Thursday, May 6, 2010

The Blog Has Moved to a New Platform and URL

Karen Brown, Senior Director Marketing
karenbrown@cis-partners.com

The Pharma Compliance Blog has moved to a new platform and can be found at: http://www.pharmacomplianceblog.com/.

Please add this URL to your Favorites, and join us often as we continue to write about the latest regulatory compliance issues and changes within the pharmaceutical industry.


The new blog provides drop-down menus so you can easily find articles that relate to Government Programs, Commercial Compliance, Clinical and Manufacturing. You’ll also find RSS feeds to agency sites and other useful links.
We hope that you’ll visit the new blog and share your compliance thoughts and questions.

Online Pharmacies, Are They Safe?

By: Yasmeen Muhammad, CIS Senior Consultant
yasmeenmuhammad@cis-partners.com

We live in an increasingly fast paced society. There is so much to do in a short amount of time. The convenience of modern technology makes juggling our daily tasks easier by freeing up some of our time. Instead of stopping by to see a friend, we keep in touch by using our cell phones to send a quick text. We use our computers to send e-mails to our co-workers sitting three cubicles away so we can meet the deadline for an important project. In addition, the internet offers limitless modern conveniences such as shopping for Christmas gifts, personal banking, shopping for groceries and purchasing prescription or over-the-counter drugs. Although online pharmacies and drug distributors offer substantial savings for the consumer, the quality and safety of the merchandise can be questionable.

For the consumer, there are many benefits to making drug purchases online. Most online pharmacies have lower prices, which is a plus in today’s economy. They also make it easier to compare prices between other pharmacies. Most websites list the insurance plans they work with for ease of use. The consumer can also receive discounts for other health care products when purchasing online. Having the drugs delivered directly to consumers’ homes is also a benefit for the elderly and very ill patients because it eliminates their need to travel to a local pharmacy. [3]

The convenience of purchasing drugs online seems ideal from a timesaving standpoint, but do we really know what we’re purchasing and who we’re purchasing it from? There are serious risks involved. Recently the Food and Drug Administration (FDA) issued a warning about the potential dangers associated with purchasing drugs online. “Some Web sites sell prescription and over the counter drugs that may not be safe to use and could put people’s health at risk.” [1] Some of the risks mentioned are receiving drugs that don’t have the right active ingredient, drugs that contain too strong or too weak of the active ingredient, counterfeit drugs, expired drugs or drugs that are not approved by the FDA. [1]

When it comes to purchasing products that can impact our life in a major way, extra precautions must be taken to protect ourselves and our families. Law enforcement agents recently arrested two individuals from China for selling counterfeit Alli, a weight loss drug manufactured by Glaxo-Smith Kline. One of the components found in the counterfeit product was Sibutramine which can cause very serious adverse effects such as high blood pressure and seizures. The product was sold in the United States through internet auction websites. A consumer who suffered several adverse effects after taking the counterfeit product notified the authorities. [2]

Since online drug purchases can be made without a physical examination or authorization from a licensed health care provider, consumers must be proactive and take a safe approach in their decisions to make drug purchases online. The FDA has given the following tips to spot an unsafe online pharmacy website:
  • You receive drugs with unknown quality or origin
  • You receive the wrong drug or another dangerous product for your illness
  • The site does not provide a way to contact the Web site by phone
  • The site advertises prices dramatically below the competitors’ prices
  • The site offers to sell prescription drugs without a prescription, which is illegal
  • The site may not protect your personal information [1]
Another wise step to safeguard your health is to check the National Association of Boards of Pharmacy (NABP) website. NABP has a Verified Internet Pharmacy Practice Sites (VIPPS) program that lists websites that have been approved to sell drugs online after an extensive accreditation process. You can easily research an online pharmacy on their website to ensure their safety before making a decision to purchase drugs online. [4]

Taking the extra steps to look into the legitimacy of an online pharmacy may seem like a hassle. On the other hand, one can avoid wasting money on drugs that could be harmful to their health and save time from having to deal with the dangerous physical and mental side effects that could be caused by these drugs. To ensure you’ll be around to enjoy the future benefits of modern technology, put yourself first and do the research.

