Tag: Specialty Pharmacy

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.

CMS Permits Use of Step Therapy for Part B Drugs with Medicare Advantage Plans Affecting Physician Dispensing and Specialty Pharmacy Patients

The Centers for Medicare and Medicaid Services (CMS) recently announced a new policy affecting Medicare Advantage plans, specifically those Medicare Advantage beneficiaries who rely on prescription drugs from Medicare Parts B and D. This new CMS guidance effective, January 1, 2019, permits MA plans to use “step therapy” for Part B drugs as part of a patient-centered care coordination program. Simply put, step therapy would require physicians to write prescriptions for a less expensive alternative drug and see if it succeeds or fails before writing for some additional expensive medications. In what will likely end up resulting in unnecessary costs and delays many providers including national oncology organizations have publicly criticized the guidance as removing patient and physician choice and harming individualized treatment.

Not surprisingly, the PBM lobbying group, Pharmaceutical Care Management Association (PCMA), has publicly favored the guidance. The big three PBMs have common ownership with MA Plans. The new rule will allow Part D plans the ability to cross-manage drug decisions across Part B and Part D. Instead of a physician choosing what drug to prescribe, the PBM would decide through Step Therapy. Under the previous CMS rule, PBMs had little control over Part B drugs—that was the domain of physicians.  The new rule will embolden the PBMs’ ability to control dispensing with step therapy; will enable PBMs to control formulary design, thus allowing them to secure even greater “rebates” from manufacturers and better spread pricing. PCMA called for this rule change in its July 16, 2018 Statement to Secretary Azar regarding the American Patients First: Blueprint to Lower Drug. Unfortunately, the consequence of this rule will be to increase the list price of drugs and patient copayment, particularly for those suffering from serious disease states.

The issue for the industry now is how to deal with the possibility of higher out of pocket costs, uncertain patient outcomes and unnecessary interference with the doctor patient relationship. The first piece of advice for Part B and Part D providers is to be vigilant in your response to the increasingly utilized Request for Information (RFI). The Request for Information is a method that agencies extend to interested stakeholders to identify issues of concern to the industry that could be technical in nature. It is strongly encouraged that you reach out to agencies offering RFIs such as this would could help avoid policy changes that hurt patient care and provider autonomy.

Over the last 12 months, CMS has increasing relied on the issuing of Requests for Information (RFIs). An RFI is part of the rulemaking process wherein an agency, such as CMS, proposes a rule or policy that it is looking to either add or change. Proposed rule announcements are usually followed by a “comment period”, public workshops/hearings, a final comment period and then a final rule with effective date. The RFI process provides opportunities for industry stakeholders, including national associations, to comment on the technical aspects of a proposal. However, the Administration is using agencies like CMS to distribute RFIs as a way for the industry to guide the conversation on what should be included. This could provide your organization with another way to influence policy.

It is clear that the pace of federal and state government policy making in the healthcare and life sciences spaces has quickened and continues to raise the stakes for market participants. Frier Levitt Government Affairs, LLC, along with legal insight from Frier Levitt, LLC, helps physician dispensers and specialty pharmacies navigate market and policy changes and helps provide the necessary tools to stay ahead. 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

Is Amazon Primed to Disrupt Specialty Pharmacy?

The following is an excerpt from our cover story printed in Specialty Pharmacy Times. Republished with persmission.

Co-Written by Ron Lanton, III, ESQ, Frier Levitt Government Affairs, and Victor Morrison, Next IT Healthcare

July 28, 2017

WHAT IF YOU AWOKE TO THIS HEADLINE? “Amazon Acquires Specialty Pharmacy”

Graduate pharmacy class: circa 2030.

“Good morning, class! Today, we will be doing a case study on specialty pharmacies, starting with their early success introducing a disruptive new service model to accommodate the influx of biologics in the 1990s and early 2000s and then moving on to how, like Kodak, Blockbuster Video, and countless others, they didn’t recognize the implications of emerging digital technologies and were made obsolete by 2025. Let’s get started. Alexa, please project case study 124 onto the center screen.”

