Life Science Compliance Update

February 16, 2017

New York Governor Unveils Plan to “Curb” Drug Pricing

CUOMO_Governor-Andrew-Cuomo

Mere days before President Donald Trump was sworn into office, when any national action could (or would) be taken on drug pricing, Governor Andrew Cuomo of New York took the matter into his own hands. On January 11, 2017, he presented a three-pronged approach to “protect New Yorkers from the soaring prices of prescription drugs in New York State.”

The three-pronged approach will:

  • Insulate taxpayers by preventing prescription drug price gouging in the Medicaid program;
  • Impose a surcharge on drug manufacturers that charge exorbitant prices and reallocate that money to insurers and businesses to lower premiums for the following year; and
  • Protect ratepayers from abusive business practices by intermediaries that drive up drug prices.

According to Governor Cuomo, “The skyrocketing costs of prescription drugs is an issue that the nation has been grappling with for years and as we have so many times before, New York is prepared to show the path forward. Perpetually rising drug costs hurt the wallets of taxpayers and the bottom lines of businesses, but for those who desperately need lifesaving medicine and cannot afford it, the consequences can be dire. The idea that in 2017 someone who has fallen ill might not have the opportunity to recover simply so someone can line their pockets with a few more dollars is unconscionable and must be stopped immediately.”

Price Ceiling

First, the Governor’s plan would effectively create a price ceiling for certain high cost prescription drugs reimbursed under the Medicaid program by requiring a 100 percent supplemental rebate for any amount that exceeds a benchmark price recommended by the state's Drug Utilization Review Board. 

Surcharges

The second prong of the Governor’s plan imposes a surcharge on any amount by which the price of these high-priced drugs exceeds the benchmark recommended by the Drug Utilization Review Board in the Medicaid context, when these drugs are sold into the state. All proceeds from the surcharge amount will be deposited into a dedicated fund held and administered by the Department of Financial Services. The proceeds collected from surcharges will be reallocated to insurers to lower insurance premiums for New Yorkers the following year.

Protecting Consumers

The third step in the Governor's plan works to protect consumers from unfair business practices by intermediaries known as Pharmacy Benefit Managers, who many believe are contributing to the rising cost of prescription drugs. Pharmacy Benefit Managers are brokers that negotiate the prices of drugs for insurance plans and self-insured employers. Recently, the U.S. Justice Department and others have alleged that this industry is rife with conflicts of interests and undisclosed arrangements entered into at customers’ expense.

Under the Governor's proposal, Pharmacy Benefit Managers will be required to immediately register with the State, and be subject to new regulations requiring disclosure of financial incentives or benefits for promoting the use of certain drugs, as well as other financial arrangements affecting customers. The proposal would also require Pharmacy Benefit Managers to be licensed by the State Department of Financial Services beginning in 2019. The Department of Financial Services will also have the authority to suspend or revoke a Pharmacy Benefit Manager's license for deceptive, unfair, or abusive business practices, or for conduct that violates the standards set by the Department. 

However, just because the Governor has proposed it, it is not guaranteed to become law. First, the New York Legislature must approve it.

Industry Reaction

Priscilla VanderVeer, spokeswoman at PhRMA, noted that Cuomo’s plan seems eerily “similar to previous proposals that were soundly rejected by the Legislature.” VanderVeer further noted that breakthrough medicines continue to save lives daily, while also reducing health costs. She said it is the insurers that are imposing high drug deductibles and other out-of-pocket costs that are limiting access to drug therapies. “Government mandates and interventions that do nothing to help patients access their medicines are not the solution,” she said.

The Pharmaceutical Care Management Association, which represents PBMs, said that the plan, “would increase costs by tying the hands of employers, unions, and public programs that hire PBMs to negotiate discounts on prescription drugs,” also noting that it may be illegal because of a recent Eighth Circuit Court of Appeals ruling that struck down a mandate in Iowa that attempted to limit PBMs.

February 14, 2017

Connecticut APRN Reporting Policy Starting to Come to Fruition...Kind Of

IStock_000010012895Medium-1

We have previously written about Connecticut policy that was aimed at reporting payments from pharmaceutical and device manufacturers to nurse practitioners. Back when the law was originally passed, Connecticut planned to require pharmaceutical and device manufacturers to report payments and transfers of value to advance practice registered nurses (APRNs), starting July 2015. APRNs include: nurse practitioners, clinical nurse specialists, nurse anesthetists, and nurse midwives. The first reporting date is from July 1, 2015 to June 30, 2017, and requires annual reports on July 1, 2017 (rather than quarterly filings as was in the original legislation).

Under the Connecticut General Statutes, a licensed APRN who has maintained their license for at least three years, and engaged in the performance of advanced practice level nursing activities in collaboration with a physician for at least three years (and at least two thousand hours), may – with or without physician collaboration –

Perform the acts of diagnosis and treatment of alterations in health status and prescribe, dispense and administer medical therapeutics and corrective measures and dispense drugs in the form of professional samples in all settings. Any advanced practice registered nurse electing to practice not in collaboration with a physician shall maintain documentation of having engaged in the performance of advanced practice level nursing activities in collaboration with a physician for a period of not less than three years and not less than two thousand hours.

