In the News

Dale Smith Jr. honored with Nexus Award

June 15, 2016 - Smith was presented the award, the pharmaceutical distribution industry’s highest individual honor, at the Healthcare Distribution Alliance (HDA) 2016 Business and Leadership Conference in Colorado Springs. Also presenting the award to Smith were sponsors Genentech Inc. and Mylan Inc. Read more

Premier’s latest acquisitions show hospitals’ high hopes for specialty pharmacy

June 14, 2016 - Last week, the group purchasing organization (GPO) Premier announced its acquisition of two specialty pharmacies from Lincare Holdings. This deal shows just how crucial specialty pharmacy opportunities are for hospitals and health systems. Premier is betting that its members want to outsource specialty pharmacy dispensing and services to their GPO’s external pharmacy. But as I describe below, many hospitals are building their own in-house specialty pharmacies or outsourcing specialty pharmacy services (but not dispensing) to such third parties as Diplomat Pharmacy. Read more

United Health: with General Electric win, is PBM rethinking in order/

June 13, 2016 - UnitedHealth confirmed to us in a call that OptumRx has been selected, once again, to replace CVS in a major PBM contract. The General Electric win (300k lives, 1/1/17 start) is important not just for the $300mm in revs it represents, but more because General Electric is widely regarded as one of the most sophisticated HC buyers in the commercial market and not just on price. Read more

FDA rejects highest number of monthly generic drug applications ever

June 14, 2016 - FDA, criticized for pumping out too many generic drug applications in a bid to stimulate market competition, has applied the brakes in recent months. The regulator rejected a record 190 abbreviated new drug applications (ANDAs) for the month ended April 16, after turning down 147 in the previous month ended March 16. Read more

Hospital star ratings useful, but don’t tell the whole story

June 8, 2016 - The Centers for Medicare & Medicaid Services’ star-rating system has raised questions about its usefulness, prompting the agency to break down exactly how it arrives at the ratings. But a look at the data shows it’s unclear how much the system actually helps consumers choose the best care, according to an article in JAMA. Read more

Drug co-pay assistance programs facing increasing state, federal scrutiny

June 6, 2010 - Charity-run funds to help patients pay high co-payments face new scrutiny by prosecutors in two states and increased federal oversight, amid increasing questions about how they mask high drug prices. Read more


Direct from Washington

House-Senate conferees appointed to negotiate opioid legislation; additional funding sought

In recent months, the House and Senate have each approved different legislative approaches to address opioid addiction. On March 10, the Senate passed S. 524, the Comprehensive Addiction and Recovery Act, and on May 13, the House completed its work on 18 opioid-abuse bills. These bills address federal and state efforts regarding prevention and education, law enforcement, treatment, and recovery. On June 16, the House and Senate finished the process of appointing conferees to reconcile the two chambers’ legislation. A comprehensive approach to resolve the opioid crisis is a top priority of many Members of Congress.

In addition to authorizing legislation, Members of Congress and the Obama Administration renewed calls for Congress to pass $1.1 billion in new funding as requested by President Obama to address the opioid epidemic. The White House released a breakdown of estimated funding to each state under the $1.1 billion proposal.

Medicare Payment Advisory Commission (MedPAC) releases report to congress

MedPAC, an independent agency established to advise the Congress on issues affecting the Medicare program, released its June 2016 Report to Congress. The report covers a wide-range of issues related to Medicare, focusing in particular on policies related to Medicare Part B and D.

Medicare Part D spending increased nearly 60 percent from 2007 to 2014, due in part to rising drug costs. To slow this spending, MedPAC recommends encouraging more use of generic drugs and creating incentives for insurers to negotiate better prices from drug manufacturers. MedPAC’s proposals for beneficiaries would:

  • sharply reduce or even eliminate the copayments paid by approximately 12 million low-income Medicare enrollees for generic drugs — to encourage the use of the lower-cost medications;
  • create an annual out-of-pocket spending cap for higher-income enrollees, similar to current cap for low-income beneficiaries;
  • cover 100 percent of the cost, after enrollees hit the cap, of medications;
  • make it harder to reach that annual cap by not allowing a drug discount given by manufacturers to count toward the enrollee’s out-of-pocket maximum; and
  • require insurers to pay 80 percent of drug costs, which is an increase from the current 15 percent, after patients hit the out-of-pocket maximum.

