Life Science Compliance Update

October 20, 2016

CMS Releases MA and Part D Landscape Information for 2017

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On September 22, 2016, the Centers for Medicare and Medicaid Services (CMS) announced information on premiums and costs for Medicare Advantage (MA) and stand-alone prescription drug plans (PDPs) for calendar year 2017.

CMS stated that 2017 Medicare Advantage premiums will “remain stable [and even decrease] and more enrollees will have access to higher quality plans while, for the seventh straight year, enrollment is projected to increase to a new all-time high.” For calendar year 2017, CMS has estimated that the average Medicare Advantage monthly premium will decrease by roughly $1.19 (about a 4% decrease), from $32.59 to $31.40. Approximately two-thirds of Medicare Advantage enrollees will experience no premium increase. 

CMS also reports that ninety-nine percent of Medicare beneficiaries will have access to a Medicare Advantage plan in 2017 and that more of those plans will offer additional supplemental benefits, such as dental, vision, and hearing benefits.

CMS is expecting an increase in enrollment, to 18.5 million enrollees next year, an increase of sixty percent since 2010. Enrollment in Medicare Advantage plans is projected to increase to thirty-two percent of all Medicare enrollees in 2017, an increase from just twenty-four percent in 2010.

It is estimated that average premiums for the Medicare Part D prescription drug program will also remain stable, saving beneficiaries billions on prescription drugs. In July 2016, CMS announced that the average premium for a basic Medicare prescription drug plan is projected to be $34 a month in 2017. Recent projections show that access to a prescription drug plan will remain strong in 2017, with 100% access to a plan in the individual market, and improved access to employer plans. The average number of Medicare Advantage plan choices per county is relatively unchanged from 2016, and access to supplemental benefits will continue to grow.

Andy Slavitt, CMS Acting Administrator, said “Medicare Advantage and the prescription drug benefit continue to be a great option for seniors and people living with disabilities. Medicare enrollees will continue to have access to predictable premiums and high quality care.”

It is estimated that due to the Affordable Care Act, Medicare beneficiaries are seeing reduced costs through: (1) savings on covered brand-name and generic prescription drugs and (2) access to certain preventive services with no co-pay or other cost sharing. More than 11 million seniors and people with disabilities have received savings and discounts in the coverage gap, since the enactment of the Affordable Care Act.

Open Enrollment for 2017 Medicare health and drug plans starts October 15, 2016, and ends on December 7, 2016.

Information on premiums and costs of 2017 Medicare health and drug plans can be found here.

A fact sheet on Medicare Advantage and Part D can be found here.

Information on Medicare Open Enrollment, including state-by-state fact sheets, can be found here.

State-by-state information on discounts in the “donut hole” can be found here.

State-by-state information on utilization of preventive services at no cost sharing to beneficiaries in Medicare can be found here.

February 19, 2016

2016 The Year of Pharmacy Enforcement

For some time now, both the U.S. Department of Justice ("DOJ") and the Drug Enforcement Administration ("DEA") have signaled their interest in pursuing audits and enforcement actions against pharmacies and pharmacists. With quality problems at compounding pharmacies and the debate around opioid addiction dominating headlines and the political race, this increased enforcement is no surprise. Four separate cases illustrate why we say 2016 is going to be the year of pharmacy enforcement.

Palisade Pharmacy

In December 2015, Palisade Pharmacy in Palisade, Colorado agreed to pay $60,000 in civil penalties to settle allegations by the U.S. Attorney's Office in Colorado that it violated various provisions of Controlled Substances Act (CSA) and the Combat Methamphetamine Epidemic Act of 2005 (CMEA).

Palisade allegedly committed 480 violations of the two (2) Acts including

  1. shipping controlled substances to unregistered locations;
  2. failing to verify addresses on DEA order forms to the corresponding addresses registered with the DEA;
  3. filling prescriptions for controlled substances despite missing required information on the face of the prescription;
  4. failing to maintain, record, and retain complete and accurate records relating to the distribution of controlled substances; and
  5. selling List I chemical products without a valid self-certification certificate.

In addition to paying the penalty, Palisade signed an administrative settlement agreement agreeing to enhanced reporting and training requirements, as well as a three-year surrender of its CMEA certification that allows it to sell List 1 chemicals. According to Barbra Roach, Special Agent in Charge of the Drug Enforcement Administration's Denver Field Division, "The diversion of pharmaceuticals and chemicals for illicit gain and profit is nothing more than drug trafficking. Those occupying positions of trust and responsibility, such as medical practitioners and pharmacists, have to be held accountable when they chose to operate illegally and threaten the safety of our communities."

