Life Science Compliance Update

June 14, 2016

Pricing Bills Are Popping Up Everywhere – Review of State Prescription Drug Pricing Proposals

The price of prescription drugs has created much controversy in recent years. This article examines why the pharmaceutical industry is under such scrutiny despite the fact that expenditures for drug costs have remained steady, explores State and federal legislative response to this perceived problem, and posits the future regulatory landscape regarding prescription drug pricing.

Are prescription drug prices out-of-control? According to the Centers for Disease Control and Prevention's National Center for Health Statistics, the percent of national health expenditures in 2013 for prescriptions drugs accounted for 9.3%, while personal medical expenses related to that percentage equates to $271.1 billion. Media outlets and politicians often grab headlines with only one of those numbers, but it is important to keep things in perspective and realize that overall, the national health expenditures for prescription drug costs have remained relatively the same since 1960, when compared to other health consumption expenditures.9 The largest expense can be attributed to hospital care, which accounts for 32.1% overall or $936.9 billion, by professional services (i.e., physician and clinical services, etc.) at 26.6% or $777.9 billion.10 Based on this data, why is the pharmaceutical industry such a target then?

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June 09, 2016

Vermont Governor Signs Drug Price Transparency Bill

On Friday, June 3, 2016, Vermont Governor Peter Shumlin signed into law a bill that aims to require greater transparency on behalf of drug manufacturers when they increase the prices of prescription medicine.

The law, S.216, will require state health care regulators to develop an annual list of fifteen drugs for which "significant health care dollars" are spent and where the wholesale acquisition costs (i.e., list prices) rose by fifty percent or more over the previous five-year period, or for which the list prices rose by fifteen percent or more over a twelve-month period. The Green Mountain Care Board of Vermont will work with the Department of Vermont Health Access to develop that list.

Select manufacturers will then need to disclose "all the factors that have contributed to a price increase" and justify the price increase to the Attorney General's office, which could take companies to civil court if they decline to provide the requested information. Each violation also carries a $10,000 penalty.

The law also requires Vermont's Medicaid program to use the 340B drug pricing formula to save money on prescription drugs, and require health insurance companies to provide information for consumers on what they may need to pay for their prescriptions.

In addition, the bill requires health insurance companies through the state's Health Connect program to set up interactive websites for patients so they can find out how much their prescription drugs cost before going to get the prescription filled at the pharmacy.

In a statement issued by Governor Shumlin's office, he noted that "This bill is about accountability. The reality is that we have pharmaceutical companies raising prices on lifesaving drugs five thousand percent. When asked about those outrageous increases, CEOs are literally laughing in front of Congress. That needs to change."

What Governor Shumlin does not seem to recognize is that Martin Shkreli, presumably the aforementioned CEO, does not represent the pharmaceutical industry on the whole. Unfortnately there are going to be a few organizations that game the system, and painting all pharma execs in the same light at Shkreli does everyone a disservice.

Many of the drugs that the bill targets actually save health care costs by enabling patients to avoid more expensive procedures. It is possible that by revealing competitor pricing, or the perception that such information could be revealed in the aggregate in the Green Mountain Care Board's report, could lead to disincentivizing deeper discounts and rebates.

At an April Vermont House Health Care Committee meeting, PhRMA submitted written testimony, noting that the information on pricing may not actually be relevant because companies do not sell drugs to doctors and pharmacies and in many cases, manufacturers are actually "not privy to the final price paid in Vermont." The testimony also noted that forcing companies to disclose prices may "chill the incentive" for drug makers to give discounts to those groups.

PhRMA recommends that legislators in other states who are contemplating similar legislation instead focus "on giving patients and families what they actually need: predicable and accessible information about the out-of-pocket costs they will face and enforceable, common-sense rules that prevent discrimination and remove barriers to receiving care."

Shatterproof Report on Critical Elements of Effective State Opioid Legislation

The opioid epidemic has been a prominent talking point in many circles lately, including physician groups, Congress, and, of course, the pharmaceutical industry. There are many possible solutions coming out of these discussions, including ideas like: public health surveillance, provider education, prescribing guidelines, community-based drug abuse prevention programs, regulatory oversight, and prescription drug monitoring programs.

Shatterproof, a national organization that is "committed to preventing substance use disorder and facilitating access to evidence-based treatments without shame or stigma for those afflicted," believes that one solution to this problem is the design, enactment, and effective utilization of Prescription Drug Monitoring Programs (PDMPs).

What is a PDMP?

A PDMP uses a statewide electronic database to collect designated data on controlled substances that are dispensed within the state. When properly utilized, PDMPs can identify and prevent drug misuse or diversion, identify polypharmacy, and offer treatment to patients in need of support, while continuing to ensure the legitimate medical use of painkillers. The data may also be more broadly used to analyze prescribing patterns and trends in use, ultimately informing patient-centered public health initiatives.

PDMPs have been around since the 1930s, when the concept was introduced as a paper-based database to track Schedule II drugs so that law enforcement officials could identify diversion. Many changes were made to PDMP regulations through the years, and in 2014, the Center for Disease Control and Prevention (CDC) began funding a Prevention Boost State Program to equip states with the resources and scientific assistance to prevent prescription opioid overdoses by addressing the inappropriate prescribing that fuels the epidemic. That program supports three key areas, including maximizing PDMPs.

To date, forty-nine states and the District of Columbia have enacted some form of legislation authorizing the creation and operation of a PDMP. However, in the majority of the states, according to Shatterproof, PDMP participation by prescribers is low, thereby compromising the effectiveness of this clinical tool.

Concerns over PDMP

Some express concern that PDMPs will eventually lead to limiting access to prescription opioids for patients in need. However, Shatterproof insists that is not going to happen. Shatterproof states that the objective is to protect patients from being prescribed opioids they do not need, in volumes that are unnecessary, or in combination with benzodiazepines. These three protections help minimize the likelihood for patients to develop an addiction to opioids, or result in death from an overdose.

How to Make PDMP Better

Shatterproof has analyzed PDMP practices and policies to identify a proven model for states to adopt. Through this guidance, states may enact state-specific legislation that has the potential to save lives of residents.

The twelve critical elements to effective state legislation and PDMPs are:

  1. Dispensers report specified information, quickly;
  2. Prescribers look at the PDMP before prescribing drugs in Schedules II, III, and IV;
  3. Licensed prescribers must register with PDMP;
  4. Delegation of PDMP data queries should be enabled;
  5. Specified recipients of PDMP data should be authorized;
  6. Proactively analyze and distribute PDMP data;
  7. PDMP data should be shared with other states;
  8. De-identified information should be provided;
  9. A community-based approach to PDMP data should be taken;
  10. Link PDMP data to pain and addiction treatment;
  11. Institute confidentiality protections;
  12. Track and report evaluation measures.

The Shatterproof report goes into further detail, even going so far as to recommend legislation and provide the rationale for the recommended legislation.

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