This scenario is real, and other industries offer many examples of the dire consequences of digital disruption. With shrinking margins, a dated focus on incremental platform improvements, the increasing desire of consumers for digital self-service, and heavy strategic reliance on human resource–dependent call centers, specialty pharmacies are facing significant and likely fatal disruptions as they enter the crosshairs of technology.

Clinging to a strategy that dictates that high-touch models are the only way to remain viable, most specialty pharmacies have no strategic clarity to support the critical move to digital and mobile health (mHealth) engagement.

A quick survey of the current specialty pharmacy digital landscape indicates that most websites are still glorified business cards and mHealth is the elephant in the room, getting little more than lip service. With a glaring lack of digital engagement options for consumers, specialty pharmacies are still spending significant organizational energy utilizing unscalable call center resources to chase down patients for onboarding, adherence interventions, refills, etc.

Enter Amazon, the most technologically advanced, consumer-centric digital retail distribution organization in the world. With Amazon, you have an entity in prime (pun intended) position to disrupt the specialty and/or retail pharmacy industry.

How difficult would it be for Amazon to buy a small specialty pharmacy licensed in all 50 states and leverage their advanced distribution system and consumer relationship platforms to create an unprecedented ability to deliver specialty pharmacy services and therapies at scale?

Their Alexa, Echo, and Dot conversational user interfaces, synchronized with their ubiquitous Kindle smart devices, could very effectively engage patients, answer questions 24/7, enable the collection of real-time clinical insights, and drive adherence/refills with real-time interventions.

With traditional call center costs dramatically reduced by Amazon’s ability to deliver a pervasive front-end engagement channel for millions of patient relationships by using technology, the ability to compete for payer contracts and deliver more lucrative pharma services at a lower cost would be unprecedented.

By disrupting the current limited-scale high-touch model with an infinitely scalable smart-touch technology-dependent model, Amazon could leverage remote-monintoring devices, artificial intelligence-powered conversational user interfaces, behavior-based real-time virtual coaching, and a low-cost optimized call center to deliver personalized and holistic daily engagement at any point during the patient’s clinical journey at an extremely low price point.

The smart touch approach would trigger a transformative move from traditional call centers that support adherence to a monthly therapy to an unlimited digital engagement platform that will uncover unprecedented real-time data insights and enable optimized adherence to the right therapy.

What is the Current Status of the Comprehensive Care for Joint Replacement Model (CJR)

Joint Replacement

On July 25, 2016, the Department of Health and Human Services (HHS) released its proposed new models that demonstrate the Administration’s continued transition from quantity into quality of care. In this case, HHS was proposing incentives for hospitals to improve patient outcomes at a reduced cost to the healthcare system. The proposal, titled Medicare Program; Advancing Care Coordination Through Episode Payment Models (EPMs); Cardiac Rehabilitation Incentive Payment Model; and Changes to the Comprehensive Care for Joint Replacement Model (CJR), seeks to have hospitals collaborate with other providers in order to prevent hospital patient readmissions and avoid costly complications. On May 19, 2017, CMS announced that it is delaying the start date of this program to January 1, 2018 to allow additional time to prepare. For those that are wondering what this rule is, we figured we would outline what was previously proposed.

When it comes to the cardiac rehabilitation services of the proposal, CMS seeks to accomplish a few things. First, this will be geared toward patients that have been “hospitalized for a heart attack or bypass surgery, which would be based on beneficiary utilization of cardiac rehabilitation and intensive cardiac rehabilitation services in the 90-day care period following hospital discharge.” Secondly, CMS discussed model specifics. Hospitals may use this incentive payment to coordinate cardiac rehabilitation and support beneficiary adherence to the cardiac rehabilitation treatment plan to improve cardiovascular fitness. These payments would be available to hospital participants in 45 geographic areas that were not selected for the cardiac care bundled payment models as well as 45 geographic areas that were selected for the cardiac care bundled payment models. This test will cover the same five-year period as the cardiac care bundled payment models. Standard Medicare payments for cardiac rehabilitation services to all providers of these services for model beneficiaries would continue to be made directly to those providers throughout the model.

