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 advisory@integrichain.com and we would be happy to talk you through it.


2023 Proposed Restructure of Co-Pay Accumulators

On March 15, 2022, IntegiChain’s Jeff Baab and TrialCard’s Jason Zemick presented the highly anticipated webinar on the 2023 proposed restructure of co-pay accumulators. Here are the main takeaways from the webinar:

In December of 2020, The Centers for Medicare & Medicaid Services (CMS) issued a final rule that will alter the patient assistance program exclusions for Best Price (BP) and Average Manufacturer Price (AMP) calculations starting in January of 2023. The rule states that manufacturers must “ensure the benefits of their assistance programs are provided entirely to the consumer” to be excluded from the Best Price calculation. Some of the challenges with this rule are:

  • Manufacturers lack visibility of accumulators
  • It materially impacts the liabilities in government programs
  • Patients are often unaware of this, and it would likely complicate the overall patient experience

This new rule will ultimately lower the BP for manufacturers. This decrease in BP will lead to a rise in the Total Unit Rebate Amount (URA) which will have an impact on 340B pricing. Assuming that AMP does not change, this would lead to higher 340B liabilities.

The Average Sales Price (ASP) calculation also follows Best Price eligibility criteria. This means that if co-pay expenditures become eligible for BP, they will also likely become eligible for ASP which will result in lower reimbursement rates for healthcare providers.

Here are some action items for manufacturers to consider between now and 2023 if this rule is implemented:

What to do now: Lift the immediate financial impact

  • Reduce co-pay offer benefits to maximize savings
  • Identify accumulator patients from claims data and move them to an alternate reimbursement model
  • Apply this new model with new enrollments to test and evaluate

By July 2022: Phase in a 2023 compliant design

  • Add predictive analytics at enrollment for earlier identification
  • Incorporate patient outreach to explain how to use the new offer

If Best Price rule remains on January 1, 2023:

  • Convert all patients to the new offer model during the second half of 2022

If Best Price rule is delayed or withdrawn:

  • If delayed, continue to transition to prepare for the new effective date
  • If withdrawn, keep the alternate design to address ongoing accumulators or revert to normal design to optimize the patient’s ease over the financial impact

If you are interested in assessing your company’s PBM copday accumulator strategy, reach out to the IntegriChain consulting team. For more information on this webinar, watch the replay, or stay tuned for next week, as IntegriChain will be posting a blog to address the most pressing questions that were posed by the webinar attendees.


Medicare Sequestration Update

The Medicare Part B physician reimbursement reduction continues to be delayed due to recent legislative action.  Medicare Part B reimburses physicians for the administration of medications at a rate of 106% of the Average Sales Price (ASP). That 106% was scheduled to be reduced to 104% on January 1, 2022. However, the reimbursement reduction was delayed by the Protecting Medicare and American Farmers from Sequester Cuts Act (Public Law No: 117-71) signed by the president on 12/10/2021.

The term “sequestration” used in this context means provisions of a law are set to expire at some time in the future with an intent to reduce government spending.

The reimbursement rate adjustments are now set on the following schedule:

  • No payment adjustment through March 31, 2022
  • 1% payment adjustment April 1 – June 30, 2022
  • 2% payment adjustment beginning July 1, 2022

To be clear, the rate sequester is a percent reduction on the total reimbursement (including co-insurance payment), not a percentage point reduction in the ASP multiplier of the calculation.  Therefore, the realized effective value of the adjustments (sequester) is shown below:

  • Payment Limit, No adjustment = 106% * ASP
  • Payment Limit, 1% adjustment = 105.2% * ASP
  • Payment Limit, 2% adjustment = 104.3% * ASP

Pharmaceutical manufacturers with “ASP drugs” should consider both the recent congressional actions as well as the changing reimbursement landscape in determining any commercial strategy actions for these drugs in the coming months.

Reach out to the IntegriChain consulting team if you would like assistance in assessing how these changes might affect you or your customers.

Sources:

CMS.gov

Protecting Medicare and American Farmer

About the Author

Brian Bumpus

Brian Bumpus

Brian Bumpus is a Director within IntegriChain’s Advisory Services Practice. Brian is a career pharmaceutical executive with over 20 years experience in Life Science commercial contracts and Government compliance matters. He has assisted both large and small manufacturers with compliance and strategy challenges. At IntegriChain, he is primarily assisting clients with Government Pricing regulations and compliance.

About the Author

Matt Cunningham

Matt Cunningham

Matt Cunningham is an up and coming consultant on the Advisory team at IntegriChain. His background and experience brings a new perspective to the Government Pricing and State Price Transparency services for Life Sciences manufacturers of all sizes. He has earned his Bachelor's degree from The College of New Jersey.