Sources:
[1] http://www.fda.gov/ForConsumers/ConsumerUpdates/ucm048396.htm
[2] http://www.fda.gov/ICECI/CriminalInvestigations/ucm206314.htm
[3] http://ezinearticles.com/?The-Advantages-of-Purchasing-Medicines-From-Online-Pharmacies&id=4115885
[4] http://www.nabp.net/

Wednesday, May 5, 2010

"Who Ya Gonna Call?" Part 3

By: Bill Baxter, CIS Strategic Advisor, Government Affairs
billbaxter@cis-partners.com

Current Health Care Reform (HCR) legislation includes the obligation for manufacturers with Medicaid rebate agreements to provide the same rebates for products dispensed to valid Medicaid Managed Care Organization (MMCO) patients as required for Medicaid fee-for-service utilization. While much is still to be determined regarding the mechanics of the requirement, one question stands out very clearly: “what rebate exposure does this generate for my company?”

Two things are VERY clear; 1) this will significantly increase rebates for most if not all participating manufacturers, and 2) the impact will vary by a company’s product mix, current utilization in the fee-for-service program, and formulary position on most large MMCOs.

When estimating the full impact of this aspect of HCR, the following data points are very important to consider:
  • The total number of patients in a particular account
  • The number of Medicaid patients in that account
  • The ratio between total patients & Medicaid patients
  • The total volume of utilization of a particular product in that account
  • An estimate of the share of the MMCO market these accounts have
  • A projection of the Medicaid utilization these data points suggest
  • Contract language with the MMCOs that would protect a manufacturer from a “double dip” or “double hit”, i.e., discounts to the MMCO and rebates to the MDRP
  • A comparison of the difference between current commercial discounts and Medicaid rebate amounts
A product and/or operating company specific model can be developed combining these data points for several key MCO’s and used to estimate the fiscal impact. Data sources to assist in projecting the exposure include the attachments to this communication. These data, combined with specific product utilization can be used to generate an estimation of increased rebate exposure.

Table 1: Medicaid Managed Care Enrollment Trends[1]


1Data Footnotes:
http://www.cms.gov/MedicaidDataSourcesGenInfo/
http://www.kff.org/medicaid/upload/8046.pdf
http://www.statehealthfacts.org/healthreform.jsp

Monday, May 3, 2010

CIS presents at CBI’s Medicaid Rebates Conference, May 12th -14th in Orlando

It is not too late to register for the CBI Conference this year! The Conference could not come at a better time with the recent Healthcare Legislation, and there will be a lot of healthy and informative discussion about the coming changes.

Stop by the CIS booth to pick up information and articles, written by CIS subject matter experts, on recent and potential Healthcare Reform changes and their impact on the industry.

Also, meet the newest member of the CIS team, Lisa McNair, Senior Manager, Tricare Contracting. Lisa recently worked with the DoD where she played an integral part in developing the Tricare program. She will be sharing her insight on upcoming Federal Register notices on Tricare.

Don’t miss out on our topical presentations!

Product Divestitures and Company Mergers & Acquisitions - Due Diligence on the Financial and Compliance Impact on Government Programs
Chris Cobourn, VP, Regulatory Affairs

Workshop: Best Practices for Pricing and Contracting with FSS, VA, DoD and PHS Programs
Lisa McNair, Senior Manager, Tricare Contracting

Panel: Considerations for Auditing and Monitoring within the MDRP
Amy VanDeCar, Director, GP Consulting Services

* Check out the recent Pharma Compliance INSIGHT Webinar: ‘Are you Audit-Ready?’ for a preview!

Please feel free to use the CIS code ‘ZAC795’ to receive a $300 discount off the standard registration price. Contact Jackie O’Connor (jacquelineoconnor@cis-partners.com) if you have any questions.

Thank you and we look forward to seeing you in Orlando!

Friday, April 30, 2010

Articles of the Week!

Courtesy: Jess Ebert, CIS Compliance Specialist
jessicaebert@cis-partners.com

1) Pharma's Future Depends on These Three Trends
http://blogs.hbr.org/hbsfaculty/2010/04/pharmas-future-depends-on-thes.html

2) Drugmakers’ Overhaul Costs $105 Billion
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_TC.yB.SbaY

3) Rate Proposal by WellPoint Is Withdrawn http://online.wsj.com/article/SB10001424052748704302304575214962216143580.html

4) Space experiments may aid earthly ailments
http://www.cnn.com/2010/HEALTH/04/29/discovery.space.sickness/index.html

5) FDA Urges Industry To Take Additional Steps To Prevent Cargo Theft
http://www.medicalnewstoday.com/articles/187056.php

