Advisory Market Update

This the Advisory Market Update for October 2020 from IntegriChain. We want to keep you up-to-date with relevant, timely industry insights and regulatory updates that may impact your business. If you have questions on any of the content found in this or other newsletters, reach out to your IntegriChain Advisory Lead or and we would be happy to talk you through it.

News from the Medicaid Drug Rebate Program (MDRP)

The annual Medicaid Drug Rebate Program (MDRP) was held on September 14-18, 2020. The IntegriChain Advisory team has compiled the biggest, most impactful items that were covered during the event. Here are some highlights of the key topics that were discussed:

Medicaid Drug Rebate Program

  • CMS Proposed Rule – June 2020 
  • The proposed rule addresses several key areas such as value-based purchasing, line extensions, the impact of certain manufacturer-sponsored patient assistance programs on AMP and BP
  • Comment period ended in July 2020


        340B Program

        • Some manufacturers have recently introduced guidelines regarding covered entity contract pharmacy arrangements for 340B products
        • These guidelines would restrict product access based on certain criteria
        • Unless there is a violation of the 340B statute, HRSA would not be able to enforce guidance
        • HRSA released a letter responding to Eli Lilly’s proposed guideline
        • This event is likely to have a significant impact on the 340B program 


          Presidential Executive Orders

          • July 24, 2020:
            • Discounts offered on prescription drugs should be passed on to patients
            • An executive order on increasing drug importation to lover prices for American patients
            • A new directive that federally-qualified health centers pass through 340B discounts on certain drugs to certain patients
          • September 13, 2020
            • An executive order that states the Medicare program should not pay more for costly Part B or Part D prescription drugs or biological products than the most-favored-nation price

           Office of the Inspector General

          • Some manufacturers have reported incorrect product data in connection with the reporting of Average Sales Price (ASP) and AMP: OIG September 2020 Audit Report


          “Most Favored Nation” Drug Pricing Is In the Works

          After more than a month of conversations with the Pharmaceutical Industry, President Donald Trump signed an Executive Order on September 13, 2020 to create a “most favored nation” drug pricing that may impact government programs. The “Most Favored Nation” (“MFN”) price has been defined as the lowest price, after adjusting for volume and differences in the national gross domestic product (“GDP”), for a drug sold in any member country of the Organization for Economic Cooperation and Development (“OECD”). MFN Executive Order states that Medicare should not pay more for drugs than the “most favored nation” price and points to implementing a test payment model for Medicare Part B high-cost prescription drugs and biologics. The anticipated outcome is a reduction in poor clinical outcomes as well as reductions in expenditures. 

          It is unclear how this executive order will be achieved and has been met with criticism and skepticism. A recent rebuttal from PhRMA, who represents the country’s leading biopharmaceutical research companies and supports the search for new treatments and cures, had this to say:

          “PhRMA is committed to working with all stakeholders, including elected officials across the ideological spectrum, to find market-based, competitive reforms to the challenges facing our health care system and patients. The focus of any reforms must be on lowering costs for patients, ensuring patients’ access to medicines, addressing the misaligned incentives in the pharmaceutical supply chain, and protecting the critical work being done to end COVID-19. Unfortunately, instead of pursuing these reforms, the White House has doubled down on a reckless attack on the very companies working around the clock to beat COVID-19.”

          Read more on PhRMA’s statement against the “Most Favored Nation” executive order.


          Public Law Timeline for 2021 Covered Drug Pricing Updates

          Public Law (PL) 102-585, Section 603 requires covered drug manufacturers to have a VA Schedule contract as a condition of receiving payment from certain entities. The latest abbreviated timeline (below) explains major dates and milestones. 


          Read more from the Office of Procurement, Acquisition, and Logistics.

          About the Author

          Greg Katz

          Greg Katz

          Senior Director, Advisory Services

          About the Author

          Annamarie Lee

          Annamarie Lee

          Director, Advisory Services