Life Science Compliance Update

April 17, 2018

State of Washington Enacts Statewide Drug Disposal Law

Drug Take Back 3_0

On March 22, 2018, the State of Washington officially enacted the first statewide drug take-back program in the country. Washington Governor Jay Inslee signed HB 1047 into law, which establishes a single, uniform, statewide system of regulation for safe and secure collection and disposal of medicines through a uniform drug "take-back" program operated and funded by drug manufacturers.

The Act goes into effect on June 7, 2018, and requires “covered manufacturers” to submit their proposed programs by July 1, 2019. Also by July 2, 2019, Washington’s Department of Health (DOH) must determine its own costs for administration, oversight, and enforcement, as well as set fees and adopt rules establishing program proposal requirements. The estimated costs to pharmaceutical companies is less than one percent of the annual sales made in Washington markets, though time will tell.

Covered Drugs

Under the Act, only “covered drugs” are part of the take-back program. The Act further defines “covered drugs” as those that are both prescription and non-prescription, brand name and generic, drugs for veterinary use, and drugs in medical device and combination products. Included in that broad definition are drugs administered via ingestion, injection, and inhalation. Excluded from the Act are “exposed” needles and sharps, as well as “used drug products that are medical wastes.”

Further, “covered drugs” are those that “covered entities” no longer want and that the covered entities either have already abandoned or discarded or plan to abandon or discard.

Exempt Products

The follow products are exempt from any requirements under the Act: (1) Vitamins, minerals, or supplements; (2) Herbal-based remedies and homeopathic drugs, products, or remedies; (3) Schedule I controlled substances; (4) Cosmetics, shampoos, sunscreens, lip balm, toothpaste, antiperspirants, or other personal care products that are regulated as both cosmetics and nonprescription drugs under the Federal Food, Drug, and Cosmetic Act; (5) Drugs for which manufacturers provide a pharmaceutical product stewardship or drug take-back program as part of a FDA REMS; (6) Biological drug products; (7) Drugs that are administered in a clinical setting; or (8) Pet pesticide products contained in pet collars, powders, shampoos, topical applications, or other forms.

Covered Entity

The Act also defines “Covered entity” as any state resident or other non-business entity. This therefore excludes any hospitals, clinics, healthcare providers offices, veterinary clinics, pharmacies, law enforcement agencies, and any other businesses.

Covered Manufacturer

Covered manufacturers” are those that are engage in the manufacture of covered drugs that are sold in or into Washington. Under this definition, any manufacturers relating to the production, preparation, propagation, compounding, or processing of the drug, substance, or device, will be considered a covered manufacturer. The packager or labeler of the drug is also included.

Not included in this definition are any private label distributors, retail pharmacies selling the drug under the pharmacy’s store label, repackagers, or nonprofit health care corporations that repackages drugs solely to supply them to facilities or retail pharmacies operated by the same corporation or an affiliate.

Obligations of Wholesalers and Other Covered Manufacturers

A drug wholesaler that sells a drug in or into Washington must provide a list of drug manufacturers to the DOH (DOH will create a standardized form). Additionally, a retail pharmacy, private label distributor, or repackager must provide written notification to the DOH identifying the drug manufacturer from which the retail pharmacy, private label distributor, or repackager obtains a drug that it sells under its own label. The law provides that no later than 90-days following the effective date (i.e., July 7, 2018), companies must submit the list to the DOH.

What happens to county disposal ordinances? 

Depending on how soon regulations are developed, county programs may continue to operate an existing ordinance for 12 months after a state-approved program begins operating. At the end of the 12-month period, all existing and future local laws regarding drug take-back programs are preempted.

Penalties

As is perhaps expected, there are penalties that come with running afoul of the new law. Such penalties include:

  • An informal administrative conference
  • A restriction on ability to engage in certain activities; or
  • A civil fine of up to $2,000.00 per day.

Interestingly, one penalty excluded from the list of possibilities is that of the DOH prohibiting a manufacturer from selling a drug in or into the state of Washington.

March 20, 2018

Prime Therapeutics Proves PBMs’ Value

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On February 20, 2018, Prime Therapeutics issued a press release that highlighted the way it – as a leading pharmacy benefit manager – has helped save its clients billions of dollars. The 2017 drug trend reports noted that its clients saw overall expenditure reductions (per member, per month) across all three lines of business (commercial, Medicare, Medicaid) as compared to 2016. Additionally, corresponding annual savings delivered to clients in 2017 exceeded $3 billion across all three lines of business.

“Our outstanding 2017 drug trend results are hard won, especially as we continue to see ongoing and significant price increases for medicines in some of the most expensive disease categories,” said Jim DuCharme, Prime’s president and CEO. “These outcomes require many dedicated employees working tirelessly on behalf of our clients and their members to deliver optimal care and prescription drugs at the lowest net cost. Our close alignment with 22 Blue plan clients – 18 of whom are owners – allows us to see the complete pharmacy and medical drug picture to help us drive total cost of care outcomes.”

While specialty medicines continue to exert upward pressure across commercial and Medicare part D clients, Prime was able to offset those spending pressures by delivering substantial savings in other areas, including:

  • Negotiated discounts – In 2017, Prime secured substantial discounts including competitive rebates and more than $1 billion from pharmacy MAC pricing, illustrating the important role generics play in controlling drug costs. Client adoption of Walgreens-anchored networks also exerted downward pressure on trend. Incremental negotiated savings exceeded $1.9 billion.
  • Utilization management – Prime’s efforts to promote appropriate use of medicines approached $2.3 billion in total savings across all three lines of business.
  • Pain medication management – Prime is particularly proud of our efforts in managing controlled substances such as opioids. Not only has Prime decreased pain medicine expenditures across all three lines of business (-14.6 percent in commercial, -12.2 percent in Medicare and -9.8 percent in Medicaid), but these results build on Prime’s controlled substance successes over the past five years. These successes include decreasing by 71 percent the number of commercial members who were at high-risk for misuse* and reducing their health care costs by $1,500 PMPY.  