Wednesday, April 28, 2010

H.R. 3590 as Amended by H.R. 4872

As compliance consultants in the ever changing Healthcare Industry; it is critical for us to immediately document and implement proposed guidance’s and statutes that are constructed by our governing bodies. Therefore, when the legislation for Health Reform was signed into law, we acted as diligently as possible to create a ‘user friendly’ summary of both acts, H.R. 3590 and H.R. 4872. CIS has developed three publications to assist in understanding how the new legislation may affect you and your company, all of which can be found on our Pharma Compliance Blog :

1. Healthcare Reform Legislation Webinar – Chris Cobourn

2. The Patient Protection and Affordable Care Act; Key Impact on Pharmaceutical Manufacturers and Government Program Participation – Lauren Pellicciotti

3. H.R. 3590 as Amended by H.R. 4872 – Jordan Mummau (Read Below)

MEDICARE (H.R. 3590, Sec. 3101-3602)

2010
• Provide a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010 and gradually eliminate the Medicare Part D coverage gap by 2020.
Expand Medicare to individuals exposed to environmental health hazards.

2011
• Manufacturers to provide a 50% discount on brand-name prescriptions filled in the Medicare Part D coverage gap. o Begin phasing-in federal subsidies for generic prescriptions filled in the Medicare Part D coverage gap
• Provide a 10% Medicare bonus payment to primary care physicians and to general surgeons practicing in health professional shortage areas.

2013
• Begin phasing-in federal subsidies for brand-name prescriptions filled in the Medicare Part D coverage gap (to 25% in 2020, in addition to the 50% manufacturer brand-name discount).
Pilot program is established, evaluates paying a bundled payment for acute, inpatient hospital services, physician services, outpatient hospital services, and post acute care services.

2014
Reduce Medicare DSH payments by 75%
o Increase payments over time based upon the % of uninsured population and the amount of uncompensated care provided.

MEDICAID (H.R. 3590, Sec. 2501)

2010
Increase the Medicaid drug rebate % for brand name drugs to 23.1%
o Exception: rebates for clotting factors and drugs approved exclusively for pediatric use increases to 17.1%.

Increase the Medicaid rebate for non-innovator, multiple source drugs to 13% of AMP
o Extend drug rebate to Medicaid managed care plans

2011
• Prohibit federal payments to states for Medicaid services related to health care acquired conditions.
• State balancing incentive program

2013
Increase Medicaid payments for primary care services provided by primary care doctors for 2013 and 2014 with 100% federal funding.

2014
Expand Medicaid to all individuals under age 65 with incomes up to 133% FPL based on modified adjusted gross income.
Reduce states’ Medicaid DSH allotments

Medicaid Unit Rebate Amount Line Extension – (H.R. 4872, Sec. 1206)
The House-passed reconciliation bill requires a potential substitute Medicaid rebate calculation for "line extensions" of oral solid dosage forms of innovator products. For these products, the Medicaid rebate will be the greater of:
• (a) the usual calculation or
• (b) AMP times the highest additional rebate for any strength of the original expressed as percentage of AMP.

Physician Ownership/Reporting/and Other Transparency - (H.R. 3590, Sec. 6002) better known as the Physician Sunshine Payment Act
If providing a payment or other transfer of value to a covered entity, a Manufacturer must submit:

• The name of the covered recipient.
• The business address of the covered recipient and, in the case of a covered recipient who is a physician, the specialty and National Provider Identifier of the covered recipient.
• The amount of the payment or other transfer of value.
• The dates on which the payment or other transfer of value was provided to the covered recipient.
• A description of the form of the payment or other transfer of value, indicated (as appropriate for all that apply) as cash or a cash equivalent
• In-kind items or services
• Stock, a stock option, or any other ownership interest, dividend, profit, or other return on investment; or any other form of payment or other transfer of value (as defined by the Secretary).
• A description of the nature of the payment or other transfer of value, indicated (as appropriate for all that apply) as consulting fees
• Compensation for services other than consulting
• Honoraria
• Gift
• Entertainment
• Food
• Travel (including the specified destinations
• Education
• Research
• Charitable contribution
• Royalty or license
• Current or prospective ownership or investment interest
• Direct compensation for serving as faculty or as a speaker for a medical education program
• Grant; or any other nature of the payment or other transfer of value (as defined by the Secretary).
• If the payment or other transfer of value is related to marketing, education, or research specific to a covered drug, device, biological, or medical supply, the name of that covered drug, device, biological, or medical supply.
• Any other categories of information regarding the payment or other transfer of value the Secretary determines appropriate.