Nashville Pharmacy Services

On January 5th, the U.S. Attorney's Office (USAO) for the Middle District of Tennessee announced that it had reached a settlement with Nashville Pharmacy Services, LLC. and its owner Kevin Hartman. The pharmacy, which specializes in HIV and AIDS-related medications, allegedly overbilled Medicare and TennCare for pharmacy services, and will now pay up to $7.8 million to make those allegations go away.  The whistleblower in this case, Marsha McCullough, was a former order entry technician who worked for Nashville Pharmacy Services.

According to the USAO, from February 2011 to May 2012, Nashville Pharmacy Services:

  • automatically refilled medications without a request from the beneficiary, their physician, or a person acting as the agent of the recipient, in violation of TennCare's contractual requirements;
  • routinely and improperly waived TennCare and Medicare co-payments without an individualized assessment of those beneficiaries' inability to pay;
  • improperly used pharmaceutical manufacturers' co-payment cards to pay the co-payments of individual Medicare recipients for thirteen Medicare beneficiaries;
  • billed Medicare and TennCare for certain medications after the dates of death of 15 beneficiaries with either Medicare or TennCare coverage; and
  • billed Medicare or TennCare for drugs that lacked a valid prescription from a licensed provider for 22 beneficiaries with either Medicare or TennCare coverage.

The case also shows the lengths the U.S. Government will go in prosecuting pharmacy allegations.  No less than four separate Government bodies were involved including:

  1. United States' Attorney's Office for the Middle District of Tennessee,
  2. Tennessee Attorney General's Office,
  3. U.S. Department of Health & Human Services Office of Inspector General and
  4. Tennessee Bureau of Investigation Medicaid Fraud Control Unit.

MedIV

Most recently, two Alabama pharmacists agreed to plead guilty in connection with the deaths of nine (9) patients.  The cases date back to 2011 and involve the compounding pharmacy Advanced Specialty Pharmacy doing business as MedIV. The pharmacy allegedly compounded drugs in unsanitary conditions sometimes leaving batches out overnight in open, unrefrigerated containers. The unsanitary conditions resulted in some of the products becoming contaminated with bacteria that later killed the nine patients.

The pharmacists are the former-pharmacist-in-charge of MedIV as well as its former president.  Each has agreed to plead guilty to two (2) misdemeanor counts under the Federal Food, Drug, and Cosmetic Act.  If the judge imposes the maximum penalty, both men face a maximum of two (2) years in prison and a fine of up to $500,000.

While individual criminal pleas are rare in food and drug cases, this case reinforces how important the U.S. Department of Justice ("DOJ") is about holding individuals accountable, and the increasing regulatory and enforcement focus on pharmacies.

CVS Pharmacy, Inc.

The USAO for the District of Maryland announced on February 12, 2016, that CVS had agreed to pay $8 million to resolve claims that some of its pharmacies in Maryland had violated the Controlled Substances Act (CSA). Specifically, the Government alleged that over a 4-year period from 2008 to 2012 some of the Maryland CVS pharmacies dispensed controlled substances, including oxycodone, fentanyl and hydrocodone, failed to comply with CSA requirements, including having a pharmacist ensure the prescriptions for controlled substances were issued for a legitimate medical purpose.

"Pharmacies that dispense controlled substances have a duty ensure that prescriptions they fill were issued for legitimate medical purposes," said U.S. Attorney for the District of Maryland Rod J. Rosenstein. "Doctors and pharmacists are the gatekeepers of the effort to prevent the abuse and diversion of pharmaceutical drugs for non-medical purposes."

Conclusion

The unfortunate thing is that in all four cases this was preventable.  In the Palisades, Nashville and CVI cases, the proper internal review and the establishment of SOPs, basic training, and monitoring were the need. In the case of MedIV, establishing a Quality Management System and following current Good Manufacturing Practices could have prevented needless tragedy.

Over the years, pharmacy compliance programs have been sorely neglected. Pharmacies and pharmacists need to take compliance seriously and take the necessary steps to establish or reinforce their programs -- before the Government comes calling, which seems more likely with each passing day.

by Dr. Seth Whitelaw, President & CEO of Whitelaw Compliance Group, LLC. and Editor, Life Science Compliance Update

January 11, 2016

Pharmacy Benefit Managers Begin to Cut Ties With Specialty Pharmacies

Specialty pharmacies have been around since the 1970s, when they started to pop up to deliver products that required special handling to doctors' offices and hospitals. Some of the first specialty pharmacy products included therapies for cancer, HIV/AIDS, or hemophilia. Fast forward to today, when specialty pharmacies are used for a lot more, including complex, high-cost drugs for rare or chronic diseases.

