Regulatory Market Update

Updates for Pharma Manufacturers

As always, if you have questions on any of the content found in this or previous market updates, please reach out to your IntegriChain Consulting Lead or consulting@integrichain.com and we would be happy to talk you through it.

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Another Manufacturer Adds to the 340B Contract Pharmacy Restrictions

Bausch Health has recently announced that beginning on August 1, 2022, they will join the alliance with the other seventeen drugmakers in posing restrictions to sales of drug products at the 340B price to covered entities that utilize multiple contract pharmacies. This pushback has triggered the federal government to advise manufacturers that they could face fines if they do not abide by the 340B statute. Currently, nine of the eighteen manufacturers have been warned and another seven were reported to the Department of Justice in an effort to have them comply.

As a way of background, the 340B program offers discounts to safety-net providers (i.e, 340B Covered Entities) so long as they participate in the Medicare and Medicaid program. With the increase in Contract Pharmacies within the 340B program, many Pharmaceutical manufacturers are contesting that the patients of the program are not reaping the benefits of the reduced drug pricing offered by the 340B program; however, the 340B Covered Entities and 340B program advocates do not see it this way and have argued that the patients are in fact benefiting as the facilities run on very thin margins. From their perspective, the restriction of offering the 340B discounts [from Manufacturers] to certain Covered Entities will preclude the facilities and patients from receiving benefits that are very much needed. In a recent interview with Fierce Healthcare, Bausch Health explained why they too are joining the 17 other drugmakers in the restriction of 340B sales stating, “We believe this decision will preserve the integrity of the program and help ensure our 340B prices directly assist more low-income Americans,”. Additionally, Bausch Health is allowing any covered entity that does not have an in-house pharmacy to expect one contract pharmacy to be exempt from the policy. Pharma companies that cut off 340B sales completely amid the ongoing lawsuit could face fines if they do not stop the restriction of these sales.

Source: 

Drugmaker 340B contract pharmacy restrictions continue with Bausch Health

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Senate Medicare B and D Bill

This month senate Democrats proposed a series of drug pricing reforms that are similar to those contained in the Build Back Better Act, which stalled earlier this year when Democrats could not gather the required votes. The Democrats are hoping to push the bill through the reconciliation process, which would require a simple majority, which they appear to have at the moment.

The Congressional Budget Office (CBO) claims the pricing reforms would save the Federal government $288 billion through 2031, though $122 billion of that total relates to “savings” achieved by simply rescinding the Trump administration’s “no rebate rule,” which never actually went into effect. PhRMA reiterated that the reforms included in this bill were bad for patients and that this new iteration is worse than the previous version.

The bill is a sprawling 190 pages but proposes changes in a few key areas:

•  Allow the Federal government to directly negotiate Part B and D drug prices. The program would begin in 2026 with 10 drugs and expand to 20 drugs by 2029. The drugs would be chosen based on total spending under the Part B and D programs
• Cap out-of-pocket costs for prescription drugs for Medicare Part D patients of $2,000/year and restructure benefit designs and manufacturer liabilities
• Impose inflation penalties to Medicare Part D and Part B for drugs whose prices rise faster than inflation

The earliest impact of these proposed reforms would be in 2023 when the inflation penalties would start to be applied to Medicare Part B and Part D.

We here at IntegriChain will keep our eyes on the unfolding legislation and bring to your attention any newly passed measures. Reach out to your Consulting Team lead or Account Manager today if you’d like to discuss more.

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Medicare Discarded Drug Rebate Legislation Set to Go into Effect in 2023

Pharmaceutical manufacturers are often challenged to establish the best dosage packaging size for their injectable drugs. For some drugs, it’s as easy as one dose for all (e.g. 1ml for everyone), and often pre-filled syringes work well in that scenario. However, for many drugs, the dose must be carefully titrated based on the weight or age of the patients (e.g. 50mg/kg in 50 mg/ml increments). Also, drug stability or drug cost would not support multi-dose vials. So, for those drugs, manufacturers have to decide on the best single-dose vial size(s) with the minimum amount of waste.