Monetary penalties for non-compliance can range from $10,000 – $1,000,000. See section 1128G if you have specific questions regarding penalties.

More Information:
• Physician ownership-referral (H.R. 4872, Sec. 1106)
o Changes to December 31, 2010 the date after which physician ownership of hospitals to which they self refer is prohibited and provides a limited exception to the growth restrictions for grandfathered physician owned hospitals that treat the highest percentage of Medicaid patients in their county (and are not the sole hospital in a county).

• Drug, device, biological and medical supply manufacturers must report gifts and other transfers of value made to a physician, physician medical practice, a physician group practice, and/or a teaching hospital.

• Referring physicians for imaging services must inform patients in writing that the individual may obtain such service from a person other than the referring physician, a physician who is a member of the same group practice, or an individual who is supervised by the physician or by another physician in the group.

• Prescription drug makers and distributors must report to the HHS Secretary information pertaining to drug samples currently being collected internally.

• Pharmacy benefit managers (PBM) or health benefits plans that provide pharmacy benefit management services that contract with healthy plans under Medicare or the Exchange must report information regarding the generic dispensing rate; rebates, discounts, or price concessions negotiated by the PBM.

Drug Sampling; Reporting – (H.R. 3590, Sec. 6004)
Beginning in 2012, no later than April 1st of each year each manufacturer and authorized distributor of an applicable drug shall submit to the secretary the following information from the preceding year:

• In the case of a manufacturer or authorized distributor which makes distributions by mail or common carrier reports the identity and quantity of drug samples requested and the identity and quantity of drug samples distributed, aggregated by the name, address, professional designation, and signature of practitioner making the request.

•In the case of a manufacturer or authorized distributor of record which makes distributions by means other than mail or common carrier reports the identity and quantity of drug samples requested and the identity and quantity of drug samples distributed under such subsection during that year, aggregated by the name, address, professional designation, and signature of the practitioner making the request.

Pharmacy benefit managers transparency requirements – (H.R. 3590, Sec. 6005)
Part A of title XI of the Social Security Act (42 U.S.C. 1301 et seq) is amended by inserting after section 1150 the following new section:

The Act requires that pharmacy benefit managers ("PBM") provide the Department of Health and Human Services with information including the percentage of all prescriptions that were provided through mail order pharmacies versus retail pharmacies and the percentage of prescriptions where there is a generic drug available and dispensed. This will create transparency into the discounts achieved by PBM which serves as the middleman between the pharmaceutical manufacturers, health insurance plans and the pharmacies.

The reporting requirement applies to health benefits plan that manages prescription drug coverage under contract with (1) a prescription drug plan sponsor of a prescription drug plan or a Medicare Advantage prescription drug plan under Medicare Part D, (2) a qualified health benefits plan offered through a health insurance exchange established under the Act. In addition to mail order and generic information, PBM’s are required to disclose the aggregate amount and types of rebates, discounts or price concessions that are attributable to patient utilization under the plan. PBM’s will also be required to disclose the aggregate amount of rebates, discounts or price concessions that are passed through to the plan sponsor and the total number of prescription that were dispensed. Excluded from this reporting requirement would be: bona fide services fees such as distribution service fees, inventory management fees and fees associated with administrative service agreements and patient care programs.

Expanded Participation in the 340B Program – (H.R. 3590, Sec. 7101)
Expansion of Covered Entities Receiving Discounted Prices – Section 340B of PHS is amended by adding:
o A children's hospital excluded from the Medicare prospective payment system pursuant to section 1886(d)(1)(B)(iii) of the Social Security Act
o free-standing cancer hospital excluded from the Medicare prospective payment system
o Critical Access Hospitals
o Rural referral centers (must have disproportionate share adjustment % equal or greater than 8%)

• Prohibition on Group Purchasing Arrangements

• Medicaid Credits on Inpatient Drugs o Not later than 90 days after the date of filing of the hospital's most recently filed Medicare cost report, the hospital shall issue a credit as determined by the Secretary to the State Medicaid program for inpatient covered drugs provided to Medicaid recipients

340B Integrity Provisions: (H.R. 3590, Sec. 7102)
Quarterly Manufacturer Reporting: The reform bill requires the development of a system that will permit the Secretary (presumably the Health Resources and Services Administration, "HRSA") to verify the accuracy of ceiling prices. To this end, the HRSA must publish "precisely defined" standards for the calculation of ceiling prices; regularly compare HHS-calculated ceiling prices with those reported quarterly by manufacturers; perform "spot checks" of sales to Covered Entities; and investigate and resolve pricing discrepancies.