Pharmacy Benefit Managers Cut Ties

Pharmacy benefit managers (PBMs) are starting to crack down on those specialty pharmacies, with at least eight specialty pharmacies cut off from reimbursements over the past few weeks. PBMs are focusing on pharmacies with close ties to certain drug makers, such as Valeant Pharmaceuticals and Horizon Pharmaceuticals. The PBMs are claiming that the relationships between drug makers and specialty pharmacies leads to a favoring of brands over generics, which can raise health spending and is prohibited by reimbursement rules.

The specialty pharmacies, on the other hand, state that they are helping patients get access to the drugs they need, oftentimes with help from copay assistance programs founded by pharmaceutical companies.

This crackdown comes after the Valeant-Philidor relationship became a topic of discussion. Adam Fein, president of Pembroke Consulting states, "The Valeant-Philidor relationship woke payers up to potential problems in their pharmacy networks. We are now seeing much greater scrutiny of the independent pharmacies that may not be complying with payer requirements." As a result of that relationship, all three major PBMs have stopped doing business with Philidor.

Express Scripts, CVS Health, and Optum Rx (the UnitedHealth PBM) are three of the PBMs who have cut off ties to multiple specialty pharmacies. These terminations come from PBMs who manage drug benefits for over 100 million Americans. Express Scripts, which is the nation's largest PBM, has gone so far as to change the algorithms it uses in audits to find pharmacies that have a heavy focus on one drug manufacturer. As a result, Express Scripts has cut off business ties to Linden Care, a pharmacy tied to Horizon Pharmaceuticals, along with five other specialty pharmacies.

CVS Health, the second largest PBM, responded to a Reuters email saying they are reviewing the pharmacies with ties to drug manufacturers and will remove those pharmacies that are falling short of their contract.

This recent crackdown, which is all-but-sure to continue growing in the coming weeks, is a continuation of the battle between PBMs and drug makers that use copay coupons to boost sales of their prescriptions. PBMs have said that drug makers were using copay discounts to their benefit to "circumvent their own tiered formulary rules designed to steer patients to lower-cost generics."

Specialty Pharmacy Pushback

While it may seem as though the PBMs are trying to help the consumer by cutting of ties to these specialty pharmacies, specialty pharmacies want to highlight the fact that Express Scripts, CVS, and OptumRx control more than two-thirds of the market through their own mail-order operations. It is speculated that the PBMs could be trying to curb the explosive growth of smaller, independent pharmacies, and protect their own bottom line.

Horizon Pharmaceuticals Chief Executive Timothy Walbert is sticking to his guns and attempting to further the aforementioned theory as it relates to Express Scripts and Linden Care, "Our philosophy of ensuring that patients get the medicine their doctors prescribe is threatening Express Scripts' profiteering and exposing what we believe is a lack of care for patients and respect for physicians."

Walbert is not the only specialty pharmacy head who harps on that point, either. Both Linden Care Pharmacy and Irmat Pharmacy allude to the idea in their lawsuits, mentioned below.

Lawsuits on the Horizon

These actions by PBMs are leading to legal recourse taken by the specialty pharmacies. Linden Care Pharmacy has sued Express Scripts, while Irmat Pharmacy sued OptumRx for moving to terminate their contracts.

Linden Care Pharmacy

Linden Care Pharmacy filed their suit against Express Scripts on November 10, 2015. Linden Care requested a temporary restraining order (TRO) against Express Scripts for dropping Linden Care from Express Scripts' network earlier this month. On November 25, 2015, a U.S. District Court denied that TRO, stating that Linden Care failed to make "a clear showing that it was entitled to the relief requested" or that "extreme or very serious damage will result from a denial of preliminary relief."

Marc Wiener, chief executive of Linden Care issued a statement, saying, "We are disappointed in this ruling and believe we will prevail in arbitration proceedings."

Irmat Pharmacy

Irmat filed their suit against OptumRx on November 12, 2015. Matthew Cantor of Constantine Cannon, Irmat's attorney, issued a lengthy statement summarizing their belief that "OptumRx's actions are nothing more than a cover for what we believe is an illegal and anticompetitive termination of Irmat's contract."

Conclusion

As these cases continue to wind their way through the courts, it is unknown if they will be joined by others. However, what is known is that all pharmacies can likely expect greater oversight after the disclosures of Valeant and Philidor.

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