CMS proposes establishing a two-part cardiac rehabilitation incentive payment that would be paid retrospectively based on the total cardiac rehabilitation use of beneficiaries attributable to participant hospitals

  1. The initial payment would be $25 per cardiac rehabilitation service for each of the first 11 services paid for by Medicare during the care period for a heart attack or bypass surgery
  2. After 11 services are paid for by Medicare for a beneficiary, the payment would increase to $175 per service paid for by Medicare during the care period for a heart attack or bypass surgery

Based on Medicare coverage, the number of cardiac rehabilitation program sessions would be limited to a maximum of two one-hour sessions per day for up to 36 sessions for as many as to 36 weeks, with the option for an additional 36 sessions over an extended period of time if approved by the Medicare Administrative Contractor. Intensive cardiac rehabilitation program sessions would be limited to 72 one-hour sessions, up to six sessions per day, over a period of up to 18 weeks.

According to HHS, cardiac care should be a great target for cost containment. In 2014, more than 200,000 Medicare beneficiaries were hospitalized for heart attack treatment or underwent bypass surgery, costing Medicare over $6 billion. But the cost of treating patients for bypass surgery, hospitalization, and recovery varied by 50% across hospitals, and the share of heart attack patients readmitted to the hospital within 30 days varied by more than 50 percent. And, while harder to quantify, patient experience also varies.

Note: The chart below shows the first nationwide prevalence study of hip and knee arthroplasty shows 7.2 million Americans living with implants

Source: Mayo Clinic

While this proposal is geared toward hospitals, specialty providers should take notice for three reasons.

  1. Since this rule was put into place by the Obama Administration, there is undoubtedly uncertainty with the Trump Administration as far as whether this rule will survive intact. One certainty is that cost in this sector must be controlled and specialty has tools to help.
  2. Proposals such as these represent an opportunity for specialty. Since your business model is about helping patients improve outcomes, your unique position in the supply chain places you at the center of payer, provider, and manufacturer strategies
  3. Because many of the patients you treat may have underlying chronic conditions, cardiac issues may be among those you have to combat and knowing how HHS plans to reimburse this particular disease state will be key for your profitability.

Gone are the days in which providers can operate in a fee-for-service reimbursement silo. Now providers must adapt to working with each other in order to demonstrate value and maintain network viability. If you are looking for assistance in realizing how your firm can capitalize on policy and marketplace changes either by lobbying and advocacy or by simply needing to know how to advance your priorities regardless of what is happening, contact us.

The Current State of Biosimilars

current state of biosimilars

With the continued policy dialogue of how rising drug costs impact patient access, the theoretical cost savings that biosimilar medications may offer have intrigued many. A recent IMS Institute Report found several interesting points regarding the potential of biosimilars:

• By 2020, biosimilars will start competing with original biologics that currently have sales of $50 billion annually.
• Biosimilar use in the European Union and United States may yield total savings of $56 to $110 billion over the next 5 years.
• Within three years, 8 major biologic medicines are expected to lose exclusivity protection, including treatments for autoimmune disorders and diabetes.
• Health care systems, by opening markets to biosimilar competition, could realize a 30% reduction in price per treatment day compared with originator biologics.1

While biosimilars have the potential to slow the dramatic rise in the overall drug spend, many questions remain about what biosimilars are, how they will get to market, and whether they will be fully integrated into our health care system. This article will examine the basics of biosimilars and shed insight into the latest discussions surrounding this topic.

The first question to ask is what is a biosimilar? A biosimilar is a biological product that is approved based on demonstrating that it is highly similar to an FDA-approved biological product—known as a reference product—and has no clinically meaningful differences in terms of safety and efficacy.

Only minor differences in clinically inactive components are allowable in biosimilar products. The concept of a biosimilar originated under the Biologicals Price Competition and Innovation Act of 2009, and was enacted by the Patient Protection and Affordable Care Act in early 2010. This legislation created an abbreviated licensure pathway for biological products deemed biosimilar or interchangeable with an FDA-licensed biological product.2

There is a common misconception that biosimilars are classified informally as generics, but the FDA said this is not true. “Generic drugs are copies of brand-name drugs, have the same active ingredient, and are the same as those brand name drugs in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. That means the brand name and the generic are bioequivalent.

