Editor’s Note: This month, we offer updates on three significant regulatory topics and advice to pharmaceutical manufacturers on steps they should consider now and in the coming months. 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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Consumer Price Index for All Urban Consumers Updates

The Medicare Parts B and Part D inflation rebate provisions of the Inflation Reduction Act focus on inflation and, more specifically, the Consumer Price Index for All Urban Consumers (CPI-U). The inflationary penalties are essentially a pricing control for drugs paid under Medicare Parts B and D and result in manufacturers owing rebates for pricing actions exceeding inflation. These penalties are directly impacted by the change in inflation over defined periods, and it’s important for manufacturers to understand the latest published CPI-U values and what that means for these penalties.

• The CPI-U increased 13.9% between January 2021 and October 2022, which is the rate of change used for the first year of the Part D inflation rebates.
• The CPI-U increased 13.5% between January 2021 and July 2021, which is the rate of change used for the first quarter of the Part B inflation rebates.

These double-digit increases reflect a period of high inflation, and they essentially provide a “buffer” for year one of the Part D inflation rebates and the first quarter of the Part B inflation rebates. However, if the rate of inflation returns to historical norms – in the 1.5% to 2.5% range – manufacturers might have less room to maneuver as they explore pricing actions in future periods.

References

1. US Bureau of Labor Statistics

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Washington 2019 H.B. 1224 Updates: New Permanent Rule & Other Reporting Updates

Permanent Ruling – New Molecular Entity update for Reporting Pipeline Drugs

On September 16, 2022, Washington’s Health Care Authority (HCA) enacted a Permanent Rule (CR-103P) amending sections of chapter 182-51 WAC, the current Price Transparency program regulations, “to increase program clarity by adding definitions and rewording requirements.” The proposed changes include the following.

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. The language changes in the regulation are as follows.

(16) “Pipeline drug” means a drug or biologic product, not yet approved by the Food and Drug Administration, for which a manufacturer intends to seek initial approval from the Food and Drug Administration under an original and Drug Administration, for which a manufacturer intends to seek initial approval from the Food and Drug Administration under an original and Drug Administration, for which a manufacturer intends to seek initial approval from the Food and Drug Administration under an original new drug application under 21 U.S.C. Sec. 355(b) or under a biologics license application under 42 U.S.C. Sec. 262.

Author note: These changes do not currently apply to generic/ANDA products.

Introduction of New Covered Drugs to Market: The proposed language would redefine Covered Drugs “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. (13) “Introduced to market” or “introduce to market” means to make available for purchase in Washington state.”

New Draft Data Submission Guide Released

The HCA has released an updated version of the Data Submission Guide to assist manufacturers with complying with the law (Chapter 43.71C Revised Code of Washington) for comments. The HCA welcomes feedback and input from manufacturers and stakeholders as they develop these guides before final publication. 

The changes between version 2.0 and 3.0 of the guides are summarized within the Change Summary document. The major changes include updates to the reporting templates including the Covered Drugs template (previously used for both New Covered Drugs and Qualifying Price Increases submissions), which has now been split into a Covered Drugs with a Qualifying Price Increase report and New Covered Drugs report template to ease reporting. Within the new templates, additional updates have been made to certain fields.

Manufacturers should note that the changes from the Permanent Rule (CR-103P) noted above have not been incorporated into this new guidance. IntegriChain has reached out to the state to clarify these discrepancies in reporting and are still awaiting their feedback. Comments and feedback were due by November 7, 2022.

New Reporting Portal Launched November 15, 2022

The HCA launched a new drug price transparency (DPT) submission portal on November 15, 2022. Manufacturers will be able to register, update primary and secondary contacts themselves, and submit reports with immediate feedback on Technical Validation.

Manufacturers will no longer need to request DPT password resets. The current SFT portal will be retired and manufacturers will need a new SecureAccess Washington (SAW) account to access the portal. You can view the step-by-step instructions here. Manufacturers should note that this change to the reporting portal has also not been incorporated into the new draft data submission guide. IntegriChain is still awaiting feedback from the state to clarify these discrepancies.

References:

1. Permanent Rule (CR – 103P)
2. Chapter 43.71C Revised Code of Washington

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Understanding the Impact of Digital Pharmacies

As the healthcare industry evolves, we are seeing more and more presence of “digital pharmacies.” The shift into a more technologically advanced era as well as the recent COVID-19 pandemic, which resulted in the use of virtual and online communications/drug purchases much more than ever, has driven up the landscape for digital pharmacies. 

So what exactly are digital pharmacies, and what services do they offer? There are many different types of digital pharmacies in the market with the following being the most prominent: 

• Standard Virtual Pharmacy
• Pureplay Telehealth
• Direct to Patient
• Digital Service Platforms

In a nutshell, digital pharmacies are a way for patients to be able to obtain their drugs virtually (online). The evolution of the digital pharmacy model has been one in which we are seeing online pharmacies coupled with telehealth service providers, as patients no longer are going to see their doctors in person to obtain scripts but rather making virtual visits online or via an app.  

The global digital pharmacy market is growing rapidly and forecasted to grow at a compounded annual growth rate of 17% from 2022 to 2027. In fact, the revenue from digital pharmacies in North America are forecasted to triple in 10 years, from 2020 to 2030.

One reason digital pharmacies are becoming increasingly popular is due to the cost savings they are able to pass on to the consumer. In addition to reduced overhead expenses, the increase in digital pharmacies can drive competition, which can then have the effect of bringing the prices of certain drugs down.  Another reason for the increase in popularity is due to the convenience factor digital pharmacies offer patients. This is especially true for the elderly and those who are disabled and unable to get to the pharmacy on their own  Lastly, from the manufacturer’s view point, digital pharmacies offer low fee structures within their contracts agreements and offer additional services that manufacturers are seeking to obtain. For these reasons, manufacturers are starting to re-evaluate their contracting strategies to ensure they understand the value proposition of digital pharmacies. 

There are many key considerations to keep in mind when contracting with digital pharmacies, specifically as it relates to Government Pricing or Gross-To-Net impacts. It’s also important to understand the services offered by digital pharmacies not only as a patient, but as a manufacturer, provider, and distributor and pay attention to how these changes can affect the pharmaceutical industry as a whole.

References:

1. Grand View Research: EPharma Market Size
2. MDRP 2022 Presentation: Digital Pharmacies – The Next Industry Disrupters?