Medicaid Drug Rebate Program Summit: A Final Review

For the last few years, the final session at the Medicaid Drug Rebate Program Summit (MDRP) has been handled by John Shakow (King and Spalding) who highlights many of the “hot topics” from the various presentations during the conference. This review gives a good overview of the key takeaways and is very helpful if you want to review any of the slides provided by the speakers from this last week. Some of the slides he referenced included:

All of Miree Lee’s Government Pricing Basics, since understanding the basics is critical for manufacturers to be able to understand the impact of anything discussed during the conference.

Elizabeth M. Wicyk-McGovern of Hospira discussed the requirements for manufacturers when it comes to 340B Ceiling Price reporting. One of her slides shows the complicated nature of the PHS/340B program and the way covered entities (CE) can order, such as through a GPO contract, at the 340B price, or for a non-340B outpatient, and how it has to all be tracked by the CE.

Jeremy Docken from Kalderos gave an outstanding presentation regarding duplicate discounts and managed markets. John found it difficult to identify a single slide as the entire presentation showed how there is still significant revenue leakage within the industry when it comes to the PHS/340B Program.

John Gould of Arnold & Porter gave a presentation regarding bundling and one slide especially highlighted the difficulty when durable medical equipment (DME) is involved. Of issue is how do you address GP concerns with a drug and a DME if the DME is free with a purchase, even if it’s required to dispense the product.

When it comes to Mergers & Acquisitions, Sanjida Chowdhury (Fresenius Kabi USA) and Kathleen Peterson (Hogan Lovells) not only gave a number of considerations regarding what to consider but also showed how dangerous it can be to blindly purchasing a company or even a product without doing the full due diligence.

All of the slides from Alice Valder Curran (Hogan Lovells) provided a great review of the current environment surrounding pharmaceutical manufacturers and pricing, including the political nature of what we do.

And John even mentioned his own slide on Puerto Rico and the Medicaid Program, showing how there remains a high level of uncertainty as to how this may impact manufacturers’ contracting strategies and bottom line.

This year’s MDRP was full of information for manufacturers and as always, there’s a lot going on in the government programs, so if you need help or are overwhelmed by all of the information, give me a call. I can help you figure out what is relevant and how to ensure you’ve fully and accurate implemented the Final Rule! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com.

Read more about MDRP 2016 here:

MDRP 2016 Pre-Conference, Track C: The AMP Final Rule
Track D: 340B Guidance for Pharmaceutical Manufacturers: Fundamentals, Operations, and Compliance
Drug Pricing is Today's Environment
MDRP 2016: Day One - Government Agency Sessions
A Review with Some of the Top GP Legal Experts
Farewell to 2016's MDRP Summit

MDRP 2016: Day One - Government Agency Sessions

The 2016 MDRP Summit is officially underway, and the theme of the morning was Government Agencies.  IIR always does an excellent job recruiting key members of the agencies with which we interact to provide updates and answer questions, and this year was no exception.  Sometimes these government updates take place at the end of Day Two, when we might not be quite as fresh or ready to absorb information as we would be, say, had we not spent most of the night in the lobby bar, so I really appreciated kicking Day One off with these detailed sessions.  No matter how much we read and dissect the statues, regs, and FAQs, there is no substitute for getting information directly from the horse’s mouth.  There is also the immediate gratification of standing up, asking a question, and getting an answer right away, as opposed to waiting months (or years) before our comments are addressed via rulemaking. 

This year’s Opening Keynote Address: A Conversation with Scott Gottlieb: Health Care Policy Winds in an Election Year: Payment, Reform, Data Sharing, and Patient Access was delivered by the aforementioned Scott Gottlieb, and covered in today’s Drug Pricing in Today’s Environment blog by Katie Lapins.  The keynote was followed by CMS Update: Update on the Final Regulation Implementation by John Coster, Director, Division of Pharmacy, CMS.  John, who called in remotely, covered CMS’ talking points on the AMP Final Rule, and opened the floor up to questions – a move he may have regretted after he was subjected to cross-examination on Puerto Rico’s Departamento de Asuntos del Consumidor (DACO) program by John Shakow, Partner at King & Spalding.  Finally, Commander Krista Pedley, Director, Office of Pharmacy Affairs (OPA), Health Resources and Services Administration (HRSA), delivered her annual HRSA 340B Update, which included information on the Audit Plan, and a Q&A session where some attendees expressed their concerns about elements of the 340B program. 

