Life Science Compliance Update

April 20, 2018

Physician Specialty Groups Caution Against Proposed Drug Pricing Changes


Nine of the nation’s leading physician groups – including the American College of Rheumatology, American Academy of Neurology, American Academy of Ophthalmology, and American Urological Association – joined together this week to urge the Trump Administration to reconsider some of the policy changes suggested in recent drug pricing proposals that would have negative effects on patient care.

In a letter sent to U.S. Department of Health and Human Services Secretary Alex Azar, the groups cautioned that the Administration’s proposal to consolidate certain physician-administered drugs covered under Medicare Part B into the Part D program while reducing physician reimbursements for new drugs below the current payment rates would create access issues and force patients to seek treatment in higher-cost sites of care.

“While are we are supportive of some concepts recently presented, we do have serious concerns regarding other policy suggestions,” stated the letter, “We believe HHS should make policy proposals designed to reflect the needs of complex care patients, reduce administrative burdens, and increase access to care.”

In the letter, the groups note that Medicare Part B and D are different programs with differing formulary structures and that cost sharing would be difficult to consolidate without significantly increasing out-of-pocket costs for patients – especially those who have no choice but to rely on biologics. And because Medicare Part D does not allow for supplemental coverage, patients would be on the hook for larger portions of these expensive biologic therapies.

The groups also warned that changing Medicare Part D formulary standards to require a minimum of only one drug per class rather than the current two could limit patient’s access to the medical therapies judged to be the most effective choice by their physician.

Additional concerns centered on how the Administration’s proposal to reduce physician reimbursements for in-office treatment from the current ASP +6% (which is 4.3% due to sequestration) to Average Sales Price (ASP) +3% would be damaging to patient access. By reducing physician reimbursements below the cost of obtaining and providing these complex therapies, many practices – especially small and rural practices that are unable to negotiate bulk discounts from manufacturers – may be forced to stop administering biologic therapies to Medicare patients altogether, the specialty groups warn. This would drive patients into more expensive and less convenient settings to receive needed therapies – if such alternatives even exist.

In their letter, the groups are supportive of policies that would lower drug prices while at the same time increasing access to vital medications, including:

  • Requiring Medicare Part D plans to apply a substantial portion of rebates at the point of sale;
  • Establishing a beneficiary out-of-pocket maximum in the Medicare Part D catastrophic phase providing beneficiaries with better protection against high drug costs;
  • Decreasing the concentration in the pharmacy benefit manager (PBM) market and other segments of the supply chain; and
  • Providing guidance from CMS on how drug-related value-based contracts and price reporting would affect other price regulations.

“Our organizations are dedicated to ensuring that physicians have the resources they need to provide patients with high-quality care,” the letter concludes. “We look forward to being a resource to you and we welcome the opportunity to meet with HHS to discuss our concerns and positions in more detail.”

April 12, 2018

How Can We Increase Value and Monitor / Lower Costs?

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Health Affairs and the National Pharmaceutical Council held a briefing focused on efforts to increase value and monitor costs on February 1, 2018. Alan Weil, JD, editor of Health Affairs highlighted the importance of continuing to publicly speak about the issue and look for solutions. "As hard as it is to talk about health costs and as hard as it is to do something and to reach consensus, the consequences of not doing so are really profound," he said.

National health spending reached $3.3 trillion in 2016, a 4.3% growth rate compared to a 5.8% growth rate in 2015. In response to the growing costs of healthcare, the American Board of Internal Medicine (ABIM) started an initiative, “Choosing Wisely,” in 2012, in an attempt to address low-value care by identifying unnecessary interventions early. Results from the Choosing Wisely campaign, however, have been lackluster. Recent research on the effectiveness of the effort suggests only a 3-5% reduction in the use of the low-value services surveyed.

Corinna Sorenson, PhD, MPH, is currently at Duke University researching possible barriers to reducing low-value care, including abstract challenges (i.e., cultural attitudes, lack of political will) and more obvious challenges (i.e., complications inherent in the fee-for-service system). Sorenson and her team are delving into scientific literature and interviewing thought leaders in the world to come to some conclusions.

Another intervention – hospital value-based purchasing (VBP) arrangements – has not shown a substantial impact, either, unfortunately. Ashish Jha, MD, MPH, of the Harvard T.H. Chan School of Public Health, notes that mortality rates have been falling since before VBP and that “basically nothing has happened.”

Other well-intended efforts have fallen flat to say the least, and may even have had some unintended consequences. The Hospital Readmissions Reduction Program, an initiative introduced by the Affordable Care Act (ACA) has been somewhat successful in reducing unnecessary admissions; however, Jha noted that it is possible the reductions may not be due to the program, but instead due to changes in coding. Jha also noted (morbidly) that other research shows that mortality rates increased when readmission rates decreased.

Positive Approaches

As for other value-based approaches, Jha suggested that accountable care organizations, whose numbers have grown -- from about 220 in 2013 to 561 in 2018 -- may represent one bright spot in the healthcare system. ACOs should include financial incentives on the patient side that dovetail with incentives on the provider side.

According to Katherine Baicker, PhD, "If we have both of these together [patient and provider incentives] ... then we can get higher value care that may not be cheaper. I'm perfectly fine spending as much money as we are on healthcare, if we were getting more health for it."

Jha also highlighted bundled payments, noting that most well-designed studies on such bundles show a 2%-3% reduction in costs. Most of the savings are due to reducing post-acute care costs, he said.


Insurance plans should be mindful of the impact of cost-sharing because, as Baicker notes, "There is ample evidence that when patients have to pay more for care, they consume less of it.” This can, however, result in patients not paying for lower-value care and skimping on necessary services and treatments. Financial incentives on both sides of the equation may be the key to increasing value while monitoring increasing healthcare costs.

April 10, 2018

The Day After Tomorrow – The Drug Pricing Transparency Chorus Grows Louder


Drug pricing transparency, as a concept at least, is here to stay. However, the details of what that means and the new obligations that pharmaceutical companies will need to deal with are yet to be determined. For pharmaceutical compliance professionals, 2018 will continue to be a time of high uncertainty and an ever-increasing workload. This article examines the current state and what the future may hold.

Breaking with the tradition of past Food and Drug Administration (“FDA”) heads, Dr. Scott Gottlieb continues to speak out on drug pricing and competition; topics usually considered outside of the Commissioner’s purview. However, Dr. Gottlieb is not alone.

The chorus of advocates calling for transparency in drug pricing transparency has rapidly grown from citizen activists and academics to legislators at all levels of government and now the FDA Commissioner. What is remarkable is the uniformity of their reasoning why transparency is necessary and the disparity of their ideas of what drug pricing transparency looks like.

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