Tag: Pharmacy Benefit Managers

State AG Investigations Against Generic Manufacturers Demonstrate Drug Pricing Debate is Here to Stay

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.

CMS Issues New Guidance on Medicaid Spread Pricing to Attain Fairness Against PBMs

CMS has issued guidance for Medicaid Managed Care and CHIP health plans which clarify how current regulations require “spread pricing” to be accounted in the calculation of Medical Loss Ratios (MLRs), which according to CMS represents the percent of premium revenue that goes towards actual claims and activities that improve healthcare quality.

The guidance states, “CMS regulations require Medicaid and CHIP managed care plans to report an MLR and use an MLR target of 85 percent in developing rates. The 85 percent target means that only 15 percent of the revenue for the managed care plan can be for administrative costs and profits. CMS is concerned that some managed care plans are not accurately reporting pharmacy benefit spread pricing when they calculate and report MLRs.”

Spread pricing has been a negative PBM business practice against pharmacy reimbursement, primarily regarding generic prescription drugs. Several states, through auditor reports and legislative actions, are starting to see that pharmacy generic reimbursement is based on lower benchmarks that those used for Medicaid and CHIP managed care plans for the same medications.

CMS’ guidance states, “Spread pricing occurs when health plans contract with pharmacy benefit managers (PBMs) to manage their prescription drug benefits, and PBMs keep a portion of the amount paid to them by the health plans for prescription drugs instead of passing the full payments on to pharmacies. Thus, there is a spread between the amount that the health plan pays the PBM and the amount that the PBM reimburses the pharmacy for a beneficiary’s prescription. If spread pricing is not appropriately monitored and accounted for, a PBM can profit from charging health plans an excess amount above the amount paid to the pharmacy dispensing a drug, which increases Medicaid costs for taxpayers.”

Expect to see more regulation on spread pricing in the future. Louisiana’s Act 483 and Arkansas’ Act 994 have started to go after PBM spread pricing on their own, while there are many other pharmacies in other states that have not yet had legislative relief from spread pricing.

Frier Levitt Government Affairs, LLC (FLGA), working hand in hand with Frier Levitt, LLC, provides pharmacies with the appropriate legal recourse against unfair PBM business practices. FLGA can provide the strategic advice on how to get spread pricing legislation enacted into law in your state, while also offering you the lobbying tools to get it done. Contact Frier Levitt Government Affairs to get your voice heard.

Service Spotlight: Frier Levitt Government Affairs Gap Analysis

The first step to achieving effective change at a legislative and policy level is understanding where the current
weaknesses lie. To do this, any organization seeking to be a part of change must conduct a “Gap Analysis” as to the
existing laws and policy to better understands where to direct its efforts and “political capital.”

To assist with this process, Frier Levitt Government Affairs (FLGA) can perform a comprehensive Gap Analysis of a
state’s pharmacy and pharmacy benefits laws. This in-depth service will help organizations understand where it
may be missing an opportunity, while also providing you with a proactive solution.

As part of the Gap Analysis, FLGA provides a summary of where current laws stand on certain identified issues and
identifies weak areas within a state’s laws, as well as realistic opportunities for change/improvement, based off of
what has been recently enacted in other jurisdictions. When weaknesses or gaps are identified, FLGA provides a
“model bill,” containing suggested language that will be helpful in addressing each particular issue.

This “bill check” service process examines proposed or existing language, verifies the correct statute that the
language would be added to, and ensures that the language has been reviewed by healthcare attorneys with
extensive backgrounds in pharmacy and pharmacy benefits laws, making it applicable to an organization’s

FLGA’s comprehensive Gap Analysis of a state’s pharmacy and pharmacy benefits laws includes:

• Any Willing Provider Laws
• Maximum Allowable Cost (MAC) Laws
• Prompt Payment Laws
• Fair Pharmacy Audit Laws
• PBM Licensure Laws
• Direct and Indirect Remuneration (DIR) Fee Laws

Contact FLGA today to have a Gap Analysis of your organization’s state pharmacy laws.

Is Your State a “True” Any Willing Provider State?