Biosimilars are highly similar to the reference product they were compared with, but have no clinically meaningful differences in terms of safety, purity and potency from the reference product,”2 the FDA noted in a biosimilar consumer guidance. Interchangeability is among the hot topics surrounding biosimilars.

An interchangeable biological product must not only be shown to be biosimilar to the reference product, but the sponsor also must demonstrate that the proposed interchangeable product is expected to produce the same clinical result as the reference product in any given patient. Additionally, when a product will be administered more than once to an individual, the sponsor must also demonstrate that the risk (in terms of safety or reduced efficacy) of alternating or switching between use of the proposed interchangeable biological product and the reference product is not greater than the risk of using the reference product without such a switch.2

In an industry guidance for biosimilars, the FDA notes that to have a product evaluated as a biosimilar, manufacturers must submit a 351(k) biologics license application (BLA) that includes data showing biosimilarity based on analytical studies that demonstrate the biological product is “highly similar” to the reference product, besides minor differences in clinically inactive components; animal studies that include a toxicity assessment; and clinical studies that demonstrate the biosimilar is safe and effective in 1 or more of the conditions that the reference product was approved for.3

Recently, the FDA released new guidance on interchangeability, titled “Considerations in Demonstrating Interchangeability With a Reference Product.” The guidance expands on the FDA’s current stated positions governing interchangeability by recommending that sponsors submit data from a switching study, or studies, to the agency in order to deem a biosimilar interchangeable.4

The regulatory arena is not the only forum shaping this debate. While it is too early to tell how the Trump administration and the 115th Congress will handle biosimilars, the 114th Congress was busy laying the groundwork for future discussions surrounding this issue. Legislators have considered ways to speed generics to market, considered alternatives to reduce market exclusivity time for biologics, and passed the 21st Century CURES bill, which seeks to get innovative products to patients faster.

Even the Medicare Payment Advisory Commission continues the debate over how to pay for these products through its discussions on the future of the Average Sales Price metric. State legislatures have also been active over the last 4 years, in which at least 36 states have debated legislation establishing varied standards for substituting a biosimilar product as a replacement for an original biologic.

Notwithstanding the advancements discussed thus far, US biosimilar policy still has a long way to go before it is fully developed. Along with recently released CMS guidance documents on biosimilar reimbursement, the FDA guidance on labeling, and the FDA’s approval of 4 biosimilars within the last 2 years, there are still a number of significant unknowns.

First, will the payer community see biosimilars as a way to lower drug costs, since it is not necessarily a given that biosimilars will be cheaper than the biologic?

Second, will the prescribing community feel comfortable enough to prescribe these new products?

Third, will patients be willing to accept biosimilars? Finally, and most importantly, what role will the US Supreme Court play? On April 26, the court will hear arguments in a case between Amgen and Sandoz where 2 critical questions will be asked:

1. Must there be FDA approval before providing the brand with a 180-day notice of intent to market?
2. Is the patent-sharing process required?

If both questions are answered in favor of Sandoz, we can expect biosimilars to come to market faster than previously expected.


1.      IMS Health: Surge in Biosimilars to Drive Significant Change in Health System Costs, Patient Access and Competition by 2020, March 2016.
2.      U.S. Food & Drug Administration information for Consumers (Biosimilars),
3.      Ibid.
4.      Ibid.
5.      U.S. Food & Drug Administration Information for Industry (Biosimilars)
6.      U.S. FDA Guidance titled Considerations in Demonstrating Interchangeability With a Reference Product

Should Specialty Pharmacy Look at Mobile Health?


Mobile health is an emerging area where we hear about the increasing possibilities of reducing costs and achieving greater patient engagement. Right now, there are over 97,000 health and wellness mHealth apps, as the projected revenue for mHealth in 2017 is $26 billion. Additionally, 93% of physicians believe mHealth apps can improve patient health. However, with fitness apps, electronic health records and the of greater utilization of telemedicine, the question that many are asking is what is mobile health?

To date, there is no standardized definition of mobile health or mHealth as its generally referred to. Organizations like the World Health Organization (WHO) has previously referenced mHealth “as an area of electronic health and it is the provision of health services and information via mobile technologies such as mobile phones and Personal Digital Assistants,” while the NIH Consensus Group referred to mHealth as “the use of mobile and wireless devices to improve health outcomes, healthcare services and health research.”” Having no clear definition usually creates a wild west regulatory scheme.