Following the agency sessions, Alice Valder Curran, Partner, Hogan Lovells presented a much-anticipated session entitled Oversight: Time to Get Ready.  Alice’s presentation was a helpful follow up to the morning sessions, because it provided information on recent government office studies and industry trends.  She touched on the topic of counting patient coupons in ASP, citing the recent U.S. Government Accountability Office (GAO) study on Medicare Part B coupon discounts.  She also discussed price changes among generic drugs covered under Medicare Part B, noting GAO study results showing that generic drug prices under Part D fell 59% from 2010 to 2015, with the exception of certain lower use drugs with complex manufacturing requirements that witnessed “extraordinary” price increases during this period.  Alice also discussed the PHS/340B program, describing the various audit functions performed by the OIG’s Office of Audit Services (OAS) and Office of Investigations (OI), noting that there have been no audit findings this year, and reminding manufacturers that a revised Pharmaceutical Pricing Agreement is coming, and that it must be signed.  Alice offered a number of strategic suggestions for manufacturers, recommending that they keep their management teams in the loop regarding these industry trends, identify areas of pricing risk (especially for drugs with high Medicaid or Part B spend), ensure that bundles, authorized generics, and line extensions are treated appropriately in GP calculations, maintain thorough documentation, and hire an outside firm to do a test audit to identify potential problem areas.  Alice also encouraged everyone to be nice to John Coster at CMS, a comment that was surely unrelated to the above-mentioned Q&A exchange.

Come back for more recaps of IIR’s 2016 MDRP Summit throughout the week and after the show, and for those of you who are here in person, keep coming to these fantastic sessions!

  

About the Author: Dana Z. Collins has worked in the Government Pricing space for almost a decade, as both a consultant and an in-house compliance professional.  As a GP consultant, Dana’s areas of primary focus are audits/assessments, training, ongoing calculations, Medicaid rebate processing, and policies/procedures – oh, and blogging.  After working with Katie Lapins, Principal/Owner of Government Pricing Specialists (GPS), on and off over the years, Dana joined GPS in 2016 and has never looked back.

Track D: 340B Guidance for Pharmaceutical Manufacturers: Fundamentals, Operations, and Compliance

After a short introduction by Christopher Schott (Counsel, Hogan Lovells), the Symposia got off to a great start with Dennis Kim (Director, Dohmen Life Sciences) and “Addressing Key Areas Covered Within the 340B Guidance. Dennis went through an overview of the PHS/340B Program, including basics of the program and then moved to a review of the “Mega Guidance,” including administration of Medicaid Exclusion File, Manufacturer Restrictions (overcharges, limited distribution plans, recertification, potential audits). Activity expected in 2016 that is likely to be of interest to manufacturers is guidance regarding “penny pricing” and limited distribution arrangements. There are also two comment periods currently open related to civil monetary penalties and the administrative dispute resolution process.

Dennis also provided an explanation of Duplicate Discounts and Diversion, what constitutes a “Covered Patient,” and the use and growth of contract pharmacies which served as a great foundation for the next session.  In it, Steve Zielinksi (Director, Kalderos) discussed in-depth the Contract Pharmacy Model.  This model grew as covered entities (“CEs”) were allowed to use multiple contract pharmacies and the entire industry shifted as contract pharmacies and CEs were attempting to maximize revenue.   When serving as a contract pharmacy, the pharmacy can maintain either a physical or virtual inventory model.  In the physical inventory model, there can be no “borrowing” of inventory from the 340B inventory for non-340B patients, or vice versa.  In the virtual inventory model, the “reconciliation” or maintenance of inventory occurs electronically so a pharmacy only maintains one physical batch of inventory.  An overwhelming majority of contract pharmacies use the virtual inventory model today and software exists to assist.

Contract pharmacies fall into four categories.  The first is an independent pharmacy where the internal controls for compliance with the program requirements can vary significantly.  The CEs actually can have a fair amount of control in this relationship.  Chain pharmacies are the second type of contract pharmacy.  Chains pharmacies have a lot more control in the relationship with the CE and are heavily focused on the business outcome.  The third type of contract pharmacy is a former CE pharmacy that has been created by a restructuring of the facilities associated with the CE so they are a different legal entity.  The internal controls are usually stronger like a CE because of their familiarity with the program requirements.  And finally, specialty pharmacies can serve as a contract pharmacy.  These entities focus on complex products/diseases and the CEs have the least amount of control with them.

Manufacturer reporting requirements were covered by Elizabeth Wicyk-McGovern (Senior Analyst, Hospira).  Besides providing a good example of the 340B ceiling price calculations, including how a product can result in penny pricing.  One important issue is how to calculate a price when [AMP – URA] is less than $0.01/Medicaid unit.  Many manufacturers apply the “penny pricing” concept after the [AMP – URA] has been calculated but some apply it at the Medicaid unit level.  For example, if [AMP – URA] is $0.0002/Medicaid Unit and there are 1,000 units/package, the calculation would be either [$.0002 * 1,000 = $2.00] or [$0.01 * 1,000 = $10.00]. 