Pharmacists and pharmacies nationwide are constantly fighting for network inclusion with Pharmacy Benefit Managers (PBMs) and various payors. One of the issues that has been frustrating the pharmacy community are the various interpretations from the PBM and payor community regarding how they read Any Willing Provider statutes vs. how the pharmacists read the law.

Status of Any Willing Provider Laws

This legislative session has seen two states address some form of expanded access for pharmacy: Oklahoma through SB 841 and Louisiana through SB 41. There are currently 26 states that have any willing provider laws that expressly applies to pharmacies. However, there are 10 other states that have Any Willing Provider laws, but they apply either generally to “providers” or are otherwise expressly limited to only certain types of providers which do not include pharmacies. Pharmacies should not assume that that they are covered just because their state has an Any Willing Provider law. Sometimes that may not be the case.

Pharmacies need to recognize whether their state is a “true” Any Willing Provider. Even if there is a law in place, often a state’s language can either be tightened or clarified. Frier Levitt Government Affairs (FLGA) works with pharmacies, pharmacy organizations, and other stakeholders regarding language to use to improve their position and opportunities regarding Any Willing Provider laws. Additionally, FLGA provides lobbying for stakeholders on the state level to help them get into more networks, reach more potential patients, and expand their margins.

Contact Frier Levitt Government Affairs today for help with Any Willing Provider laws and expanding more market opportunities.

CMS Makes Proposed Copay Accumulator Rule Final

In January 2019, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule titled, “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020,” targeting Accountable Care Organizations (ACOs), payers and Affordable Care Act (ACA) exchange stakeholders, with one component of the proposed rule focusing on copay accumulators. CMS has now finalized this proposed rule, allowing payers to implement copay accumulator programs to prevent the application of manufacturer coupons from applying to patient out of pocket costs.

Currently, copay accumulators are being implemented by insurance companies and Pharmacy Benefit Managers (PBMs), harming patient access. With this payor program, the value of copay assistance cards/coupons issued by manufacturers do not count towards out-of-pocket costs that are applied toward deductibles. The result has caused a cost shift onto consumers and away from employers and payers. Unfortunately, in the proposed rule, the Administration defends the use of copay accumulators.

In contrast, Arizona, Virginia, and West Virginia are leading the state legislative efforts this year to ban copay accumulator programs, although Arizona’s approach to this issue is much more measured.

CMS has stated that its final rule would apply to individual market, small, and large group and self-insured group health plans starting in 2020. The final rule is effective June 25, 2019 which will be sixty days from its April 25, 2019 publication date. There will be no further public comments taken for this rule.

States are currently trending against CMS’ position regarding copay accumulators. If you would like to target your state legislation, Frier Levitt Government Affairs (FLGA) can lobby state legislators to prohibit copay accumulator programs. Contact FLGA today to get started.

Take Action: New CMS Proposed Rule Targeting Manufacturers, Patient Assistance Programs, ACOs, Payers and ACA Exchange Stakeholders

The Centers for Medicare and Medicaid Services (CMS) has issued a new proposed rule targeting Accountable Care Organizations (ACOs), payers and Affordable Care Act (ACA) exchange stakeholders. The proposed rule, titled “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2020“, reflects a priority of the Administration around the Patient Protection and Affordable Care Act (PPACA) of reducing fiscal and regulatory burdens across various areas within the law. This proposed rule has several components that affect different stakeholders.

Manufacturers and Patient Assistance Program Stakeholders:

Copay accumulators are being implemented by insurance companies and Pharmacy Benefit Managers (PBMs), harming patient access. With this payor program, the value of copay assistance cards/coupons issued by manufacturers do not count towards out-of-pocket costs that are applied toward deductibles. The result has caused a cost shift onto consumers and away from employers and payers.

In this proposed rule, the Administration defends the use of copay accumulators stating:

“The availability of a coupon may cause physicians and beneficiaries to choose an expensive brand-name drug when a less expensive and equally effective generic or other alternative is available. When consumers are relieved of copayment obligations, manufacturers are relieved of a market constraint on drug prices which can distort the market and the true costs of drugs. Such coupons can add significant long-term costs to the health care system that may outweigh the short-term benefits of allowing the coupons, and counter-balance issuers’ efforts to point enrollees to more cost-effective drugs.”