Currently mobile health is overseen by three regulatory agencies:

FDA: The FDA’s position on mobile health is that is it “taking a tailored, risk-based approach that focuses on the small subset of mobile apps that meet the regulatory definition of ‘device’ and that: are intended to be used as an accessory to a regulated medical devices, or transform a mobile platform into a regulated medical device. For many mobile apps that meet the regulatory definition of a ‘device’ but pose minimal risk to patients and consumers, the FDA will exercise enforcement discretions and will not expect manufacturers to submit premarket review applications or to register and list their apps with the FDA. The FDA’s mobile medical apps policy does not regulate the sale or general consumer use of smartphones or tablets.”

FCC: “The Federal Communications Commission (FCC) regulates interstate and international communications by radio, television, wire, satellite and cable. The agency’s jurisdiction extends to non-Federal users of spectrum in the 50 states, the District of Columbia and U.S. possessions. The FCC manages Radio Frequency (RF) communications to ensure that RF devices operate efficiently and without interference. In the healthcare area, the FCC authorizes a wide variety of RF-based medical devices including both implanted devices and patient monitoring devices. It also authorizes carriers whose networks are used by a wide variety of mobile devices to access, store or transmit health information, and it establishes technical rules used by Wi-Fi and other similar networks.”

FTC: The Federal Trade Commission (FTC) protects consumers from fraudulent, unfair or deceptive acts or business practices. “The Federal Trade Commission has created a new web based tool for developers of health related mobile apps, which is designed to help the developers understand what federal laws and regulations might apply to their apps. The FTC developed the tool in conjunction with the Department of Health and Human Services’ Office of National Coordinator for Health Information Technology (ONC), Office for Civil Rights (OCR) and the Food and Drug Administration (FDA).

The guidance tool asks developers a series of high-level questions about the nature of their app, including about its function, the data it collects, and the services it provides to users. Based on the developer’s answers to those questions, the guidance will point the app developer toward detailed information about certain federal laws that might apply to the app. These include the FTC Act, the FTC’s Health Breach Notification Rule, the Health Insurance Portability and Accountability Act (HIPAA) and the Federal Food, Drug and Cosmetics Act (FD&C Act).

The guidance, which is maintained on the FTC’s website, links directly to each agency’s information about applicable laws. In addition, the FTC simultaneously released its own best practices guidance for compliance with the FTC Act, by building privacy and security into their apps.”

Where mHealth is concerned, it has focused on the claims companies have made about the effectiveness of their devices or apps. In late 2015 the FTC showed it becoming more aggressive in its oversight of mobile health that may cause confusion on who the lead regulator is in this field. The FTC settled with a California based app developer named Carrot Neurotechnology for $150,000. The company pledged that their Ultimeyes app improved visual acuity, but the FTC stated that the company’s “promoters did not have the scientific evidence to support their claims that the app could improve users’ vision. Health-related apps can offer benefits to consumers, but the FTC will not hesitate to act when health-related claims are not based on sound science.”

Why the FTC? This shows how there is a “wild west environment” that exists with no lead regulatory agency. There are many questions around why the FDA has remained silent. Some theories are that the FDA’s current regulatory structure has not caught up with a 21st century issue such as mobile health. Additionally, the FDA may not want to give the perception that it could stifle innovation. Whatever the case, we could get further clarity on who regulates mobile health with a new Administration.

On the legislative policy front Congress currently has a few bills on point.

  • S. 1101 titled the Medical Electronic Data Technology Enhancement for Consumers’ Health Act or the MEDTECH Act wants to exempt certain software that promotes healthy lifestyles from being classified as a medical device subject to FDA oversight.
  • H.R. 2396 titled the SOFTWARE Act sponsored by Congresswoman Blackburn (R-TN) is now part of the 21st Century CURES legislation. This bill seeks to define health software as software that does not acquire, process, or analyze data from an in vitro diagnostic device or signal acquisition system, is not an accessory or part of a medical device, is not used to prevent disease in the transfusion of blood and blood components. Health software is exempted from FDA oversight except for software that provides patient-specific recommendations and poses a significant risk to patient safety.
  • H.R. 5906 titled the Wi-Fi Capable Mobile Devices Act of 2016 directs the FCC to issue rules to ensure that providers of mobile broadband Internet access service supported through the Lifeline Assistance Program offer mobile devices that are capable of: (1) receiving Wi-Fi or other wireless broadband signals using unlicensed spectrum, and (2) sharing a mobile service connection with other compatible hardware or devices.