Refunding Overpayments: The new law also includes integrity provisions to require manufacturers to issue refunds to Covered Entities that are overcharged by the manufacturers and to explain why and how the overcharge occurred, how the refunds will be calculated, and to whom the refunds will be issued. HRSA must then ensure that the refunds are issued accurately and within a reasonable period of time, both in routine instances of retroactive adjustment to relevant pricing data and in exceptional circumstances such as erroneous or intentional overcharges for covered drugs.

Audit Rights and Penalties: The new law permits HRSA to selectively audit manufacturers’ and wholesalers’ compliance with the requirements of the 340B program. It also grants HRSA the authority to impose civil monetary penalties (not to exceed $5,000 for each instance of overcharging a Covered Entity) in the event of knowing and intentional overcharges.

Payments Excluded from AMP – (H.R. 4872, Sec. 1101 & H.R. 3590, Sec. 2503)
• The new law expands the list of statutory exclusions from AMP. It continues to exclude customary prompt pay discounts paid to wholesalers.

• The reform law excludes bona fide service fees paid to wholesalers and RCPs, and gives examples of services that are potentially bona fide:
o Distribution services,
o Inventory management agreement services,
o Stocking allowances and administrative services.

• Reimbursement for recalled, expired, damaged, and returned goods is excluded from AMP, as are the associated costs. PBM, MCO, HMO, insurer, hospital, clinic, mail order, LTC and manufacturer price concessions (and where appropriate payments) are all excluded from AMP.

• Finally, discounts under § 1860D-14A (i.e., the Medicare coverage gap discount program) are now officially out of AMP and Best Price.

• All other discounts to wholesalers and retail community pharmacies will be included in AMP.

Quick Facts/ At a Glance

Dual Eligible Coverage and Payment Coordination – (H.R. 3590, Sec. 2602)
HHS will establish a Federal Coordinated Health Care office.
• Improve coordination among the federal and state governments for individuals enrolled in both programs.

Medicare Advantage Part C – (H.R. 3590, Sec. 3311)
‘MA’ payments will be based on the average number of bids submitted by insurance plans in each market.
• MA plans will be prohibited from charging beneficiaries cost sharing for covered services greater than what is charged under fee-for-service

Medicare Prescription Drug Plan Improvements Part D – (H.R. 3590, Sec. 3315)
In order to have their drugs covered under the Medicare Part D program, dug manufacturers will provide a 50% discount to Part D beneficiaries for brand-name drugs and biologics purchased during the coverage gap beginning July 1, 2010.
• Initial coverage limit in the standard Part D benefit will be expanded by $500 for 2010.

Pharmacy Reimbursement – (Section 2503)
Use of AMP in Upper Limits – Secretary shall calculate the Federal upper reimbursement limit as no less than 175% of the weighted average of the most recently reported Monthly AMP for pharmaceutically and therapeutically equivalent multiple source drug products.

Smoothing process will be implemented for AMP
o Similar to ASP smoothing

• Definition of AMP
o Wholesalers for drugs distributed to retail community pharmacies
o Retail community pharmacies that purchase drugs direct from the manufacturer

Medicare, Medicaid, and CHIP Program Integrity Provisions (H.R. 3590, Sec. 6401-6508)
The secretary will establish procedures to screen providers and suppliers participating in Medicare, Medicaid, and CHIP
• Providers and suppliers enrolling or re-enrolling will be subject to new requirements including a fee, disclosure of current or previous affiliations with any provider or supplier that has uncollected debt, has had their payments suspended, has been excluded from participating in a Federal health care program, or has had their billing privileges revoked.

• Secretary of HHS is authorized to deny enrollment in these programs.

Exclusion of Orphan Drugs for Certain Covered Entities (H.R. 4872, Sec. 2302)
• For the new Covered Entities, the term "covered outpatient drug" would not include a drug designated for rare conditions by the Secretary under section 526 of the Federal Food, Drug, and Cosmetic Act under the House-passed reconciliation bill.

Enhanced Medicare and Medicaid Program Integrity Provisions – (H.R. 3590, Section 1128j)
CMS will include in the integrated data repository (IDR) claims and payment data from Medicare (Parts A, B, C, and D), Medicaid, CHIP, health-related programs administered by the Departments of Veterans Affairs (VA) and Defense (DOD), the Social Security Administration, and the Indian Health Service (IHS).