HRSA has scheduled five manufacturer audits scheduled for 2016 after having only one in 2015.  In the 2015 manufacturer audit, there were no findings.

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.

MDRP 2016: Why You Can’t Miss It

It’s hard to believe that we’re only about two weeks away from the 21st Annual Summit on the Medicaid Drug Rebate Program (MDRP 2016), arguably the biggest Government Pricing event of the year. This event always provides invaluable insight into the challenges facing the GP community, and this year is no different. Here are a few things that set MDRP 2016 apart from all the others.

First, the biggest names in Government Pricing will be in attendance. Not only will subject matter experts from law firms, consulting firms, and third party vendors be speaking, Knect365 (former IIR) has also secured a number of pharma industry speakers and panelists to share their experiences. Additionally, members of key federal agencies like HHS, HRSA and a number of state Medicaid agencies will provide clarity into their rules, regulations, and processes. Are you looking for assistance from external counsel but don’t know anyone? This is the perfect opportunity to get to know the true experts in the field. If you are looking for a GP system provider, in the process of implementing a system, or want to ensure your system has been updated to reflect recent rulemaking, walk through the exhibit hall and strike up a conversation with one of the many vendors who offer these types of services. And besides the great networking opportunity to find out how your organization compares to your peers, or to larger or smaller manufacturers, there are opportunities to attend panel discussions that present multiple viewpoints. And if you want to hear more about recent rulemaking directly from agency heads, this is the place.

Second, the MDRP 2016 offerings are more innovative and exciting than ever. This year, Knect365 (former IIR) has organized its sessions into streams like Fundamentals of Government Pricing Programs, 340B Guidance Symposia for Pharmaceutical Manufacturers, Generic Drug Manufacturers Workshop, and the AMP Rule Symposia. But you’re not “stuck” to one track. To help you pick the sessions that will best meet your needs, Knect365 has created a fantastic Interactive Agenda to allow you to mix and match the presentations right for you. The agenda even allows you to select the format, to allow you to identify presentations, panel discussions, and networking events. Don’t just pick a track and hope it tells you what you want to know. Pull up the interactive agenda before you head to MDRP and build your own customized track. If you are representing your GP team at the conference, you can also ask your teammates to pull up the agenda and create a wish list of sessions they would like you to attend. With its new agenda, Knect365 has given you the tools to ensure you won’t miss out – take advantage of it!

And last but not least, you just can’t miss MDRP 2016 because this year, after 6 years of holding our breaths, we finally got the AMP Final Rule we’d been waiting for! But it’s not just the AMP Rule GP teams have been talking about, this year we also got the 340B Drug Pricing Program Ceiling Price Proposed Rule, as well as a number of CMS Manufacturer Releases and FAQs that have been included in alerts by GPS. If all these changes in such a short period of time make your head spin, you’re not alone. Come to MDRP 2016 to make sure none of this information falls through the cracks, potentially putting your organization at risk.

We look forward to seeing you at MDRP 2016 at the Palmer House Hilton in Chicago. If you have not already registered, do so today and use code XP2158MISC to get an additional $100 off of the current registration fee. GPS will be onsite and blogging for the 2nd year in a row, so we look forward to seeing you there!

Unintended Consequences - 340B

It began with Medicaid.

In 1991, Congress passed the Omnibus Budget Reconciliation Act (OBRA 90). The goal was to enlist the aid of pharmaceutical manufacturers in lowering the cost of pharmaceuticals prescribed to Medicaid patients, and financed by the Federal and state governments. Access to manufacturers’ “best price” was the goal, to help balance the Federal budget.

Manufacturers, commercial entities all, recognized that the “best prices” were the ones on the Federal Supply Schedule (FSS); the prices paid by the Veterans Administration (VA) and the Department of Defense (DOD). There was no legislated exemption for these, so manufacturers raised the FFS prices to list price. These actions severely impacted the DOD and VA budgets, so an amendment was added to exempt FSS prices from OBRA. On June 30, 1992, this amendment expired.

Subsequently, P.P 102-585, the Veteran’s Health Care Act (VHCA) of 1992 was passed. Sections 601 and 603 establish the pricing rules for DOD and VA. Section 602 amended the Public Health Service (PHS) Act by adding a “Subpart VII, Sec. 340B” to Part D of Title III. 340B was born!

Congress created a program to offer uninsured indigent patients better access to prescription drugs by providing these drugs at discounted prices to covered entities (CE) serving large numbers of this uninsured population. Intention….give these patients better access to these drugs.