So, is mHealth something that specialty pharmacy can take advantage of? I believe so. First it would be best to be aware of some of the emerging mHealth technology to tell your patients as some approved products can have an immediate impact on their outcomes. For example, the Mount Sinai Health System in New York has launched an enterprise-wide platform for doctors to prescribe mobile health apps directly to patients. The platform called RxUniverse features a curated list of apps – pulled from the thousands of health apps available to consumers today – that have already been evaluated for their efficacy based on published literature. Israel-based medical device maker TytoCare has received FDA 510(k) clearance for its digital stethoscope, which pairs with a smartphone and allows users to examine the ears, throat, skin, heart, lungs and temperature. Data will be captured, stored and shared via a cloud-based telehealth platform with video conferencing. Examinations can be done in real time or in advance of a telehealth visit.

A second suggestion is to be aware of the continued emergence of telemedicine. Telemedicine is an area that has been grouped in with mobile health and has shown strong signs of momentum on both the state and federal level as policymakers recognize that telemedicine will help rural patients achieve greater access. Besides expanding the benefits of telemedicine to patients outside of rural areas and the eventual sorting out of licensure concerns, the only major roadblock that exists here is how are providers that engage in telemedicine going to be reimbursed?

Lastly, mobile health can help specialty pharmacies increase medication adherence. Per the Network for Excellence in Health Innovation, medication non-adherence costs our system $290 billion annually. We have seen patients today that are not only more tech savvy in that they own smartphones, tablets and other connected devices, but these patients are the more engaged than ever in trying to improve their own outcomes. By developing or utilizing apps, adherence tools or how to videos, you can help your patients achieve their personal goals but they key is to make sure that these digital resources are simple to use and provides the necessary incentives to keep your patients engaged long term. Contact us today for more information.

Three Current Oncology Conversations


According to the Centers for Medicare and Medicaid Innovation (CMS Innovation Center) “cancer diagnoses comprise some of the most common and devastating diseases in the United States: more than 1.6 million people and diagnosed with cancer each year in this country.” Of this statistic, the American Cancer Society estimates 595,690 will die this year. While these trends show us that more work is needed to improve patient outcomes in this disease state, it is encouraging to see increased conversations in both the news and policy realm about the need to confront this challenge and arrive at a positive solution. In recognizing the Specialty Pharmacy Times’ annual oncology edition, I thought it would be appropriate to examine three of the latest policy conversations involving oncology.

The first conversation involves cost containment. CMS surprised the industry with its March announcement of its Medicare Part B Payment Model otherwise known as the Part B demo. In this demo, CMS proposed a “two phase model that would test whether alternative drug payment designs will lead to a reduction in Medicare expenditures, while preserving or enhancing the quality of care provided to Medicare beneficiaries. The first phase would involve changing the 6 percent add-on to Average Sales Price (ASP) that we use to make drug payments under Part B to 2.5 percent plus a flat fee. The second phase would implement value based purchasing tools similar to those employed by commercial health plans, pharmacy benefit managers, hospitals and other entities that manage health benefits and drug utilization.” Physicians in phase 1 will be placed in groups based on their zip codes and will receive a flat fee of $16.80. Phase 2 is expected to limit a patient’s out of pocket cost sharing; however; details on this needs to be expanded on. If finalized, the model is expected to last five years.

The demo was a result of discussions that stemmed from the Medicare Payment Advisory Commission’s (MedPAC) investigation into physician reimbursement for oncology drugs. The Commission who is a nonpartisan legislative agency that provides Congress with policy recommendations on Medicare examined the ASP plus 6% model and were skeptical as they believed physicians could make more money by administering the more expensive product that may or may not have an improved effect on the patient’s outcome over the lower-priced drug.

