Life Science Compliance Update

August 22, 2017

CMS Announces Part D Premiums Are Going Down


On July 31, 2017, the Centers for Medicare and Medicaid Services (CMS) announced that Medicare Part D premiums will drop in 2018. The announcement states that the Part D national average monthly bid amount for 2018 will be $57.93, the 2018 Part D base beneficiary premium will be $35.02, and the de minimis amount will be $2.

This decrease is the first drop in five years, in part because of the bids submitted by drug plans for basic coverage in Part D and because rebates and other price concessions are projected to grow faster than drug costs. The decline comes amid reports of surging spending in Medicare on specialty drugs.

"This is encouraging news for the nearly 43 million seniors who are enrolled in the program," said Health and Human Services Secretary Tom Price.

Part D offers “an abundance of competing choices in each region and uses cutting edge, cost-saving tools like pharmacy networks and home delivery,” Mark Merritt, president and chief executive officer of the Pharmaceutical Care Management Association, told Bloomberg BNA after the announcement.

National Average Monthly Bid Amount

The national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone prescription drug plan and MA-PD plan described in section 1851(a)(2)(A)(i) of the Act. The weights are based on the number of enrollees in each plan. The reference month for the 2018 calculation was June 2017. As noted above, the national average monthly bid amount for 2018 is $57.93.

Base Beneficiary Premium

The base beneficiary premium is equal to the product of the beneficiary premium percentage and the national average monthly bid amount. The beneficiary premium percentage (“applicable percentage”) is a fraction, with a numerator of 25.5 percent and a denominator equal to 100 percent minus a percentage equal to (i) the total reinsurance payments that CMS estimates will be paid for the coverage year, divided by (ii) that amount plus the total payments that CMS estimates will be paid to Part D plans based on the standardized bid amount during the year, taking into account amounts paid by both CMS and plan enrollees.

De Minimis Amount

Plans will have from Monday, July 31, 2017 until 11:59 PM Pacific Daylight Time on Monday, August 7, 2017 to complete rebate reallocation. Starting Tuesday, August 8, 2017 until 11:59 PM Pacific Daylight Time on Friday, August 11, 2017, plans can inform CMS of their intent to participate in the de minimis program.

Under the Affordable Care Act (ACA) §3303(a), a prescription drug plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD) may volunteer to waive the portion of the monthly adjusted basic beneficiary premium that is a de minimis amount above the low income subsidy (LIS) benchmark for a subsidy eligible individual. The law prohibits CMS from reassigning LIS members from plans who volunteered to waive the de minimis amount. As noted above, the de minimis amount for 2018 will be $2.

This announcement is further evidence that Part D continues to provide beneficiaries with access to affordable prescription drug coverage. Year after year, the monthly premiums have been and continue to be regularly stable. Stable premiums combined with a wide range of plan choices ensure that Part D coverage remains available and affordable for seniors and people living with disabilities.

Medicare will release the actual premiums in mid-September, in time for the Oct. 15 to Dec. 7 open enrollment period. Beneficiaries should be on the lookout then for 2018 information from their own plan to see if their premiums are going up or down. They can decide whether they want to switch to a different company.

August 17, 2017

Ohio “Drug Price Relief Act” Ballot Update


We have previously written about the ballot proposition that is scheduled to be on the ballot in Ohio this November as Issue #2.

– An analysis by former Ohio Budget Director Greg Browning has found that a key claim by proponents of the so-called Ohio Drug Price Relief Act is “simply false and without merit.”

Backers of the November ballot issue have repeatedly asserted that passing the initiative would save Ohio at least $400 million per year. But Browning, who served as Ohio Budget Director from 1991-98, says that in making that claim, proponents appear to have “ignored the significant discounts Ohio currently receives on prescription drugs” and thereby “used faulty logic involving the most basic of relevant policy and fiscal realities.” 

As evidence of the incorrect assertions, Browning notes,

“In FY 2015, Ohio Medicaid spent over $2 billion on prescription drugs for those three million recipients. However, after a mandatory Medicaid discount of 23.1 percent plus numerous additional supplemental rebates that Ohio negotiated, this number was reduced to approximately $1.5 billion. Initiative backers appear to ignore these realities. Instead, they assume Ohio could apply a simple, across-the-board reduction of 20 to 24 percent per year to its current spending.”

Dale Butland, Communications Director for Ohioans Against the Deceptive Rx Ballot Issue, stated,

“This is a perfect example of why the so-called Ohio Drug Price Relief Act is deceptive and misleading. ODPRA proponents want voters to believe that while the VA receives a 24 percent discount on the drugs it purchases, our state government pays full price. Either they don’t know that Ohio is already getting a huge discount, or they’re intentionally misleading the voters. But either way, their claim that passing the ballot initiative could save taxpayers an additional $400 million per year—on top of the at least $500 million we’re already saving—is utterly preposterous. The truth is that both the VA and the state of Ohio receive significant mandatory discounts on the drugs they purchase, and both negotiate significant additional discounts with drug manufacturers. Ballot issue proponents are great at making wild claims, but not so good at providing evidence to back them up. It’s time they were held to account. How, exactly, did they come up with their $400 million savings figure? It’s time they showed their math.”         