Over time, for many reasons, the program has grown exponentially. HRSA sub-regulations, the Medicare Modernization Act (MMA), and the Affordable Care Act (ACA) have wrought significant changes in the program participants and their collective behaviors. The program has outgrown its mission.

The patient definition, or its interpretation, has expanded to include all outpatients of the CE, regardless of insurance coverage. The CE list has been broadened, and now includes hospital satellite locations, sole community hospitals, and free-standing cancer centers, to name a few. In 2010, CEs were allowed to begin utilizing multiple contract pharmacies to supply these drugs. Manufacturers concerns, other than the low pricing requirements, involve diversion and double dipping.


Diversion happens when a 340B-priced drug is dispensed to anyone not entitled to receive it. That list includes in-patients, and any outpatient that does not fit the HRSA definition. Diversion also happens if the drug is sold or transferred to another entity. Double dipping occurs when a Medicaid claim is filed with the state for a 340B drug, thereby duplicating the Medicaid rebate. Over time, states have improved the identification of 340B claims in the Fee-For-Service (FFS) arena, and have excluded them. However, since the ACA now requires manufactures to pay Medicaid rebates on Medicaid MCO utilization, double dipping is back in focus. The Office of Inspector General (OIG) issued a report in June stating that many state methods for identifying 340B drugs may create a risk of “duplicate discounts and foregone rebate.” Since the ACA now requires manufactures to pay Medicaid rebates on Medicaid MCO utilization, double dipping is back in focus, along with the potential for “forgone” rebates.

Concerns:

• CEs are profiting from the system. In any economic system, if access to low priced commodities is available, organizations will find ways to maximize them. And if the penalties for non-compliance are weak and non-existent, boundaries will be pushed. Consider: A CE can legitimately purchase drugs at 340B prices, and then bill the applicable insurance company. They cannot legally bill Medicaid, but all others are fair game.

• A retail store serving as a contract pharmacy has the potential to profit from the same situation. Oversight of these institutions is the duty of the CE whom it serves. Regular audits of these entities are expected by HRSA, but enforcement is apparently not currently a HRSA priority.

• A CE can acquire a physician oncology practice to gain access to 340B pricing on those drugs.

• Patient care may be impacted clinically by moving or scheduling a procedure on an out-patient facility or status to take advantage of the cheaper medications.

These are just a few of the concerns to be considered. The 340B Program has grown into something beyond what its creators had envisioned. 


The 21th MDRP Summit includes a full day pre-conference Symposia on 340B Guidance for Pharmaceutical Manufactures. Download the agenda to see a complete list of topics here. 



About the author:

John Bliss is a contributing writer for the Medicaid Drug Rebate Program summit. He has extensive experience in the pharmaceutical industry, including AstraZeneca, Sanofi Aventis, Merck, Pfizer, Daiichi Sankyo, and Bristol-Myers Squibb (BMS). The bulk of John’s career was at BMS. When OBRA90 hit, Government Pricing took over his life. Government pricing, managed care contracting, rebates, and chargebacks continue to extend challenges and provide meaningful employment. John now works as a consultant, primarily subcontracted by other consulting firms, providing value added services to each of them and their clients.

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MDRP 2016: Final Agenda Available!

Medicaid Drug Rebate Program
September 20-22, 2016 | Chicago, IL
Download the final agenda: http://bit.ly/1TY7XCQ 

Now in its 21st year, IIR's MDRP Summit (http://bit.ly/1ZdEll3) has continued to be THE authoritative MDRP Event for Everything Government Pricing, Rebates and Regulation. MDRP provides unparalleled access to the government regulators creating the rules, the industry leaders interpreting them, and the pharmaceutical executives implementing them.

Don't miss out on your opportunity to benchmark best practices and gain solutions to overcome new operational challenges brought on by AMP Final Rule, 340B, Medicaid Expansion, Class of Trade, Fair Market Value, FSS, VA, OIG, and other critical government programs.

Why should you attend MDRP?

Learn:
• AMP Final Rule Implementation
• 120+ Speakers
• 6 Keynote Presentations
• 340B Guidance Updates

Benchmark:
• State Dispute Resolution Meetings
• New Executive Leadership Boardroom
• Town Hall between Manufacturers and States

Connect:
• 14+ Federal and State Agencies
• 600+ MDRP Executives
• 20+ States
• 30+ Solution Providers

Access the final agenda: http://bit.ly/1TY7XCQ

$400 savings ends Friday, July 1st! Click here to register: http://bit.ly/1RNJ5rF

Pricing of Prescription Drugs Debated

(This article "Pricing of Prescription Drugs Debated" originally appeared on the HealthLeaders website, January 18, 2016.)

By Christopher Cheney.

