Perspectives

Perspectives on Trump’s Drug Importation Plan

September 5, 2019

Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs, AIS Health reported.

Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs, AIS Health reported.

Under the Safe Importation Action Plan, the first pathway would allow states, wholesalers and pharmacists to propose to HHS demonstration projects for importing certain drugs from Canada. Under the second pathway, drug manufacturers could import non-U.S. countries’ versions of their drugs into the United States.

What do health plan executives need to worry about with these two pathways? Not much, at least not in the next couple of years, according to Jigar Thakkar, Pharm.D., a managing director at FTI Consulting.

“There are so many hurdles that this isn’t something that’s going to happen tomorrow or in the next year or two,” Thakkar says. The hurdles include passage of legislation to allow biologics such as insulin to be imported and the ability of drugs imported from other countries to be tracked via FDA-TRACK, the FDA’s agency-wide performance system that monitors drugs during their journey from manufacturer to distributors to pharmacies.

Another significant hurdle is pushback from interest groups in Canada. Bloomberg News reported that the Canadian Medical Association and 14 other groups sent a letter to Canada Health Minister Ginette Petitpas Taylor protesting the Trump administration’s moves.

Deb Devereaux, senior vice president of pharmacy at Gorman Health Group, isn’t optimistic about the success of the first pathway where drugs would be imported to the United States from Canada. “The bottom line is the Canadian drug supply would be exhausted in 16 months with all the U.S. states trying to avail themselves of Canadian drugs,” she says.

Perspectives on Blockchain Technology

August 22, 2019

Industry consultants from Milliman Inc. assert in a July 11 report that blockchain — which is described as a real-time digital ledger for building secure networks — “could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions.”

Using blockchain technology, payers and pharmacies would reduce the time they spend validating insurance coverage, making phone calls and managing data,

Industry consultants from Milliman Inc. assert in a July 11 report that blockchain — which is described as a real-time digital ledger for building secure networks — “could potentially transform the relationship between payers, pharmaceutical manufacturers, wholesalers, and pharmacies by offering an alternative, transparent mechanism for processing, pricing, and validating prescription transactions.”

Using blockchain technology, payers and pharmacies would reduce the time they spend validating insurance coverage, making phone calls and managing data, Milliman explains. The firm is urging PBMs to work to “evaluate a blockchain alternative now with an eye toward a more efficient drug financing system” capable of handling additional technology improvements, AIS Health reported.

“We’re just trying to get people thinking outside the box, and I believe blockchain has applications with supply chain management, claim-processing and transparency to the consumer,” says Brian Anderson, a principal for Milliman and co-author of the blockchain paper.

In the Milliman report, Anderson and his colleagues, Gregory Callahan and Michael DiPrima, note the current electronic approach to processing pharmacy claims is a sometimes opaque, centralized database management system managed by the PBM.

By contrast, blockchain’s database management system model would be decentralized. Milliman explains that means a distributed network of “nodes” would validate all transactions and would store data throughout the distributed network rather than in a centralized server.

The Milliman consultants conclude blockchain technology “appears to hold great promise for the PBM marketplace.” But they concede there are obstacles to overcome, explaining that while blockchain has shown great potential for security in cryptocurrency, its true potential in health care has not yet been evaluated.

Perspectives on Electronic Real-Time Benefit Tool

August 8, 2019

CMS in a final Medicare Advantage and Part D drug pricing rule posted in May finalized the requirement that Part D sponsors implement an electronic Real-Time Benefit Tool (RTBT). While the tool offers the potential to accelerate electronic prescribing, improve formulary adherence and lower prescription drug spending, it may pose a heavy information technology burden for some plans and require effort on the part of plans to encourage prescriber adoption, AIS Health reported.

CMS in a final Medicare Advantage and Part D drug pricing rule posted in May finalized the requirement that Part D sponsors implement an electronic Real-Time Benefit Tool (RTBT). While the tool offers the potential to accelerate electronic prescribing, improve formulary adherence and lower prescription drug spending, it may pose a heavy information technology burden for some plans and require effort on the part of plans to encourage prescriber adoption, AIS Health reported.

According to the rule, each Part D sponsor must implement at least one RTBT capable of integrating with at least one prescriber’s e-prescribing system or electronic health record (EHR) to “provide prescribers who care for its enrollees complete, accurate, timely and clinically appropriate patient-specific real-time formulary and benefit (F&B) information (including cost, formulary alternative and utilization management requirements)” by Jan. 1, 2021.

For proponents of e-prescribing like Point-of-Care Partners, LLC, the new requirement is “really exciting,” says Tony Schueth, CEO and managing partner of the health IT management consulting firm. “We have been trying to include formulary in the e-prescribing process for a long time, and the way we were doing formulary in the past just wasn’t patient-specific enough. So we’re at a really important juncture in the evolution of electronic prescribing and the benefit information being integrated.”

Heidi Harmon, a senior consultant with Gorman Health Group, says pushing back the start date of the RTBT to 2021 was very good news for plans because it will involve a “massive IT undertaking.” CMS had originally proposed that sponsors have the tool ready by Jan. 1, 2020, but pushed back the deadline after hearing from concerned stakeholders, the majority of which suggested delaying the start date until an industry standard becomes available. Harmon also notes that the requirement that a plan have a tool that can work with one prescriber’s system could be interpreted as one prescriber group’s system.

Perspectives on New York’s Pricing Transparency Bill

July 25, 2019

Lawmakers in New York in June approved wide-ranging legislation designed to require pricing transparency from PBMs and to eliminate key PBM practices. But the bill could potentially limit plans’ ability to respond to pricing moves by manufacturers, one consultant tells AIS Health.