Revisiting CMS’ 2014 proposal regarding protected classes, MedPAC recommends removing antidepressants and immunosuppressants for transplant rejection from the classes of clinical concern (protected classes). In addition, MedPAC recommends:

  • streamlining the process for formulary changes;
  • requiring prescribers to provide standardized supporting justifications with greater clinical rigor when applying for exceptions; and
  • permitting plan sponsors to use specific tools to manage specialty drug benefits while maintaining appropriate access to needed medications.

Congressional committees take seriously the recommendations of MedPAC seriously and frequently hold hearings to discuss the agency’s recommendations. Given the short time left on the congressional calendar this year, however, MedPAC’s recommendations will likely receive greater consideration in 2017.

Update on California drug pricing ballot initiative

The California Drug Price Relief Act, a November 8 ballot initiative sponsored by the AIDS Healthcare Foundation, would cap state reimbursement for prescription drugs at the amount paid by the U.S. Department of Veterans Affairs (VA). The Act, if approved, would apply to California’s traditional Medicaid program, state-run prisons, state universities, and the California Public Employees’ Retirement System. According to the California Legislative Analyst’s Office, these programs together spend $4 billion per year on prescription drugs. The Act would not apply to the state’s privately run Medicaid plans, which cover 10 million residents. The California Drug Price Relief Act is supported by the California Nurses Association and AARP. Senator Bernie Sanders (I-VT) has also endorsed the measure.

The opposition campaign, called Californians Against the Misleading Rx Measure, is sponsored by the Pharmaceutical Research and Manufacturers of America (PhRMA), funded by $70 million in contributions thus far from drug manufacturers. The California Medical Association, the California Chamber of Commerce, and the California NAACP support PhRMA’s efforts to oppose the ballot initiative.

Some question whether the VA’s drug prices will be able to be accessed; while the VA publishes a database of prices, those prices often do not reflect the entirety of negotiated discounts. Opponents of the measure caution that the California initiative could undermine VA discounts, create a government bureaucracy, and incentivize litigation. The ballot campaign has already featured TV advertisements and is expected to intensify in the months before the November election. The outcome of this effort in California is expected to have an impact on the drug pricing issue throughout the country.

[EDITORIAL – We are monitoring this closely. Ohio is another state that has comparable legislation being discussed. If successful, VA pricing (which is generally considered best price) would spread. This would be bad news for the manufactures and could impact their funding of patient assistance and support programs. Please let us if know you are aware of these types of legislation being actively discussed in your state(s) by emailing us at governmentalaffairs@hdsmith.com]

Medicare 2017 Part D drug plan policies finalized

The Centers for Medicare & Medicaid Services (CMS) released its policies for Medicare Part D plans for the 2017 calendar year, in a document known as the “call letter.” Particularly relevant policies include:

  • CMS directs Part D Plans to implement only a soft or hard edit, used to change the way a particular drug is dispensed or processed, instead of both as originally proposed in the draft call letter. The draft call letter suggested a threshold of 90 milligrams to 120 milligrams morphine equivalent dose for soft edits and proposed requiring hard edits to block claims which are unable to be overridden by the pharmacy, for daily doses of 200 milligrams or above. CMS directed Plan Sponsors to work toward using hard edits by 2018
  • CMS will increase the threshold to identify “specialty” drugs to $670 per month, from $600 per month, for 2017.
  • CMS will permit Part D sponsors to incorporate a “non-preferred” tier option to allow for a combination of both branded and generic drugs.
  • Part D plans may designate specific drugs where only a one month supply will be covered for the initial fill, rather than a 2- or 3-month extended supply. Patients will not be required to obtain a new prescription to convert into an extended days’ supply.