In the "Great Drug Pricing Debate of 2016," a semi-fictional duo goes head-to-head on whether the pricing of prescription drugs is spiraling out of control, whether price controls should be instituted, and whether drugs can be priced based on value. 

Pricing practices for prescription drugs are drawing intense scrutiny from inside and outside the healthcare industry.

Healthcare payers are apoplectic over the rising costs of prescription drugs. America's Health Insurance Plans, the trade association for healthcare payers, has been blasting pharmaceutical companies over drug pricing on a nearly daily basis.

Healthcare providers also are sounding the alarm, with the American Medical Association announcing in November that it would launch an "advocacy campaign to drive solutions and help make prescription drugs more affordable."

Drug pricing is already a hot topic in this year's presidential race, with Democratic Party contender Hillary Clinton calling for affordable drug pricing in political advertising and on her campaign's website. Her main opponent, Sen. Bernie Sanders (D, VT) has his own plan to lower prescription drug prices.

Capitation's Second Coming Debated 

To debate the issue, I have assembled a semi-fictional duo with opposing perspectives on drug-pricing trends and their impact on the healthcare industry. The debate format gives each participant about 500 words to answer a handful of questions.

Arguing in favor of the drug-pricing practices of pharmaceutical companies is Reginald Thump, wealthy Manhattan businessman and candidate for president of the United States.

Arguing against the drug-pricing practices of pharmaceutical companies is Jennifer Campbell, analyst for healthcare cost and delivery at the National Business Group on Health.

HLM: Are prescription drug prices trending at unsustainably high levels?

Thump: This country is not as great as it used to be and certainly not as great as I could make it again. Let's face it folks, the ability to innovate is one of America's greatest strengths, and it blows my mind that my opponent and others like her want to beat up on one of the most innovative sectors of our economy.

Screws Tighten on 340B Program 

If we want to focus on unsustainable healthcare costs, we should not be focusing on prescription drugs. Pharmacy-dispensed drugs account for about 10% of total healthcare spending, and the cost of those drugs pale in significance compared to the costs of ER visits and hospitalizations. Drugs keep people out of the hospital, which generates cost savings for the entire healthcare industry. That's an undeniable fact that pharma's critics want to ignore.

Campbell: The trend is unsustainable.

While drug pricing and utilization both continue to surge, drug spending will increase by 6% or more annually from now until 2022, according to the Centers for Medicare & Medicaid Services. In 2014, U.S. spending on prescription drugs hit $379 billion, a third of which can be attributed to specialty drugs.

Layering on top of this growing financial burden is that these drugs are now being formulated and targeted for chronic conditions affecting much larger patient populations, a trend that will spark continued discovery and growth of specialty drugs.

Under current law, the Food and Drug Administration grants brand-name biologic drugs a 12-year exclusivity period upon approval. Such a long exclusivity period essentially removes the benefits of price competition, resulting in higher drug prices and a failure of less-costly generic versions to reach the market—all of which will continue to endanger affordable coverage options.

When there is a lack of lower cost substitutes for these steeply priced drugs, health plans and employers alike will increasingly struggle to execute drug access and cost management strategies. More and more, we are seeing that even when efficacious, low-cost generics do exist, payment incentives are not always aligned to promote their use.

HLM: Should there be price controls or windfall-profit taxes in the pharmaceutical sector?

Thump: Price controls would harm patients. U.S. patients have more treatment options and earlier access to medications than patients in any other country on Earth.

The new hepatitis drugs, which we should be celebrating because they cure a dreaded disease, are a great example. The doomsday predictions about these drugs have not come true. All of the patients who need these drugs have gotten these drugs. The market does work.

Campbell: We support neither approach and believe, instead, that the current pricing models are unsustainable and that manufacturers and payers should come to a consensus on pricing.

One promising approach involves manufacturers taking on risk if medications don't deliver as promised and either fail to reduce downstream costs or increase them.

HLM: What is the best way to contain rising prescription drug costs?

Thump: The costs of life-saving medications are not the problem, and the health plans should look in the mirror before they start pointing fingers at pharmaceutical companies.

The way health plans craft benefit designs contributes to increased drug prices. Some health plans require doctors to use an expensive medication when there is a cheaper alternative. Other health plans have placed generic drugs in the highest tier of their drug-pricing benefit designs with brand-name medications.

Campbell: There are a number of best practices that employers follow. In conjunction with their pharmacy benefit manager and health plan provider, employers first seek to provide employees with tools and support to guide appropriate specialty medication management.

Second, [employers seek to] create a comprehensive utilization management framework, complete with prior authorization, step therapy, quantity limit, and exclusion protocols.

Third, [they] implement a custom drug formulary that is designed based on evidence of drug safety and efficacy, and promote patient access to appropriate treatments while effectively controlling costs.

