Thursday, September 22, 2016

A Review with Some of the Top GP Legal Experts

One of my favorite sessions each year at MDRP is the “fireside chat” with the lawyers that are experts in government pricing. (I’m still waiting for the fire, but there are probably building code restrictions on this.) What becomes evident is that even those with extensive legal training can often have a different opinion on one issue. This year, Rick Zimmerer (KPMG) lead the panel and it consisted of Alice Valder Curran (Hogan Lovells), William Sarraille (Sidley Austin), John Shakow (King & Spalding) and Jeffrey Handwerker (Arnold & Porter). Here are some of the “hot topics” covered in this year’s session:

Best Price – In CMS’ most recently issued FAQ’s, they addressed the question manufacturers have had for years – is Best Price available the best price achieved or offered. Unfortunately, the response by CMS did not provide much clarity. The perception by some on the panel was that CMS’ response was most likely about stacking of discounts but others felt it wasn’t so straightforward. All panelists agreed that manufacturers must make, and document, reasonable assumptions.

This led to the question as to whether or not manufacturers should submit reasonable assumptions to CMS. All panelists agreed that this is a good idea, at least when manufacturers are having to make a determination with the gray areas we have. John pointed out that a client recently was investigated for a False Claims Act and when they showed that they had reached out to CMS on four separate occasions and did not receive a response, the investigation appears to have ended.

The purchasing by non-DSH hospitals that are Covered Entities (CEs) are to be excluded from the calculations according to a couple on the panel but the other others. A very strict interpretation of the legislation probably indicates they should be excluded but different interpretations are possible and as with everything else, manufacturers should document their assumptions. 

The panel also discussed the lack of guidance from CMS regarding line extensions. It sounds like all, or at least a majority, of the panel members have clients who have submitted a request for an exception but none have heard back from CMS. There is also suspicion that the Mylan issue with the Epi-pen may be stalling this at CMS and the overall issue may be politicized now more than ever.

We have an upcoming election and drug pricing has been a hot topic in the media this last year. Additionally, we have had a busy year when it comes to regulations, guidance and even legislation. So, given this current environment, Rick asked the panel what they see as the single biggest issue. Alice stated the lack of definition for line extensions. John couldn’t get it to just one single answer as he thought there are two issues. First, the treatment of authorized generics in AMP and second, the reserves manufacturers have been carrying for PHS/340B overcharges, awaiting a mechanism from HRSA to provide the refund. Jeff identified the stacking of discounts in Best Price, especially with the consolidation within industry. Bill thinks the focus on pricing in the media and the poor image of the industry is an issue, especially as the DOJ attempts to find ways to affect drug prices and tie manufacturers’ actions to potential violations of the law.

As always, this session provided a lot of substance for manufacturers to discuss when they return to their offices. 

About the author: Katie Lapins has worked in the pharmaceutical and medical device industries in the areas of commercial and government contracting, compliance, finance, and sales operations for over 15 years. As a GP consultant, Katie’s areas of primary focus are audits/assessments, training, ongoing calculations, and policies/procedures. Katie is the principal/owner of Government Pricing Specialists, LLC which she started in 2010 to provide a cost-effective consulting option for manufacturers.

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