The National Association of Specialty Pharmacy (NASP) recently issued its comments in response to the Department of Health and Human Services’ (HHS) request for information related to HHS’s Drug Pricing Blueprint.[1] The Blueprint is part of the Trump Administration’s initiative to lower prescription drug prices. Center for Medicare and Medicaid Services (CMS) Administrator Seema Verma has said that “[l]owering drug prices is a top priority for the President and CMS, and the agency is committed to finding innovative ways to increase competition and lower out-of-pocket costs for consumers.”[2]
NASP states that the status quo of soaring drug prices and higher out-of-pocket costs in federal healthcare programs is “no longer acceptable.” In this regard, NASP calls upon HHS to: (1) improve competition within specialty pharmacy, (2) support better negotiation of drug discounts for high-cost specialty drugs, and (3) align stakeholder incentives to lower drug prices across the distribution channel.[3] NASP offers the following comments:
Direct and Indirect Remuneration
In NASP’s view, pharmacy benefit managers (PBMs) must better align their incentives with the ultimate payer – the consumer. The association emphasizes its support for previous CMS proposals that address pharmacy price concessions, otherwise known as DIR (direct and indirect remuneration) and post-adjudication fees. The collection of these fees, which may be assessed months after claims are submitted and reimbursed, can provide an incentive by a PBM or plan sponsor for higher drug list prices and higher rebates according to NASP. As a result, this practice creates uncertainty for specialty pharmacies and can threaten the pharmacies’ ability to provide high-touch services that are essential for optimal clinical outcomes for patients with complex health conditions.
NASP believes this model can drive higher prices and shift more drug costs onto the shoulders of Medicare beneficiaries, the Medicare trust fund, and, ultimately, to taxpayers. NASP recommends reform that would ensure that DIR and administrative fees be based on quality or performance measures specific to specialty pharmacies; metrics that are determined by the “broad stakeholder community.” Consumers and taxpayers will continue to overpay for life-saving drugs, NASP says, until measures are appropriately applied to specialty drugs and services and such fees should be suspended for the time being.
Safe Harbor Protection for Rebates
Drug manufacturer rebates can comprise a significant share of DIR fees. HHS recently submitted to the Office of Management and Budget a proposed rule entitled “Removal of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection.” [4] Manufacturers typically pay rebates to PBMs in connection with the purchase of the manufacturer’s products and formulary placement. Consequently, such rebates can potentially implicate federal and state anti-kickback laws. Although the proposed rule has not been publicly released, there is speculation that safe harbor protection under the federal Anti-Kickback Statute should be removed (or significantly revised) for prescription drug rebates involving PBMs.
Transparency
NASP says that significant transparency issues exist for specialty pharmacy network inclusion. According to NASP, the in-network “specialty pharmacy by drug” is only known by the plan sponsor or PBM, leading to beneficiary and prescriber confusion and unnecessary administrative costs. To increase CMS visibility into specialty drug access and to enhance network adequacy requirements, NASP suggests that HHS require each plan sponsor to submit a listing of every in-network “specialty pharmacy by formulary drug.” NASP also recommends that CMS require that additional information be included in the beneficiaries’ Explanation of Benefits and in the Annual Notice of Change regarding which drugs are provided by pharmacies that are in-network, in a preferred network or out-of-network.
Competition
To reinforce competition among specialty pharmacies in order to reduce costs and improve quality, NASP urges HHS to define “specialty pharmacy” and amend “any willing provider” (AWP) terms and conditions. Currently, network adequacy requirements and convenient access standards only apply to pharmacies in general. According to NASP, PBMs that own specialty pharmacies can have incentives to utilize these broad terms to exclude independent specialty pharmacies from gaining in-network status in plans they manage. By defining specialty pharmacy to support care management of patients with serious health conditions, CMS can better determine whether access to specialty drugs are meeting the ideal. Additionally, NASP says that current AWP requirements that mandate reasonable terms and conditions do not protect against unreasonably low reimbursement rates, defeating congressional intent to lower prices by encouraging competition in the marketplace.
NASP is also opposed to other PBM requirements that it believes lessen competition between independent and PBM-owned specialty pharmacies, such as accreditation by the PBM. According to NASP, this process has required independent specialty pharmacies to disclose detailed business processes as well as other proprietary and competitively sensitive information. NASP supports the use of independent, third-party accrediting bodies, such as URAC, the Joint Commission, and ACHC to drive competition to provide quality patient care.
Star Ratings
NASP encourages CMS to enhance its Medicare Advantage and Part D Star Ratings by reforming the program to apply to in-network “specialty pharmacies by specialty drug.” Greater transparency in specialty pharmacy networks not only enhances the benefit of competition, but also augments consumer choice and streamlines the administration of services.
Medicare Part B to Part D
NASP cautions HHS as the agency considers moving drugs, or classes of drugs, from Part B to Part D. Although some drugs covered under Part B are now able to be self-administered or provided in an outpatient setting, NASP advises that HHS should fully understand the impact to beneficiary out-of-pocket costs should certain drugs transition to Part D. As some beneficiaries currently do not have coverage under Part D, a new policy would need to incentivize these seniors to participate in the program. NASP suggests also that while transitioning some drugs from Part B may increase price competitiveness, certain anti-competitive practices it sees existing under Part D must first be addressed.
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The Trump Administration’s focus on reducing drug pricing indicates that extensive change may be on the way for various participants in the drug supply chain. NASP’s comments are clearly reflective of this concern. If you would like more information on the regulatory implications for your specialty pharmacy practice, please contact an attorney in Husch Blackwell’s Healthcare, Life Sciences and Education team.
Office of Information and Regulatory Affairs, Office of Management & Budget, Reginfo.gov, July 18, 2018, available at: https://www.reginfo.gov/public/do/eoDetails?rrid=128288.
[1] 83 Fed. Reg. 22692, HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, May 16, 2018.
[4] Office of Information and Regulatory Affairs, Office of Management & Budget, Reginfo.gov, July 18, 2018, available at: https://www.reginfo.gov/public/do/eoDetails?rrid=128288.