Fourth, [they] promote a more dynamic relationship between patients and their physicians and pharmacists to ensure practical treatment recommendations and compliant drug utilization behavior.

And fifth, [they] focus on site-of-care strategies and the most cost-effective distribution channels, such as specialty pharmacy chains.

HLM: Can prescription drugs be priced based on value, such as how well one drug performs clinically compared to competing drugs?

Thump: Every sector of the healthcare industry is struggling with this challenge. Singling out pharma for the sector's struggle to price prescription drugs based on value is the height of hypocrisy. I'm just saying.

Campbell: In the new value-driven healthcare system, pharma companies are feeling the pressure to demonstrate real, measurable product value. Employers have long been clamoring for more alignment between purchasers and manufacturers.

Finally, we're starting to hear more chatter around this. There are multiple efforts in the United States to make drug price determinations based on value, including the Institute for Clinical and Economic Review and DrugAbacus.

HLM: Are the costs of prescription drugs taking up too large a share of patients' total cost of care?

Thump: Again, the health plans need to take their fair share of responsibility for what is happening with the price of prescription drugs. In this country, the cost of all medications has consistently accounted for about 14% of total healthcare spending.

Patients are enduring higher out-of-pocket costs for their medications because of the way health plans are crafting benefit designs, including high deductibles. The prescription-drug share of the healthcare spend has been consistent, but the patient share of the healthcare spending burden is going up because of the way health plans are changing their benefit designs.

Campbell: The simple answer is yes, although the question is not quite that simple. As one of our forward-thinking employer members has pointed out, we need to understand the downstream costs associated with medications such as medical side effects in addition to the "value add" of the drug. 

However, in general, on a per-member, per-month basis, "specialty drugs" are having an impact on patients' total cost of care. In general, increasing drug costs are driving higher costs to health plans as well as to members, both on the medical and pharmacy side.

The better question might be, "how has specialty pharmacy had an impact on the member's total medication cost share over the course of the last year or so?" To which one member responded, "It's going up, and with no end in sight."

By Christopher Cheney, the senior finance editor at HealthLeaders Media.

Contributor Biography: Christopher Cheney has been a professional journalist for 20 years. He currently works as senior finance editor at Danvers, Massachusetts-based HealthLeaders Media. Prior to joining the staff at HLM, he worked in multiple roles at several newspapers in New England, including the Boston Herald, Cape Cod Times and Concord Monitor. Cheney began his career in healthcare research administration at Children's Hospital Boston. He holds three university degrees, including a master's degree in journalism from Boston University. Cheney is a native of the Red Sox side of Connecticut and lives in New Hampshire with his wife, Jennifer.

Medicaid Drug Rebate Program Summit (MDRP) 2015 Wrap Up!

• John Shakow highlighted the “hot topics” from the various presentations that were provided prior to the conference. Some of the slides he referenced included:

• From Miree Lee’s Government Pricing Basics, the numerous pharmaceutical price points, including AAC, EAC, UAC, MAC, SMAC, NADAC, AMP, FUL, BP, URA, 340B, ASP, NFAMP, and FCP. 

• Alice Leiter (Hogan Lovells) highlighted the critical components of a 340B policy that can be applied to other GP Policies.

• Steven Ruscus (Morgan Lewis) presented the only slide about biosimilars and Part B, highlighting how they will be reimbursed which is a special hybrid arrangement. This could define the next generation of reimbursement.

• Chris Cobourn (Huron) discussed the recent results/trends of a GP diagnostic survey showing many companies have insufficient resources, inconsistent documentation, and no G/L reconciliations.

• Connie Wilkinson & Alan Arville (Epstein Becker) highlighted the recent guidance regarding an the definition of an eligible patient for the 340B program.

• Bill Sarraille (Sidley Austin) went over what that he’ll be looking for if/when the Final Rule is released.

• Alice Valder Curran (Hogan Lovells) showed how manufacturers should be evaluating the Final Rule by looking at it with the thought, “Potential challenges if the Final Rule says…” Manufacturers should know that litigation is an option, but as John Shakow noted, only if you submitted a comment to the Proposed Rule, or potentially if you are part of an associated such as PhRMA that submitted comments.

• David Tawes from the OIG, discussing the future work involving Medicaid drugs and the possibility of attaching an inflation penalty to generic products.

• John Shakow’s own slide on the 340B Proposed Rule and the comments from the covered entities that an instance of overcharging should be defined as per unit, not per order.

This year’s MDRP was full of information for manufacturers and as always, there’s a lot going on in the government programs, so if you need help or are overwhelmed by all of the information, give me a call. I can help you figure out what is relevant and how to ensure you’re ready for the Final Rule! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com.