Companies are required to register and pay a fee.

Any eligible APRNs are required to submit written notice to the Department of Public Health of his or her intention or practice without physician collaboration prior to beginning such a practice. The Department of Public Health is responsible for annually publishing a list of such APRNs who are authorized to practice not in collaboration with a physician, which can be found here.

There are only roughly 450 providers listed who are authorized to practice not in collaboration with a physician. However, the list of providers does not include an address – just the provider name and license number. Such an effort at transparency could lead to unnecessary confusion and uncertainty, on the part of both patients and those trying to keep up with reported payments.  

With no address or much of any identifying information, it could be difficult to be certain that the APRN whose information they are looking at online is the APRN they are seeing. While there are many unique names on the list of APRNs who can practice without physician collaboration, even the most unique names can be shared by multiple people, not to mention many common names.

Further, we have seen the difficulties with the federal Open Payments, and how many payments get attributed to the incorrect physicians, with more information available to them than just a name and license number. Typically, there are hospital affiliations, addresses, etc. that help to identify and confirm physician identities. Even still, there are many payments that are misattributed year after year.

The dates of reporting is also news to applicable manufacturers (GPO's, Distributors, Drug and Device Manufacturers), It is not known why they went back to the July 1, 2015 recording date after the state legislature had delayed reporting.

This move by Connecticut was an expansion of the requirements from under the current Open Payments System; under federal law, APRNs are excluded from the reporting obligations.     

In the interim, keep your eye on Connecticut and other states who are also looking to expand the federal Sunshine Act, as well as moves made by Congress to expand the federal Sunshine Act even further (to be expounded upon in a future article).

December 16, 2016

Twenty State Attorneys General Sue Pharma Companies for Alleged Conspiracy

Medium_AG_George_Jepsen

Twenty states have announced that they have filed a lawsuit against generic-drug makers including Heritage Pharmaceuticals Inc., Teva Pharmaceuticals USA Inc., Mylan Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, and Mayne Pharma (USA) Inc., alleging that the companies conspired to fix prices and constrain competition for antibiotics and diabetes treatments.

The suit, filed in Connecticut federal court (redacted version here), claims that an investigation by that state into the generic drug market has uncovered evidence that some of the companies illegally divided up the market for doxycycline hyclate, an antibiotic used to treat respiratory tract infections.

Mylan released a statement that said it knows “of no evidence” that it participated in price fixing. Teva said it has “not found evidence that would give rise to any civil or criminal liability.” No other companies have responded to requests for comment by Courant.

Connecticut Attorney General George Jepsen noted that the investigation began two years prior, when an assistant attorney general read a news report about high generic drug prices – “something seemed fishy.” Jepsen filed the civil lawsuit to seek financial damages on behalf of patients and the Connecticut’s Medicaid program. The investigation is ongoing and Jepsen noted that he believes this “is just the beginning.”

Jepsen will continue to not only pursue the present lawsuit, but also other enforcement actions, aggressively and will work with other state officials “to restore competition and integrity to this important market.”

The complaint accuses the defendants of coordinating their schemes through direct interaction with their competitors at industry trade shows, customer conferences, and other events, as well as through emails, phone calls, and text messages. The states have alleged that the efforts to fix and maintain prices, allocate markets, and thwart competition, caused significant, harmful, and continuing effects in America’s healthcare system.

Prices for dozens of generic drugs have "uncharacteristically risen," some skyrocketing for no apparent reason, prompting complaints from public officials, payers and consumers, the lawsuit says. In some cases, costs have doubled, tripled or increased up to 1,000 percent or more, state officials say.

The lawsuit states manufacturers of generic drugs have said the significant price increases were due to industry consolidation, plant closures required by the U.S. Food and Drug Administration (FDA), elimination of unprofitable generic drug product lines and other factors.

States allege that the drug companies knew their conduct was illegal and attempted to avoid communicating in writing, or once they knew of the investigation, attempted to delete written communications. Such conduct violates federal law barring monopolistic business practices, according to the States.

The pleadings request the Court stop the companies from engaging in illegal, anticompetitive behavior and for relief, including financial relief.  

The lawsuit by the states comes one day after DOJ filed charges against two former Heritage Pharmaceutical executives for allegedly plotting to fix prices of antibiotics and diabetes treatments. This move by the DOJ marked the first charges in the criminal probe of the generic drug industry. Jeffrey Glazer, the former CEO, and Jason Malek, ex-president, were each charged with two counts of conspiring with other (unnamed) drugmakers, from April 2013 to at least December 2015.

While Heritage commented on the accusations of the executives, noting that its internal investigation found a “variety of serious misconduct” by the two individuals who were charged and they were fired. Heritage also said they “are fully cooperating with all aspects of the Department of Justice’s continuing investigation.”

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