Friday, March 28, 2014

#GPSummit14: Day 2

Our live coverage from IIR's 6th Annual Government Programs Summit has been provided by Katie Lapins, Director, Huron Consulting Group and Lori Greene, Manager, Huron Consulting Group . 

Mike Borgia of Johnson & Johnson HealthCare Systems chaired the second day of the GP Summit and started the morning off by providing some insight gained over his last 30 years in the pharmaceutical and healthcare industries, including recent events like the Health Exchanges, coverage changes in Medicaid and Medicare, and Alternative Benefit Plans (“ABPs”) which offer a more narrow benefit that is similar to the health insurance marketplace.

The keynote address was given by Stan Dorn, Senior Fellow at the Health Policy Center of the Urban Institute (“Urban Institute”), and focused on the impact of Medicaid expansion on state budgets and state economic growth. Much to the surprise of many people, prior to the Affordable Care Act (“ACA”), Medicaid did not cover the majority of poor people in the U.S. This changed with the ACA and the states were given a lot of flexibility in how they accomplish this. As of late October 2013, 25 states and the District of Columbia are expanding Medicaid, 25 states are not. The Urban Institute simulated a model like the ones used by the Congressional Budget Office (“CBO”) and the U.S. Treasury Department (“Treasury”) to predict the effects of Medicaid expansion policies, exchange tax credits, and costs. Generally speaking, their results were similar to those of the CBO and Treasury. One key finding was that for many states not expanding Medicaid, especially those in the South, if they had done so, although they would have had an additional cost associated with the expansion, the amount they received in Federal funds would have more than offset the additional cost. The effects of Medicaid expansion include:

• Fewer uninsured residents;
• More federal Medicaid dollars;
• Significant effects on provide infrastructure (e.g., increased revenue offsets reimbursement cuts, taxes and fees used to fund ACA);
• Increased Medicaid enrollment raises state costs; but,
• Significant offsetting state fiscal gains are realized (e.g., savings from higher federal matching payments for some pre-ACA Medicaid eligibility groups, savings on non-Medicaid state healthcare spending, increased general and specific revenue).

So why have some states opted to not expand Medicaid? According to Dorn, in some states, the political impact to the incumbent elected officials would be detrimental.

Mergers, acquisitions, and the role of the GP professional in the pharmaceutical industry was the topic for the first panel discussion of the day. If you have been around the industry for any length of time, you are probably aware of the frequency with which drugs are sold to other companies, and the trend of mergers and acquisitions of product portfolios and entire companies. Historically, the GP component has been an afterthought in these types of events but in recent years, the GP function is becoming involved in the analysis and earlier in the process. Important considerations include not only the operational aspect (e.g., consistent methodology, data and system integration, and capacity and resources), but also the financial impact (e.g., baseline AMP, price changes and the impact of the inflation penalty on Medicaid rebates, PHS & FSS prices, commercial rebates, and reimbursement). Understanding the reason for the acquisition is often an important consideration. Is the goal to expand into a new therapeutic area, build a commercial operation, enter the U.S. market, or does management believe the product offers potential revenue opportunities not previously realized?

A second panel discussed the recent developments and impact of the split between Managed Care (“MCO”) Medicaid and Fee-for-Service Medicaid. With the ACA, some states have been shifting their prescription coverage to MCO Medicaid which was anticipated by the ACA. However, many states have continued with Preferred Drug Lists (“PDLs”) which was not anticipated. The primary reason provided is that Supplemental Rebates are not paid on the MCO Medicaid utilization.

The morning sessions on this second day were full of great insight, analysis, and opinions from a wide range of experts with significant experience in the U.S. healthcare system and Government Programs in particular.

Stay tuned for more coverage from day 2!

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