IIR's MDRP Summit 2015 | Day 2 – External Counsel

Friday morning, IIR arranged for a session made up of group of attorneys who serve as external counsel to pharmaceutical manufacturers, focusing in part on the government healthcare programs.  This powerhouse group was moderated by Sabrina Yohai (Pfizer), and the panelists were Alice Valder Curran (Hogan Lovells), John Shakow (King & Spalding) Jeff Handwerker (Arnold & Porter), and Bill Saraille (Sidley Austin).

First, Alice walked the attendees through the legislative process for those areas that affect pharmaceutical manufacturers, explaining the differences between legislation, regulations, rules, and guidance, and also the actual contracts with the government and the preamble of rules. Sabrina emphasized the need for manufacturers to understand all of the “documents” that can affect their operations.

The panelists then discussed the questions that are most frequently being asked of them these days:
John S – bona fide service fees, and when a drug manufacturer should blend AMPs across an NDC-9;
John H – also bona fide service fees, free goods/PAP, especially in the context of a past purchase vs. a future purchase, and outcomes-based contracting;
Bill – same as the others with the comment that outcomes-based contracting is fast becoming a big issue, and the other area is ESI offers;
Alice – besides the issues previously mentioned, she also sees questions around limited distribution plans for the 340B program.

With regards to the Final Rule, what issues are most concerning to you, and what would cause you the most heartburn:

John H – the proposed change to the definition of “bundled sales” with the possibility of it being applied retroactively, and the BP exclusions that currently allow any price to a 340B entity, but the proposed rule narrows to sales under the 340B contract.
Bill – agrees with John, especially with regards to bundled sales, and the lack of compliance by the Covered Entities in the 340B Program.
Alice – potential expansion beyond three years for restatement periods and when that might be allowed, Medicaid MCO reporting, and the potential for CMS to make rules based on the ease of implementation, not always the statutory standard.
John S – agreed with the list and added the issue of how specialty pharmacies are treated within the context of retail community pharmacies.

With regards to enforcement and settlements, the panel sees the following as “HOT TOPICS”:

Bill – bona fide service fees remain a focal point as well as a shift from Best Price to AMP and ASP issues, and with regards to defending against potential investigations, the importance of documenting your methodology and assumptions.
John H - agrees with Bill and emphasized that the standard is reasonable, but the government has shifted to what you subjectively believed at the time of a submission. Documentation is the best way to demonstrate this, including advice of counsel.
Sabrina asked about how to submit assumptions and the panel agreed that it should be focused on those areas most critical to you, and when things change.
John S - ASP submissions should include reasonable assumptions.
Bill - submit early and often!
Alice - don’t assume, a prosecutor understands or interprets the statute/regulations like CMS, so make sure, you document your interpretations.
John H - US Attorney might look at how something impacts the government’s budget even if a pharmaceutical manufacturer does not consider this when making assumptions.
Sabrina - remember that being “conservative” in one program may not be conservative in another program and make sure, your internal documentation is solid.

If you were named general counsel of a major pharma tomorrow, what would you do to strengthen the GP area:

Alice – make sure, the rest of the business understands what you do and the importance of their role in GP (regulatory with product master, rebate team with BP and tracking customers.)
John S – educate company executives to understand the issues GP folks deal with (size, way commercial programs impact GP, risks of failing to fulfill the requirements.)
John H – look at documentation (policies, SOPs, assumptions) to make sure, it is sufficient for a government audit.
Bill – would add the need to audit the system setup for GPcalcs.

What’s a good way to get the conversation started with senior executives within an organization:

John S – focus on small pieces;
Alice – look at the gross-to-net impact of the programs to highlight this as a bigger piece of the business;
John H – has seen an increased focus by senior executives.

Questions form the audience were related to Texas price reporting, co-pay cards/programs, the new DOJ policy about filing criminal charges, and The First Amendment within the context of off-label promotion.

Final advice or comments from the attorneys: understand what it is others within your company do; the importance of making sure the GP team members feel valuable, especially for the women in this arena; we can be proud that we work in an industry that saves lives, and our job within these organizations is to make sure, our products are available to the most needy in a compliant manner.

As always, MDRP Summit has provided a vast amount of information and great opportunities for networking with others in the industry. If you would like more information on any of the topics that were covered this week, please contact me. As always, there’s a lot going on in the government programs, and I can help your organization figure out what is relevant, and how to ensure you’re ready for an audit! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com.

MDRP Summit: Day 1. Morning Sessions & Keynote Address

The first day of the conference kicked off today with Edward McAdam from Fresenius Medical Care discussing current events in the pharmaceutical industry, including recent price increases that have been covered by all of the media outlets.