• New penalties will exclude individuals who order or prescribe an item or service, make false statements on applications or contracts to participate in a Federal health care program, or who know of an overpayment and do not return the overpayment.

• Each violation would be subject to a fine of up to $50,000.

• The Secretary will take into account the volume of billing for a DME supplier or home health agency when determining the size of a surety bond.

• The Secretary may suspend payments to a provider or supplier pending a fraud investigation.

• Health Care Fraud and Abuse Control (HCFAC) funding will be increased by $10 million each year for fiscal years 2011 through 2020.

• The Secretary will establish a national health care fraud and abuse data collection program for reporting adverse actions taken against health care providers, suppliers, and practitioners, and submit information on the actions to the National Practitioner Data Bank (NPDB).

• The Secretary will have the authority to dis-enroll a Medicare enrolled physician or supplier who fails to maintain and provide access to written orders or requests for payment for durable medical equipment (DME), certification for home health services, or referrals for other items and services.

• The HHS Secretary will expand the number of areas to be included in round two of the DME competitive bidding program from 79 of the largest metropolitan statistical areas (MSAs) to 100 of the largest MSAs, and to use competitively bid prices in all areas by 2016.

Additional Medicaid Program Integrity Provisions - (H.R. 3590, Sec. 3101-3602)
States must terminate individuals or entities from their Medicaid programs if the individuals or entities were terminated from Medicare or another state's Medicaid program.

• Medicaid agencies must exclude individuals or entities from participating in Medicaid for a specified period of time if the entity or individual owns, controls, or manages an entity that:
o (1) Has failed to repay overpayments
o (2) Is suspended, excluded, or terminated from participation in any Medicaid program
o (3) Is affiliated with an individual or entity that has been suspended, excluded, or terminated from Medicaid participation.

• Agents, clearinghouses, or other payees that submit claims on behalf of health care providers must register with the state and the Secretary.

• States and Medicaid managed care entities must submit data elements for program integrity, oversight, and administration.

• States must not make any payments for items or services to any financial institution or entity located outside of the United States.

Pharmaceutical Manufacturers Fee
• The fee applies only to companies with sales of branded prescription drugs in excess of $5 million dollars per calendar year.

• Brand name pharmaceuticals (H.R. 4872, Sec. 1404)
o Delays the industry fee on sales of brand name pharmaceuticals for use in government health programs by one year to 2011, and increases revenue raised by the fee by $4.8 billion.

Tuesday, April 27, 2010

"Who Ya Gonna Call?" Part 2

By: Bill Baxter, CIS Strategic Advisor, Government Affairs
billbaxter@cis-partners.com

Hello GP Fans, I’m sure that you’ll be interested to know that effective 4/22/10 the Centers for Medicare & Medicaid Services (CMS) forwarded guidance correspondence to State Medicaid Directors regarding health care reform legislation. It addressed changes required by two key pieces of legislation:
  • The Patient Protection and Affordable Care Act (PPACA), P.L.111-148
  • Health Care and Education Reconciliation Act of 2010 (HCERA), P.L. 111-152
This guidance addresses increased Medicaid Drug Rebate Program (MDRP) rebate minimum percentages, extension of rebates for drugs dispensed by Managed Care Organizations (MCOs) to Medicaid patients, and the rebate offset associated with the increase in rebates achieved via changes required in the above mentioned legislation. Note: it is unclear as to when such guidance will be provided directly to manufacturers.

The legislation codifies the following changes in MDRP rebate calculations, effective 1/1/10:
  • The minimum rebate percentage (MRP) for single source & innovator multiple source (branded) products increases from 15.1% of average manufacturer price (AMP) to 23.1% of AMP
  • MRP for clotting factor drugs and those exclusively approved for pediatric indications increases from 15.1% of AMP to 17.1% of AMP
  • MRP for non-innovator multiple source (generic) drugs increases from 11% of AMP to 13% of AMP
  • A line extension of an oral solid dosage form of a brand name drug requires a rebate that includes the basic rebate for that drug and the highest additional rebate (CPI “Penalty”) for any strength of the original product
  • MRP for brand name drugs is capped at 100% of that product’s AMP
In reviewing this correspondence you will also note that the states do not get to retain the increase in rebates generated by the changes in MDRP calculations. CMS will “offset” (retain or “claw-back”) the increase in the non-Federal share of the basic rebate, but not that from additional (CPI Penalty) rebates nor state supplemental rebates. In fact, where rebates have previously exceeded 15.1% of AMP, the states appear to lose revenue. Note: CMS will offset the non-Federal share of both the basic and additional rebates for products deemed to be “line extension drugs”.