“We propose, for plan years beginning on or after January 1, 2020, notwithstanding any other provision of the annual limitation on cost sharing regulation, that amounts paid toward cost sharing using any form Start Printed Page 291of direct support offered by drug manufacturers to insured patients to reduce or eliminate immediate out-of-pocket costs for specific prescription brand drugs that have a generic equivalent are not required to be counted toward the annual limitation on cost sharing. Not counting such amounts toward the annual limitation on cost sharing would promote: (1) Prudent prescribing and purchasing choices by physicians and patients based on the true costs of drugs and (2) price competition in the pharmaceutical market.”

Participating in this proposed rule is crucial for manufacturer and patient assistance programs to maintain patient access and stop unnecessary risk shifting from occurring in consumer spending.  We can help advocate your concerns.

ACOs, Payers and ACA Exchange Stakeholders:

Specifically, the proposed rule would set forth parameters and provisions related to the risk adjustment and risk adjustment data validation programs, cost sharing parameters, and user fees for Federally-facilitated Exchanges and State-based exchanges on the Federal Platform.

The proposal outlines changes that would allow greater flexibility related to the duties and training requirements for the Navigator program and proposes changes that would provide greater flexibility for direct enrollment entities, while strengthening program integrity oversight. Lastly, the proposal discusses policies that are intended to reduce the costs of prescription drugs. This includes proposed changes to Exchange standards related to eligibility and enrollment, exemptions, and other related topics.

The Administration has been making several changes to the ACA via regulation, as earlier Executive Orders described how regulatory changes would be used to make drastic reductions to the ACA. If you have an interest in the ACA or a direct one based off of an interest in the Exchanges, it is advised that you participate in this rule to ensure that your interests are represented. Not doing so will subject your organization to whatever policies may or may not arise from this rulemaking, potentially placing your organization and your priorities at a disadvantage.

Frier Levitt Government Affairs (FLGA) helps stakeholders comment on proposed regulations. FLGA understands the nuances around industry and has strategies that can help successfully communicate stakeholders’ positions to CMS.

The deadline to comment is February 19, 2019, so it is important that you contact Frier Levitt Government Affairs today to make sure your voice is heard.

Growing Trend Toward PBM Transparency Provides Opportunities for State Medicaid Directors

2018 was a key year for further shedding light on Pharmacy Benefit Manager (PBM) business practices. As state budgets continue to be squeezed and patient populations require more specialty care, state Medicaid Directors have an opportunity to pull back the curtain on PBMs and realize additional ways that your state can benefit from transparency.

An important lesson can be learned from Ohio’s 2018 successes. In a report to the Ohio Joint Medicaid Oversight Committee, the Ohio Auditor gave an overview of the audit of the state’s Medicaid program and its dealings with PBMs.
The report found:
∙ The “spread”- difference in dollar amount between what Plans pay to PBMs and what PBM pay to pharmacies- has been growing and hit its peak in the fourth quarter of 2017
∙ An overwhelming portion of PBM spread is occurring on generic drugs
∙ Spread pricing totals varied wildly from region to region
∙ There is a disconnect between the Medicaid drug spend and what PBMs reimburse to pharmacies
∙ Data confirms a high number of pharmacy closures amid reimbursement cuts
∙ Spread totals were highest on specialty drugs, which are typically dispensed at PBM-owned pharmacies

The Ohio audit report concludes that PBMs enjoyed an 8.8% spread on Medicaid beneficiary claims, yielding PBM profits in excess of $250MM—that’s just in Ohio state Medicaid. Ohio decided that it would no longer permit PBM spread pricing and now requires PBMs to have pass through model contracts.

Frier Levitt Government Affairs, LLC (FLGA) and Frier Levitt, LLC, have extensive experience working with Medicaid Directors and other stakeholders to provide money saving solutions against PBMs. For Medicaid Directors witnessing population growth, we can help unravel savings from complex PBM contracts and relationships. We can assist your state in reviewing your Medicaid contracts to determine if you are paying too high for negotiated items. We can also provide you with substantial education on the PBM business model with the goal of saving your program much needed resources. Contact us today to put an end to questions and confusion and start requiring accountability from your PBM.