The keynote address was from Ezra Klein, Editor-in-Chief of Vox.com and the central theme was, “Where is healthcare going?” within the context of politics, reform, and policy. 

Mr. Klein first spoke about Zoltan Esteban who is running for President of the United States and is going around country in a bus shaped like a coffin. “He is the only candidate whose sole issue is to conquer death.” Looking at historical elections, oftentimes, topics that were important then now seem ridiculous. To Mr. Klein, that may be the case with our current situation. All of the conversations about things like immigration reform may be viewed by historians as a waste. Obamacare, one of the biggest pieces of legislation in this administration, has been experienced as a slow moving political “trauma” by both sides of the aisle. Republicans have not been able to repeal it and Democrats have lost the House over it. This law is here to stay, especially since the US Supreme Court has made rulings on issues before it, and the best anyone can do is to change it, but neither side is comfortable with it.  Unfortunately, the most recent round of healthcare reform has not focused on what’s probably most important and that’s value within the healthcare system. 

Most people today, including political candidates, agree that the focus of healthcare reform should be on controlling cost, not increasing access. To. Mr. Klein, the belief that the central concern should be about controlling cost, there is something wrong. It should be focused on providing value. Consider these 2 scenarios:

1.    The federal government passes a law that bans all healthcare. Spending drops to a negligible amount of GDP as a result, or,
2.    Researchers invent a pill that guarantees a life span of 180 years with a good quality of life, but doing so raises healthcare costs to 45% of GDP.

Virtually everyone can agree that Option 1 costs the least but the outcome is not desirable. Option 2 costs a lot more but the outcome is more preferable to society as a whole and probably to each individual. 

Instead of focusing on costs, the question should be, “Are we getting good value for our healthcare dollar spending?” Mr. Klein says no, we’re paying more to get less and the problem is in the value, not in the “abstract amount” of what we spend. In recent years, the growth in healthcare expenditures has been slowed but that’s been a result of making healthcare more expensive at the individual level through higher copays, deductibles, etc., and lowering the costs with the providers such as hospitals and drug companies and narrowing networks to enable insurance companies to be able to better negotiate rates. A tremendous amount of the focus currently is on increasing individual responsibility with regards to cost and making people more cognizant of their healthcare decisions.  These both lower cost at the government level but do nothing to improve healthcare. 

So what is good healthcare policy? The big “win” in healthcare is not dying, not getting an infection when you go to the hospital, finding a cure for Alzheimer’s. Very little spending occurs related to things such as research and cures, with more of an emphasis on treatment. Today, the most important thing in healthcare in Washington is not the care given as part of health but is the budget related to it.  This is true in other areas that include research and development – we will often not know the advancements and opportunities we missed. Viewing healthcare as a scientific issue, not a budget or social justice issue, is a different way of looking at it, and we don’t track how healthy we are and how healthy we could be. Many of the healthcare spending forecasts do not take into account the potential savings from investments in prevention and treatment. Sovaldi® is a good example. It was in the media when it first launched because of its high cost. It treats Hepatitis C and is an expensive drug but it’s cheaper than the ongoing treatment of someone with Hepatitis C. 

Chris Hatwig from Apexus, the company that handles the 340B Prime Vendor Program, next provided an overview of their services and then went through the Proposed Guidance recently issued. (See yesterday’s post for a lot more detail on this hot topic!) And next, although CMS was going to speak about recent updates, at the last minute, they were unable to make it, so Dave Tawes from the Office of Evaluation and Inspections, Office of the Inspector General, graciously stepped in and spoke about their recent initiatives and their work plan. This included information about recent Medicaid studies as well as an interesting study about the use of anti-psychotic drugs in children covered by Medicaid. In this study, 67% of the claims showed there was “quality of care” concerns, 53% poor monitoring, and other issues such as too many drugs being prescribed, the side effects, and the use of drugs not indicated for children.

Other topics included AMP reporting and a comparison of drug expenditures under Medicaid and Medicare Part D. Not surprisingly, drug costs under Medicaid are less than those under Part D. Also, the OIG reached a $12.64 million settlement with a manufacturer for misrepresenting ASP data to Medicare. 

The future work plan includes requests from Congress and HHS, mandatory OIG reviews, emerging issues such as price increases in the industry that made recent news, generic drug price increases, treatment of authorized generics, specialty drug pricing, audits of states’ collection of rebates for drugs from Medicaid MCOs, contractor oversight of covered uses for Part B drugs, and the spread for high cost drugs within the context of Part B and reimbursement.

Check back tomorrow for more updates from MDRP Summit and if you would like more information on any of these topics, please contact me. As always, there’s a lot going on in the government programs and I can help your organization figure out what is relevant and how to ensure you’re ready for an audit! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6466, K.Lapins@GP-Specialists.com.