Congress and CMS are frustrated with having to pay for discarded drugs, particularly expensive drugs. In 2017 CMS began requiring physicians to report the amount of discarded drugs from single-dose vials in their Medicare Part B submissions. As a result of this collective physician reporting and subsequent government analysis of “paid for product waste”, 2020 legislation within the Infrastructure, Investment, and Jobs Act (Section 90004) will require single dose vial manufacturers to pay a rebate based on the volume of discarded drugs where the discarded amount exceeds 10% of the drug volume in the vial. The rebate program goes into effect on January 1, 2023. Radiopharmaceutical or imaging agent single-dose vials are exempt.

Manufacturers may mitigate this rebate exposure by aligning the single dose vial size to the greatest number of potential patients while minimizing overall waste. Of course, another solution would be to produce varying single-dose vial sizes. However, multiple production lines are expensive and there is no assurance that providers would stock all dose sizes made available.

CMS has not issued regulations for the implementation of the legislation. For those manufacturers affected by this legislation, attention will need to be paid to the potential impact of these rules for risk mitigation and Gross-to Net planning for 2023.

Sources:

Federal Register: 42 CFR Parts 405, 410, 411, 414, 415, 423, 424, 425, and 455

CMS Proposed Rule

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State Price Transparency Reporting Updates

The State Price Transparency Reporting (SPTR) landscape continues to evolve with new state updates and regulatory changes. Here are some of the most recent updates that Manufacturers need to be made aware:

•  Maine L.D. 686 Chapter 570:
  • Annual Manufacturer Registration Fee: On July 11, 2022, the Maine Health Data Organization (MHDO) issued the invoices for its Annual Assessment fee for FY2023. The fee is issued for all Pharmaceutical Entities registered with MHDO Prescription Drug Price Data Portal pursuant to the State of Maine 90-590 C.M.R. Chapter 570 (https://mhdo.maine.gov/rules.htm).  For the fiscal year 2023 the assessment for Manufacturers is $500.00 and due by August 12, 2022.

•  Oregon H.B. 4005 (2018):
  • Reporting Threshold for New Drugs launched above the Specialty Drug Tier Threshold: On June 2, 2022, Oregon’s Drug Price Transparency (DPT) program announced that they will maintain the 2021 Medicare Part D threshold of $670 as their threshold for reporting new drugs introduced to market despite CMS increasing the limit to $830 beginning in 2022.
  • Trade Secret Determinations: On June 20, 2022, Oregon’s DPT Program issued a notice to all reporting Manufacturers that the program would be issuing determination letters regarding information claimed to be trade secret in previously submitted reports. While these notices do not require any immediate action, these determinations seek to have Manufacturers provide additional information regarding the reasoning information is being claimed as a trade secret.  Any information being identified as a trade secret still needs to be disclosed to the state and only upon further review by the state, will the state determine if it truly should be withheld from public disclosure.  Determinations are sent through the state web portal, iReg, with more details on the specific request.  It is important to note that these determinations do not include penalties but should be completed by Manufacturers, or third-party vendors, to ensure sensitive information is not released publicly.  The state also aims to ensure all Manufacturers have an active resource registered in the iReg web portal to answer questions from the state.  

• Utah 2020 H.B. 272:
  • State Updated Reporting Reference Material: On May 11, 2022, the Utah Insurance Department issued a notice regarding the modified Manufacturer Data Reporting Rule R590-287 and updated the UID Pharmacy Web Portal User Guide. The modified Utah Code Sections 31A-48-102 and 31A-48-103 were effective May 4, 2022 and included changes to the quality and type of information to be submitted for Price Increase Reports. The price increase reporting threshold is still the same however, Manufacturers are no longer required to provide a narrative description of the change or improvement in the drug product that necessitates the price increase or the effective date when the patent ended for the drug product.

• Washington 2019 H.B. 1224: On June 7, 2022, Washington’s Health Care Authority (HCA) issued a Proposed Rule (CR-102) amending sections of chapters 182-51 WAC, the current Price Transparency program regulations, “to increase program clarity by adding definitions and rewording requirements.” Some of the proposed changes include:
  • Pre-commercial notices: the state has removed language limiting reporting requirements to products with the New Molecular Entity status for Pre-Commercial Notices.  This would make the report applicable to all pipeline drugs rather than only those drug or biologic products containing a New Molecular Entity.
  • Introduction of New Covered Drugs to Market: The proposed language would redefine Covered Drugs as “introduced to market date” to mean the day drugs are made available for purchase in Washington state rather than drugs the day the drugs are marketed in Washington state.