As mentioned, this legislation also includes the requirement of rebates for covered drugs dispensed by managed care organizations (MCOs) to eligible Medicaid patients. MCOs will report such utilization to the states, where those units will be included with quarterly MDRP invoices. It is yet unclear whether or how states will identify MCO units as such. CMS will utilize the same offset policy for rebates as with fee-for-service units. Note: rebates are not required for units purchased through the Public Health Service 340B program.

A copy of the actual correspondence can be found on the GP Pharma Compliance Exchange or on the CMS website (http://www.cms.gov/home/medicaid.asp ) under Medicaid => State Medicaid Director Letters. We will advise when CMS provides additional specifics to the states and when correspondence to manufacturers is available.

Monday, April 26, 2010

TRICARE Update!

By: John Avicolli, CIS FSS Manager
johnavicolli@cis-partners.com

We would like to notify manufacturers of an important TRICARE update.

TRICARE has placed on their website that they are automating the Appendix A's. This is where manufacturers provide the NDCs, NFAMP, FCP and package size for their products.

Manufacturers will receive the link to the website along with their password in the next couple of weeks. Therefore the release of the 1Q2010 utilization data has been delayed.

Here is the link to the announcement... http://www.tricare.mil/pharm_mfg/default.cfm

Please feel free to contact us with any questions and/or concerns.

Also, please continue to follow the blog and the CIS website for information on an upcoming free Tricare Webinar (or you can email Marni Schribman at CIS to make sure you are on the list to receive an invite - marnischribman@cis-partners.com). The Webinar will be facilitated by David Rick and Lisa McNair (Lisa is formerly with the DoD and is now with Compliance Implementation Services).

Wednesday, April 21, 2010

How will the Healthcare Reform Affect Your Government Pricing Programs?

On April 14th, 2010, CIS hosted a webinar addressing how the Healthcare Reform will affect your Government Pricing programs. Due to the overwhelming request and feedback after the webinar session presented by CIS’ Chris Coburn, VP of Regulatory Compliance, Bill Baxter, Strategic Advisor of Government Affairs, and Amy VanDeCar, Director of US Commercial Compliance and Government Programs, many of our clients and outside spectators have been looking to CIS for a specific summary that addresses all of the Government Pricing impacts that have been driven from the Patient Protection and Affordable Healthcare Act (“PPCA”). Our Subject Matter Experts (“SMEs”) have been addressing the specific questions regarding the changes and thought it would be appropriate to summarize at a high-level what are the specific changes that affect GP and when they are occurring. Please feel free to reference our grid below; you can click on it to expand it another window.

Monday, April 19, 2010

Healthcare Reform Legislation Webinar

Chris Cobourn, CIS, VP Regulatory Compliance
chriscobourn@cis-partners.com

CIS ran a free Webinar last week on Healthcare Reform, focusing on its impact on Government Programs.

We had an overwhelming response and, unfortunately, had to turn some people away once the Webinar service met its maximum capacity.

If you were unable to join, or just want to revisit the discussion at your leisure, click on the link below:

HOW WILL NEW HEALTHCARE REFORM LEGISLATION AFFECT YOUR GOVERNMENT PROGRAM PARTICIPATION?

The discussion included a strategic overview by me, and a discussion about what senior management at pharmaceutical companies should know about Healthcare Reform. It also included an operational overview by Bill Baxter and Amy VanDeCar about operational aspects on Medicaid Claims — with the new base rebate percentage effective retroactively to January of 2010 — and new AMP definitions (effective October of 2010).

We are also posting an updated legislative summary on the blog early next week that will summarize the PPACA and Reconciliation Bills, categorized by program impact and timing. Clearly, with Healthcare Reform, the government as a customer is growing and expanding. From increased rebate percentages, to methodology changes, to expansion of the PHS program and the upcoming “tax” on Pharmaceutical Manufacturers, the financial impact has the potential to be significant.

It is important to understand the compliance aspects, the operational requirements, as well as the potential financial impact on your organization.

Please feel free to view the Webinar at your convenience, and let us know if you want to participate in our on-going free GP Webinar series that starts this week with an online session about GP audit readiness. For more details, go to Pharma Compliance Insight.