How Does Current Support Shake Out?

Ohioans Against the Deceptive Rx Ballot Issue announced that its opposition coalition has doubled in size since the campaign launched on May 23. With the Ohio Farm Bureau, the Ohio Alliance for Civil Justice and the Academy of Medicine of Cincinnati among the latest to join, the number of “no” coalition partners now stands at 61 organizations, up from roughly 30 when the campaign began.    

By contrast, not a single statewide organization has publicly announced its support for passing the ballot initiative. 

According to Campaign Communications Director Dale Butland:

“Though the deceptive prescription drug ballot issue will now be known as Issue 2, it is no less misleading or potentially damaging to Ohio and Ohioans than it was before. It is still unworkable. It could still lead to lawsuits, still give the proposal’s sponsors an unprecedented right to intervene in those court actions and still force taxpayers to pay the sponsors’ legal fees whether they win or lose.

But worst of all, this poorly written proposal won’t save money for the state or lower drug costs for anyone. In fact, every expert who has studied it says it is likely to do the exact opposite: raising drug costs for most Ohioans and reducing access to needed medications for some of our state’s most vulnerable citizens.

That’s why medical organizations representing well over 30,000 Ohio doctors, nurses, pharmacists and hospitals—along with veterans, farmers, businesspeople, organized labor and many others—are sounding the alarm and urging Ohioans to vote ‘no.’ Issue 2 is a prescription for disaster.”

June 19, 2017

What Does the Nevada Law Mean for Pharma?


We have written several articles on the Nevada bill that requires patient advocacy organizations to report all payments they receive from industry. The bill requires all payments be reported, irrespective of the nature of the payment (i.e., research, education, donations, etc.).  On June 15th the Governor Sandoval signed that bill into law.

This law is the first of its kind, focusing on two specific groups of drugs that are used to treat diabetes: insulin and biguanides. Most other state legislation attempting to quell prescription drug costs focus on drug prices in the general sense.

In general, the law requires that any diabetes drugmakers that have raised the list prices of drugs by a certain amount disclose information about the costs of making and marketing the drugs, along with any rebates they provide. Pharmacy benefit managers (PBMs) will also have to disclose what rebates they negotiate with diabetes drug makers, along with any rebates the PBMs keep.

Another interesting part of the law is it requires pharmaceutical sales representatives register with the state (think, Chicago and Washington, DC), and has them supply certain details about the conversations they have with healthcare providers.

Perhaps the most shocking part of the whole bill is that is requires nonprofits to disclose when they get funding from drug companies, PBMs, and health insurers.

Step-by-Step Digest

Sections 4 and 6

The first bulky section of the legislation is Section 4, which requires the Department of Health and Human Services to create a list of prescription drugs that are used to treat diabetes and that have been subject to a significant price increase. Significant price increase is defined as an increase in the wholesale acquisition cost of the drug of a percentage equal to or greater than the percentage increase in the CPI Medical Care Component during the immediately preceding year or twice the percentage increase in the CPI Medical Care Component within the immediately preceding two calendar years.

Under Section 4, any manufacturers on the list will be required to submit to the Department a report, explaining the reasons behind the cost increase. The report must include a list of each factor that has contributed to the increase; the percentage of the total increase that is attributable to each factor; an explanation of the role of each factor in the increase; and any other information prescribed by regulation by the Department. This report must be submitted on or before July 1 of a year in which a drug is included on the list.

The Department will then analyze the information submitted by manufacturers and compile a report concerning the reasons for, and effect of, the increases. The Department’s report is due on or before September 1.

Section 6 requires the Department to place the aforementioned report on the Department’s website, for public viewing.

Section 18

Section 18 requires a PBM to be licensed by the Commissioner, in addition to being licensed by the Commissioner of Insurance. It also authorizes the Commissioner to adopt regulations governing the management of prescription drug coverage by a PBM.

Section 19

This section provides that a PBM has a fiduciary duty to an insurer with which the PBM has entered into a contract to manage prescription drug coverage. Further, PMBs are required to provide insurers a certain percentage of the rebates issued by a manufacturer to the PBM for the sale to an insured person of a prescription drug used to treat diabetes.

Sections 20 & 21

These sections prohibit PBMs from engaging in certain trade practices (i.e., prohibit a pharmacist or pharmacy from providing information to a covered person concerning the amount of any copayment or coinsurance for a prescription drug or informing a covered person about the clinical efficacy of less expensive alternative drug; prohibit a pharmacy from offering or providing delivery services directly to a covered person as an ancillary service of the pharmacy; or penalize a pharmacist or pharmacy for selling a less expensive alternative drug to a covered person) and requires a PBM to post the rate at which the PBM reimburses each pharmacy for each prescription drug used to treat diabetes that is covered by a prescription drug plan managed by the PBM on its website.

The PBM report that information to the Division of Insurance of the Department of Business and Industry. That information includes the aforementioned reimbursement rate, as well as the total amount of all rebates, under several different categories.


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