Prescription Drug Issues

As reintroduced in the U.S. House of Representatives by Rep. Frank Pallone, Jr. (D-NJ-6) on April 22, 2021 after originally being introduced on September 19, 2019, H.R. 3, also known as known as the Elijah E. Cummings Lower Drug Costs Now Act, proposes to grant the U.S. Department of Health and Human Services (“HHS”) the authority to negotiate directly with pharmaceutical companies in order to lower drug prices in Medicare Part B and Medicare Part D (the “Proposal”).  The Proposal would require that 125 brand-name drugs that cost Medicare the most to be subject to negotiation by Medicare, with a cap on the price for each drug set at 120% of the average price paid in six other countries.  The Proposal is part of a $3.5 trillion budget proposal that, as of this writing, faces an uncertain future in Congress.  While not a novel idea, the Proposal is controversial and faces strong opposition from pharmaceutical companies in particular.

Continue Reading Elijah E. Cummings Lower Drug Costs Now Act: The Long and Winding Road to Drug Pricing Reform

On August 10, 2021, the Centers for Medicare and Medicaid (“CMS”) published a proposed rule (“Proposed Rule”) to rescind the Most Favored Nation Model (“MFN Model”) interim final rule that was published on November 26, 2020 (“Interim Final Rule”).  As described in our December 2020 blog post, the Interim Final Rule established a seven-year nationwide, mandatory MFN Model that would test an alternative way for Medicare to pay for certain Medicare Part B single source drugs and biologicals.  The MFN Model, originally set to begin January 1, 2021, would have tied the prices for certain Part B single-source drugs and biologics to the average price paid by several overseas countries and remove incentives to use higher cost drugs, in order to determine whether this could “control unsustainable growth in Medicare Part B spending without adversely affecting quality of care for beneficiaries.”  Had the Interim Final Rule been implemented, Medicare Part B reimbursement would have been significantly reduced starting January 1, 2021.

Continue Reading Executive Order on Promoting Competition in the American Economy: The Biden Administration Considers Drug Pricing Strategies While Keeping the “Most Favored Nations” Drug Reimbursement Program on the Sidelines

In a setback to hospitals challenging deep cuts to reimbursement for prescription drugs acquired through the 340B drug pricing program (“340B Program”), the U.S. Court of Appeals for the District of Columbia, on October 19, denied a request to reconsider a decision by three-judge panels of the Court upholding these cuts.  Short of a Supreme Court appeal, this decision effectively ends hospital challenges to these reimbursement reductions, and makes the implementation of additional cuts in 2021 a near inevitability.
Continue Reading The U.S. Court of Appeals Denies Rehearing on Cuts to 340B Drug Pricing Program

In an evening email that is sure to ruin the weekend for many, CMS announced on February 5, 2020, that it is proposing changes to the Medicare Advantage and Part D Programs for CY 2021 and 2022. CMS will not issue a Call Letter for CY2021. The unpublished version of the proposed rule is available for inspection, and is scheduled to be published in the Federal Register on February 18, 2020. Comments are due April 6, 2020.
Continue Reading CMS Proposes Changes to the Medicare Advantage and Part D Programs for CY 2021 and 2022

On February 6, 2019, the Office of the Inspector General of the U.S. Department of Health and Human Services (the “OIG”) published in the Federal Register a proposed rule (the “Proposed Rule”) that, if made final in its current form, would (i) amend the Anti-kickback Statute (“AKS”) Discount Safe Harbor to explicitly exclude discounts relating to price reductions or other remuneration offered by a pharmaceutical manufacturer to a Medicare Part D plan sponsor (“Plan Sponsor”), a Medicaid managed care organization (“MCO”), and/or a pharmacy benefit manager (“PBM”) under contract with such a sponsor or organization; and (ii) add two new safe harbors: a “Discounts Offered at the Point-of-Sale” safe harbor (“Point of Sale Safe Harbor”) and a PBM Fee Arrangement Safe Harbor (“PBM Safe Harbor”).
Continue Reading HHS Proposes Rule to Eliminate Safe Harbor for PBM Drug Rebates

California recently passed Assembly Bill 315 to create greater regulatory oversight of pharmacy benefit managers (“PBMs”). [1] The bill requires PBMs to provide more transparency regarding their operations. PBMs will have to register with the California Department of Managed Health Care (“DMHC”) and provide new disclosures to the purchasers of their services. The bill will also establish a new pilot project and task force run by the DMHC to analyze how PBMs are affecting the pharmaceutical market.
Continue Reading The New California Regulatory Scheme for Pharmacy Benefit Managers

Why are prescription drug prices so high in the U.S.? While this question can hardly be considered a new topic in American healthcare, the recent clash of words between the Trump Administration and Democratic Senators has once again brought focus to the issue of prescription drug prices. According to the Administration, pharmacy benefit managers (“PBMs”) and drug distributors – who President Trump has dubbed as “middlemen” – are largely to blame for higher drug prices. However, Democratic Senators, PBMs, and drug distributors have recently pushed back against the Administration’s claims, arguing that the Administration’s claims are not supported by any evidence, and, in some cases, are contrary to the core functions of PBMs and drug distributors.
Continue Reading The Blame Game: Senators Clash with the Trump Administration