginning in July 2013 and continuing through January 2015, Teva significantly raised prices on approximately 112 different generic drugs. Of those 112 different drugs, Teva colluded with its “High Quality” competitors on at least 86 of them (the others were largely in markets where Teva was exclusive). The size of the price increases varied, but a number of them were well over 1,000%.”
What is interesting about this case is that this is the second one in three years that has been filed in this investigation. The first lawsuit was filed in 2016 in the U.S. District Court for the Eastern District of Pennsylvania. According to the suit, “the defendant and co-conspirators knowingly entered into and engaged in a combination and conspiracy with other persons and entities engaged in the production and sale of generic pharmaceutical products, including doxycycline hyclate, the primary purpose of which was to allocate customers, rig bids, and fix and maintain prices of doxycycline hyclate sold in the United States. The combination and conspiracy engaged in by the defendant and co-conspirators was in unreasonable restraint of interstate and foreign trade and commerce in violation of Section 1 of the Sherman Act (15 U.S.C. § 1).” That case is still ongoing as two former manufacturer executives have entered into their respective settlement agreements and are cooperating with the investigating AGs.
In addition to the aforementioned lawsuit, Congress has been active on generic drug pricing. While the Senate Finance Committee has been holding a series of hearings with Pharmacy Benefit Managers (PBMs) and manufacturers, this March the House Energy and Commerce Committee held a hearing titled, “Lowering the Cost of Prescription Drugs: Reducing Barrier to Market Competition,” where several bills were heard whose objectives where to essentially create a more consumer friendly generic marketplace.
The issue of drug price is not going away anytime soon. Frier Levitt Government Affairs (FLGA) is uniquely positioned in being a hybrid company that gives you a complete perspective. FLGA educates manufacturers and other life sciences stakeholders on legal developments, tracks and consults on state and federal policymaking, and keeps them informed on marketplace changes. If you are a manufacturer or life sciences stakeholder looking to learn more about your competitors, how your market is going to look over the next few years, or whether you can take advantage of either a law or a rule where your product is concerned, contact FLGA to learn about the options available.
Earlier this month, Health & Human Services (HHS) Secretary Azar announced a final rule from the Centers for Medicare & Medicaid Services (CMS) requiring direct-to-consumer television advertisements for prescription pharmaceuticals covered by Medicare or Medicaid to include the list price – the Wholesale Acquisition Cost – if that price is equal to or greater than $35 for a month’s supply or the usual course of therapy. This policy comes from the American Patients First Blueprint to reduce drug costs.
Lately, the culprit behind higher drug prices has been sharply debated. Some in the manufacturing community point to two issues: better science and rebate pressure. Improved patient outcomes due to scientific advances justifies higher prices, especially since near curative prescription drugs lead to a possible decrease in future healthcare costs. Additionally, manufacturers have rightly been pointing to the pressures by PBMs to increase rebates or face the potential of having certain drugs either removed from the formulary or in the alternative, subjected to increased formulary competition.
While the life sciences industry understands the complexities surrounding drug prices, many state and federal policymakers do not. Hence, there have varied and sometimes disproportionate responses to higher drug prices, which may not solve the problem.
There are many opportunities for manufacturers on the state and federal level to help alleviate policymaker concerns about drug prices, while also helping to provide a grounded response to ensure a stable market that promotes patient access.
Frier Levitt Government Affairs is active on the state and federal level, including both legislative and regulatory developments concerning drug prices. If you are a manufacturer, contact Frier Levitt Government Affairs today for help maximizing your existing resources to get control of the growing drug pricing issue.
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
HHS Secretary Azar has proposed a new rule that will eliminate a Safe Harbor to the federal Antikickback 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. The move, while laudable, requires substantial input from stakeholders.
According to Secretary Azar, “This proposal has the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter, ever, and finally ease the burden of the sticker shock that millions of Americans experience every month for the drugs they need.” The 123-page proposed rule, however, does not address the impact on pharmacy reimbursement, the wholesale distributor model or manufacturer profits. CMS has traditionally left reimbursement rates largely to the “market forces” and has not weighed in on the diminishing pharmacy margins. This rule, if implemented without additional guidance, has the potential to further erode pharmacy margin caused by PBM spread pricing and to erode the margins of other stakeholders.
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.
All drug supply chain stakeholders should analyze HHS’s sweeping proposed industry change. The proposed rule currently has little, if anything, to address the impact on such stakeholders, making it imperative for stakeholders to participate in Secretary Azar’s request for comment. The deadline to submit comments to HHS is April 8, 2019.
Frier Levitt Government Affairs, LLC, along with the attorneys at Frier Levitt, LLC, has scoured the rule, and gathered feedback from stakeholders ranging from retail pharmacies, specialty pharmacies, chains, distributors, national associations of providers and manufactures. We have a strong understanding of the impact of the proposed rule and are working with stakeholders to avoid unintended negative consequences.
Public comment is being sought on the Institute for Clinical and Economic Review’s (ICER) recently posted draft protocol titled the “Unsupported Price Increase” (UPI) report. This report analyzes significant prescription drug increases and looks to determine whether or not 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 comment period closes on February 13, 2019.
ICER is an independent non-profit research institute that produces reports analyzing the evidence on the effectiveness and value of drugs and other medical services. They are quietly becoming a strong influential force on government policy. The recent announcement of ICER’s collaboration with the Department of Veterans Affairs (VA) Pharmacy Benefits Management (PBM) Services to support VA coverage and price negotiations with drug manufacturers makes it clear that their influence on drug pricing will only continue to increase in the future.
If you are a manufacturer, GPO, wholesaler or similarly situated life science or healthcare stakeholder, it is imperative that you participate to ensure having your voice heard. Contact Frier Levitt Government Affairs today for assistance in submitting your comments for this very important policy development before the upcoming deadline.