Regulatory Market Updates for Life Sciences Manufacturers

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How Discount Cards are Replacing PBMs

The generic prescription market has been disrupted. Prescription drug discount cards are becoming more popular by the day and will inevitably replace PBMs. These cards are built around an unfortunate benefit design trend where the patient has become the payer as prescription costs are increasingly shifted to consumers through deductibles and coinsurance. More than one-third of people with a High Deductible Health Plan (HDHP) have coinsurance for generic prescriptions. And people who take primarily generic drugs often see little chance of hitting their deductible, which averages $4,500 for a family. The pharmacy industry’s unfortunate pricing strategy for patient-paid prescriptions means that consumers get overcharged. There are also wide and persistent variations in cash prices for common, high-volume generics. This has created two opportunities for discount cards:

  • Patients who must cover the costs of their drugs shop for better deals and cheaper prescriptions
  • PBMs can hide behind discount cards to undermine the network rates offered to their own clients

Discount cards are leading the consumerization of retail prescriptions—but not necessarily of the pharmacy and PBM industries. The cards are growing so quickly that they undermine the premise of pharmacy benefit management. Someone—consumers, their employers, and/or the government—paid insurance premiums for a pharmacy benefit managed by a PBM. Yet our system’s pricing math can still make it worthwhile for people to bypass their plan’s out-of-pocket costs and PBM network rates in favor of a different PBM’s rates.

Source: Drug Channels- Why GoodRx—Not Amazon—May Be the True PBM Disrupter

CMS Proposes to Rescind Most-Favored Nation Pricing Model

Recently, the United States Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would rescind the “most-favored-nation” pricing model for Medicare Part B drugs. The most-favored-nation (MFN) pricing model would have created a mandatory, seven-year payment model for the 50 highest-cost drugs and biologics in Medicare Part B to replace the current reimbursement formula for these drugs. Instead of adding a 6 percent administration fee to the average sale price (ASP) of the drug, the new reimbursement system would have been based on international pricing information from 22 different countries. Providers would have been reimbursed the “most favored nation” price for the drug plus a fixed payment to cover the cost of procuring, storing, handling, and administering these therapies – irrespective of whether the new price covered the overhead costs incurred by medical practices to acquire and administer these therapies.

If current pricing structures remained, CMS expected reimbursements to be reduced by more than 50 percent once the model was fully implemented. The model was first proposed by CMS in November 2020 and was scheduled to begin on January 1, 2021. However, the implementation was delayed by a ruling from a federal judge in December 2020 and put on hold by the Biden Administration shortly after the inauguration.

Source: PolicyMed- CMS Proposes Rescinding Most Favored Nation Pricing Model 

State Price Transparency (SPTR) Update

New State Price Transparency laws for Maine are effective as of October 18, 2021.

The State of Maine passed LD 686 to expand upon the public posting requirements initially established in LD 1162. This new regulation will now require the Maine Health Data Organization (MHDO) to post on its public website by January 30, 2022, and annually thereafter, a list of prescription drugs for which a manufacturer has taken a qualifying WAC increase during the prior calendar year or has introduced a new high-cost drug.

Additionally, on or before February 15th annually, the MHDO is required to post on its public website a list of drug products for which it intends to request pricing component data from manufacturers. The MHDO will make its determination on which products to include based on multiple data sources including but not limited to drugs which the MHDO has included on its list of new high-cost drugs or for which qualifying increases were taken, the 25 costliest drugs, most frequently prescribed drugs, and drugs with the highest year over year cost increases in the state. Within 30 days after the publication of the List, the MHDO is required to request via e-mail drug pricing component data from those entities. Entities must submit the required data within 60 days of such request.

Source: Maine Legislative Document 686

About the Author

Brendan Crabtree

Brendan Crabtree

Government Pricing Analyst

Brendan Crabtree is an up and coming consultant on IntegriChain’s Advisory team. He serves as a trusted partner to Life Sciences manufacturers of all sizes, delivering guidance and expertise in government pricing and state pricing transparency to their Market Access teams. He earned a Bachelor’s degree in Information Technology from Penn State University.

About the Author

Kevin Ehmann

Kevin Ehmann

Consultant, Advisory - Government Contracts & Pricing

Kevin Ehmann is a consultant on the Advisory team at Integrichain. His background and experience bring a fresh perspective to government and state price transparency advisory and services for life sciences manufacturers. He has earned his bachelor’s degree and is in the process of completing a master’s degree from the Rochester Institute of Technology.