Representative Buddy Carter (R-GA) advocates for H.R. 592/S. 314

An opinion piece by Representative Buddy Carter (R-GA), the only pharmacist in Congress, makes the case for enacting pro-patient and pro-pharmacy companion bills in the U.S. Senate and House of Representatives. The piece, titled “The most over-trained and underutilized profession in America” outlines the great potential of pharmacists to provide patient-centered services but notes that potential is limited since pharmacists are not recognized as health care providers eligible for Medicare Part B .

Representative Carter strongly supports H.R. 592 / S. 314, The Pharmacy and Medically Underserved Areas Enhancement Act, which would help seniors in medically underserved communities by allowing state-licensed pharmacists to offer and be compensated for an expanded scope of patient-care services under the Medicare Part B program. While these bills have 288 House cosponsors and 46 Senate cosponsors, neither bill has been acted upon by House or Senate Committees. Given the short amount of time left in the congressional calendar, it is unlikely that these bills will become law in the remainder of this year.

Efforts to urge CMS to finalize guidance on pharmacy payment transparency

Members of Congress, as well as the National Community Pharmacists Association (NCPA), are urging CMS to finalize guidance to require Medicare Part D Plan Sponsors and PBMs to include direct and indirect remuneration fees (DIR Fees) charged by Plans and PBMs to pharmacies in point-of-sale pharmacy reimbursement rates.

At the end of May, Representatives Austin Scott (R-GA), Dave Loebsack (D-IA), Peter Welch (D-VT) and Buddy Carter (R-GA) sent a letter to House members urging them to sign on to a letter to CMS. A similar letter was circulated on the Senate side signed by Senators Shelley Moore Capito (R-WV), Jon Tester (D-MT), Chuck Grassley (R-IA) and Sherrod Brown (D-OH). The letter requests CMS to finalize its proposed guidance on direct and indirect remuneration fees and pharmacy price concessions.

The CMS guidance, originally proposed in 2014, would require Plans’ negotiated price with a pharmacy for dispensing a drug to include all price concessions except those that cannot be reasonably determined at the point of sale. Finalizing such guidance would ensure greater transparency into prescription drug pricing.

FDA issues three draft guidance documents for drug compounders

On April 15, 2016, the U.S. Food and Drug Administration (“FDA”) issued three new draft guidance documents related to human drug compounding under the Food, Drug, and Cosmetic Act (“FD&C Act”), as amended by Title I of the Drug Quality and Security Act, that apply to both outsourcing facilities and compounders seeking to operate under section 503A.

The FDA’s new three-draft guidance documents are included below, along with a summary of what each guidance document addresses:

  1. Draft Guidance: Prescription Requirement Under Section 503A of the Federal Food, Drug, and Cosmetic Act. The FDA’s draft guidance describes its proposed policies concerning certain prescription requirements for compounding drug products for identified individual patients under section 503A of the FD&C Act. The guidance document addresses compounding after the receipt of a prescription for an identified patient, compounding before receipt of a prescription for an identified patient, and compounding for office use.
  2. Draft Guidance: Hospital and Health System Compounding Under the Federal Food, Drug, and Cosmetic Act. Pharmacies located within a hospital or standalone pharmacies that are part of a health system frequently provide compounded drug products for administration within the hospital or health system. The FDA’s draft guidance notes that some of these compounders have registered with the FDA as outsourcing facilities under section 503B of the FD&C Act and others are state-licensed pharmacies subject to section 503A. The guidance document describes how the FDA intends to apply section 503A of the FD&C Act to drugs compounded in state-licensed hospital or health system pharmacies for use within the hospital or health system.
  3. Draft Guidance: Facility Definition Under Section 503B of the Federal Food, Drug, and Cosmetic Act. Section 503B of the FD&C Act defines outsourcing facility, in part, as “a facility at one geographic location or address.” The FDA’s draft guidance seeks to answer questions received from outsourcing facilities and other stakeholders about the meaning of the term “facility,” such as whether multiple suites used for compounding drugs at a single street address constitute one or multiple facilities, or whether a single location where human drugs are compounded can be subdivided into separate operations compounding under different standards.