“While we’re thrilled drug expenditures for our clients declined in 2017, this doesn’t mean drug costs no longer present a challenge,” said David Lassen, chief clinical officer at Prime. “Low trend is not synonymous with low cost. Prescription drugs still represent 20 to 30 percent of costs for our health plans and employers. And out of the 46 drugs the FDA approved in 2017, eight of them drove commercial trend by about 1 percent, at an average price tag of $96,000 annually.”

“PBMs play a crucial role in counterbalancing upward forces in drug spending,” DuCharme concluded. “Without our active and assertive efforts to help drive clinically appropriate use and lowest net cost, spending on prescription drugs would be much higher. We’re proud to stand alongside our clients in this important work, helping people get the medicine they need to feel better and live well.”

March 01, 2018

Ontario Open Payments: Proposed Rule for the Health Sector Payment Transparency Act

Toronto-cbd

Pharmaceutical and Device Payment Transparency is making its way to our Northern neighbor, Canada. On December 12, 2017, the Health Sector Payment Transparency Act, 2017 (HSPTA) received Royal Assent and became part of the Strengthening Quality and Accountability for Patients Act, 2017. The passage and enactment of the HSPTA allows Ontario to claim the title of the first Canadian province or territory to require the reporting of transfers of value between the pharmaceutical and medical device industry to health professionals and hospitals. The information must be reported to the Minister of Health and Long-Term Care for publication in an online database.

Recently, the Ontario government issued draft regulations that lay out how the transparency law is expected to work, including the way anyone will be able to search the name of a health charity or non-profit in the online database to access funding information.

HSPTA was enacted in an attempt to strengthen the transparency and increase patient trust in the health care system. Under the Act, payors (those that provide a transfer of value to a recipient in relation to “medical products”) will be required to report information about both direct and indirect transfers of value over a prescribed threshold. Transfers of value, as defined in the legislation, is overly broad and includes items such as meals and hospitality, travel expenses, financial grants, referral fees, items provided on a value-added basis in connection with a procurement, renovations or leasehold improvements, and fees paid for consulting on speaking events. Medical products is also broadly defined and includes drugs, medical devices, or other prescribed products used in the healthcare system.

Different from the Open Payments system we are used to in the United States, the definition of a payor includes:

  • a manufacturer that sells a medical product under its own name or trademark, or a name or mark that is owned or controlled by the manufacturer;
  • a person who fabricates, produces, processes, packages or labels a medical product on behalf of a manufacturer;
  • wholesalers, distributors, importers or brokers facilitating the sale of medical products;
  • pharmacies;
  • laboratories or specimen collection centers;
  • marketing firms and individuals performing activities to market or promote a medical product;
  • persons who organize continuing education events for members of a health profession on behalf of a manufacturer; and
  • any prescribed person or entity.

The proposal excludes the following transactions from the reporting requirements:

  • Those with a dollar value of less than $10;
  • Salaries and benefits provided as part of employment;
  • Medical products intended to be provided to patients free of charge;
  • Educational materials and items intended for use within a clinical setting;
  • Compensation for expert testimony or other services with respect to a legal proceeding; and
  • Benefits that are provided by a drug manufacturer in accordance with ordinary commercial terms as set out in the regulations under the Ontario Drug Benefit Act.

Also included in the proposed regulation is a correction process, which includes the following:

  • A payor is required to notify recipients in writing of the information it intends to report to the Minister about each transfer of value it provided to the recipient in the previous calendar year.
  • The payor must provide the information to the recipients no later than March 31st and provide a minimum of 45 days for the recipient to review the information before it is submitted to the ministry.
  • If the recipient wishes to have the information corrected, the recipient must ask the payor to correct the information and provide substantiating materials to support the request.
  • Once the payor receives a request to correct information, the payor must respond to the recipient with its decision within 30 days.
  • If the payor agrees with the recipient’s request to correct information, the payor must provide the corrected information to the ministry within 15 days.
  • If the payor denies the recipient’s request to correct information the payor must, within 15 days, submit to the Minister a request to mark the information as “disputed”.
  • The recipient or the payor can submit a request to the Minister to correct information up to 12 months after the information has been published.

Both payors and recipients are required to retain all records of any qualifying transactions. Payors would then have to report transfers of value to the Minister of Health and Long-Term Care no later than June 30th of the following calendar year via an electronic data collection platform created and maintained by the Minister. The ministry is proposing that the Act and regulation would come into force on January 1, 2019, with the first annual reporting to the ministry from payors required by June 30, 2020.

However, while both parties to any transfer of value are required to retain records, the law places the burden for reporting the payments on the medical-device makers, not the recipients. Durhane Wong-Rieger, the president of the Canadian Organization for Rare Disorders (CORD,) a national network of patient-advocacy groups, said she has "no problem" with revealing the specifics of CORD's funding, as long as the administrative burden of reporting the information is not placed on small non-profits such as those she represents.  The inclusion of continuing medical events is unique to Canada as there is still no viable rigorous self-regulation for CME in Canada as there is in the United States.

The regulations are open for public comment until April 5, 2018. You can submit comments here.

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