Lawmakers in New York in June approved wide-ranging legislation designed to require pricing transparency from PBMs and to eliminate key PBM practices. But the bill could potentially limit plans’ ability to respond to pricing moves by manufacturers, one consultant tells AIS Health.

The New York bill (S.B. 6531) would require that PBMs disclose key pricing and rebate information and pass through all rebates and discounts to the plans and payers, and that they act in the best interests of the covered individual and the health plan or provider.

The New York Health Plan Association, which did not support the legislation, is particularly concerned with the “best interests” section, which imposes a fiduciary relationship on PBMs “in all but name,” says Ashley Stuart, director of government affairs for the association.

The legislation also would prohibit mid-year formulary changes and drug substitutions, and it would require PBMs operating in the state to be licensed beginning next year.

Josh Golden at Arthur J. Gallagher & Co.’s Solid Benefit Guidance says, “formulary strategies are designed to help keep drug costs in check. In moving forward with this legislation, the state potentially limits the ability of health plans to apply pricing pressure on pharmaceutical manufacturers throughout the year.”

More generally, the legislation will lead to higher health insurance premiums for employers and consumers, warned New York Health Plan Association President and CEO Eric Linzer in a statement.

The legislation comes at a time when several states are considering efforts to rein in PBMs. “At least four or five states are looking at the impact of Medicaid [pharmacy benefit] price transparency,” says Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors. “It goes back to the larger fundamental conversation of what states should be looking at — they recognize there’s money under the table, especially in the PBM space.”

Perspectives on Express Script’s “Digital Health Formulary”

June 27, 2019

Cigna Corp.’s Express Script PBM expects to introduce the industry’s first stand-alone “digital health formulary” in 2020, the company said May 16. It intends to use a uniform review process to ensure the safety and quality of apps and devices on the market for diabetes, cardiovascular and pulmonary conditions and behavioral health, AIS Health reported.

Cigna Corp.’s Express Script PBM expects to introduce the industry’s first stand-alone “digital health formulary” in 2020, the company said May 16. It intends to use a uniform review process to ensure the safety and quality of apps and devices on the market for diabetes, cardiovascular and pulmonary conditions and behavioral health, AIS Health reported.

By creating a digital formulary, Express Scripts “is using old hat methods to manage these new digital health solutions much like they do on brand and generic drugs or other therapies via utilization management,” says Nathan Ray, senior principal in business consulting firm West Monroe Partners’ health care and life sciences practice.

“A formulary allows the administrator to steer demand and control reimbursement for the use of preferred solutions,” Ray says. “Management via formulary has its upsides: It can reduce prices paid by payers and consumers.”

Moreover, digital health might be only the first step as PBMs ask what else they can put through their channel, says Ashraf Shehata, a principal in KPMG’s health care life sciences advisory practice and the firm’s Global Healthcare Center of Excellence.

Dea Belazi, Pharm.D., president and CEO of AscellaHealth, says it makes sense to think of the formulary pharmacy and therapeutics process as a coordinated effort to evaluate the merits of drugs or technologies — or for broader applications.

Yet “at the end of the day, how is this any different than what they’re doing today?” he asks. “Is there going to be an impact in either cost or outcomes in this new digital formulary process? Are numbers going to be different? It would be amazing” if there were improvements.

Perspectives on CMS’s Drug Pricing Proposals

June 13, 2019

When CMS issued the final rule on Medicare Advantage and Part D drug pricing on May 16, the agency touted its policy changes as ensuring consumers get greater transparency into the cost of Part D prescription drugs and enabling MA plans to negotiate better prices for physician-administered medicines in Part C. Yet, after receiving 4,000-plus comments related to pharmacy price concessions on negotiated price, CMS held back, saying it won’t implement this policy for 2020 — or follow through on proposed exceptions to Part D protected drug classes, AIS Health reported.

When CMS issued the final rule on Medicare Advantage and Part D drug pricing on May 16, the agency touted its policy changes as ensuring consumers get greater transparency into the cost of Part D prescription drugs and enabling MA plans to negotiate better prices for physician-administered medicines in Part C. Yet, after receiving 4,000-plus comments related to pharmacy price concessions on negotiated price, CMS held back, saying it won’t implement this policy for 2020 — or follow through on proposed exceptions to Part D protected drug classes, AIS Health reported.

Among numerous provisions, CMS’s final rule implements the statutory prohibition against gag clauses in pharmacy contracts, barring Part D plans from penalizing pharmacies that disclose a lower cash price to enrollees. But the agency decided against implementing a policy redefining negotiated price as the lowest possible, baseline payment to pharmacies.

Leerink analyst Ana Gupte sees industry winners across the board. CMS “did not follow through on its proposal to exclude certain protected drug classes, offering a win for the biopharma industry,” she said in a May 17 note. “Managed Care and PBMs also garnered a win as CMS did not follow through on the proposals to pass through pharmacy pricing concessions in the form of DIR [direct and indirect remuneration] fees to patients through reduced cost sharing.”

Dea Belazi, Pharm.D., president and CEO of AscellaHealth, offers a blunter assessment. “I think the final Part D rule is more rhetoric than anything,” he tells AIS Health.

As for negotiated price, “They’re not ready to do anything on pricing at this point,” Belazi says. “I think CMS, with HHS, opened up a Pandora’s box and realized this is not as easy as it seems and they need more time.”