While many groups have come out in opposition to the demo, Avalere has published a report that finds that the proposed Medicare payment changes for physician-administered drugs would reduce reimbursement for those that cost more than $480 per day in 2016. The analysis also shows that seven of the 10 drugs that constitute the largest reduction in reimbursement are used to treat cancer. Meanwhile, some primary care physicians, who tend to use lower cost drugs, would be paid more. At this point, it is unclear whether prescribers will be incentivized to fall in line with the goals of the demoand how this CMS proposal will coincide with the agency’s own five-year Oncology Care Model that will invest in physician-led practices who care for patients receiving chemotherapy.

The second policy conversation centers on the impact of waste. According to a March 2016 study titled Overspending driven by oversized single dose vials of cancer drugs, researchers at Memorial Sloan Kettering Cancer Center estimate that there is nearly $3 billion in wasted oncology medications. The study which analyzed the profits of drug manufacturers, oncology physicians and hospitals, examined the top 20 drugs for multiple cancer types packaged in single dose vials and for which the dose is dependent on the patient’s weight. “Based on the available vial sizes in the U.S., the researchers estimated that makers of those 20 drugs this year will receive an extra $1.84 billion from charges for unused medicine, or about 10 percent of their expected U.S. sales. Insurers and cancer patients will pay at least another $1 billion on unused medicine in 2016, based on the markups hospitals and doctors charge over a vial’s price every time they infuse patients with those cancer drugs, the researchers concluded.” The problem lies in the packages oftentimes containing more medication than patients need. While the obvious call to many is to require manufacturers to produce cancer drugs in different vial sizes, policy concerns such as scheduling for distribution to patients, as well as storage and handling requirements for oncology drugs that are biologics (products engineered from living cells compared to a chemically composed pills) remain.

The aforementioned report did not go unnoticed in the policy realm. Shortly after the release of the report, Senators Amy Klobuchar (D-MN) and Jeanne Shaheen (D-NH) wrote a letter to Food and Drug (FDA) Commissioner Dr. Robert Califf urging the FDA to examine the dosage size of cancer drugs. On the state level, while several state legislatures have for years attempted to create drug return, reuse and recycling laws, Washington state this spring has enacted legislation which seems to find a workable solution to cancer drug waste. HB 2458 was recently enacted and effective January 1, 2017, will allow cancer patients to donate their unused drugs to people in need that may not be able to financially afford it. The legislation could simultaneously reduce costs and improve patient outcomes.

The last policy conversation centers on one of many innovative policy solutions. Vice President Joe Biden (D-DE) has been personally invested in finding a cure for cancer as during recent budget negotiations, he lobbied for an increase in appropriations in cancer research funding as part of his pledge to find a “moonshot” to end cancer. During President Obama’s last State of the Union address, the President officially tasked the Vice President with overseeing his moonshot goal. With his last year in office as Vice President, Mr. Biden will be working to find federal funding to help in gene sequencing as well as trying to develop a data sharing program for researchers to communicate on different therapies.

Moonshot 2020 whose official name is the National Immunotherapy Coalition is a coalition being led by Patrick Soon-Shiong who is bringing together academia, insurers and competing drug and biotech manufacturers together to combine several immunotherapy treatments to overwhelm cancer cells rather than having these companies work in isolation. The plan is to make 60 novel and approved cancer therapies and enable rapid testing of new combination protocols.

According to the Coalition, the initiative aims to explore a new paradigm in cancer care by initiating randomized Phase II trials in patients at all stages in 20 tumor types in 20,000 patients within the next 36 months. All 20,000 patients will have their tumors genetically sequenced, and the plan is to create a patient registry where drug makers can search for specific patients that fit their trial criteria. These findings will inform Phase III trials and the aspirational moonshot to develop an effective vaccine-based immunotherapy to combat cancer by 2020.

In conclusion, these aforementioned policy discussions are a sample of many that are occurring in the United States as we look for out of the box thinking to confront the growing challenges within oncology. The road ahead is never smooth, but I like many take solace in the fact that the answer lies in the continued and tireless cooperation of government, academia and private enterprise. Contact us for more information.