It is recommended that pharmaceutical manufacturers maintain an authoritative guidance library to support their US Government Pricing calculations. gp.cis-pcx.com contains information on Federal Programs, including: Medicaid Drug Rebate Program, Medicare Parts B and D, Veterans Affairs Health Program, 340B Program and TRICARE Program. The GP PCX also contains information on Federal Agencies, including: CMS, OIG, VA, OPA, DoD and various State programs.

Look Who's Coming Off Patent

By: Lauren Pellicciotti, CIS Project Manager
laurenpellicciotti@cis-partners.com

In 2010, ten of the industry’s “blockbuster” drugs will see patent expiration. Some of the manufacturers of these drugs managed to get a six-month extension due to pediatric exclusivity, but Teva, Apotex, Mylan and many other generic drug manufacturers will have the opportunity to enter the market and put a dent in the sales of several brand medications this year,including Flomax and Aricept[1]. Under Section 505A of the Federal Food, Drug, and Cosmetic Act, the FDA allows longer exclusivity for drugs to which FDA has granted for Pediatric Studies.[2] With the big generic players applying for the 180- exclusivity period, how will the mid-size generic companies position themselves to gain a piece of the pie? Since the healthcare reform passed under legislation, several branded, big pharma manufacturers are questioning whether it is a good idea for them to embrace the generic drug market. If you are not aware, there are differences under the Medicaid Drug Rebate Program (“MDRP”) that directly affect Single-Source “S”, Innovator “I”, and Non-Innovator “N” drugs. The main difference under the MDRP is the reimbursement percentage paid to the state on a quarterly basis. “S” and “I” drugs pay 23.1% to the states for reimbursement and “N” drugs only pay 13% to the states for reimbursement. This is a good reason for why I suggest it may be a good opportunity to enter the generic market. For generics, there is a 10% difference on what the manufacturer needs to reimburse the states.

Although I believe it is very important for the brand manufacturers of innovator drugs to continue to invest in research and development, I also encourage the companies to consider entering into the generic market.

Working in the generic field the last few years I have come to realize it’s not how you market the drug and it’s not the pricing strategy. It is getting FDA approval to enter the 180-day exclusivity period. That’s where the money is made for the generic companies. Based on my experience in working with mid-size and large generic companies, I have included the following considerations and positive attributes being part of the generic market.

Considerations

  • Be first in the market – 180-exclusivitiy is extremely important to a generic companies quarterly profits. The higher the profits, the bigger the employee bonus.
  • Understand the different reimbursement rates under the Medicaid Drug Rebate Program.
  • Volume – Does your company have the operational background to support the volume of packaging and labeling for a generic product?

Positive Attributes

  • Less Cost on Marketing and Sales – Generic companies focus on the regulatory end to ensure they get all of their appropriate applications in to the FDA when a brand is coming off patent.
  • Minimal Cost of Research and Development.

Below is a listing of Drugs and Manufacturers that will be losing their patent in 2010:
1. Cozaar/Hyzaar – Merck (Six Month Extension)
2. Lipitor - Pfizer
3. Flomax - Boehringer Ingelheim
4. Arimidex - AstraZeneca
5. Climara - Bayer HealthCare
6. Aricept - Eisai
7. Invirase - Roche
8. Hycamtin - GlaxoSmithKline
9. Protonix - Pfizer
10. Levaquin - Ortho-McNeil

I am interested in your feedback regarding the topic above. Please take a minute and comment on whether or not you think brand drug companies should consider entering the generic market.

[1] http://www.fiercepharma.com/special-reports/big-patent-expirations-2010
[2] http://www.fda.gov/Drugs/DevelopmentApprovalProcess/DevelopmentResources/ucm050005.htm

Friday, April 16, 2010

Articles of the Week!

Courtesy of: Suma Kallurkar, CIS Senior Compliance Manager
sumakallurkar@cis-partners.com

1) Breaking Down the Barriers: When Health-Care Providers Exchange Electronic Medical Records, Costs Go Down and Patient Care Goes Up
http://online.wsj.com/article/SB10001424052748703382904575059703004716596.html

2) FDA Says Studies on Triclosan, Used in Sanitizers and Soaps, Raise Concerns
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/07/AR2010040704621.html

3) How Gene Patents Harm Innovation
http://www.forbes.com/2010/03/31/gene-patent-myriad-business-healthcare-dna-biotech.html

4) Orphan Drugs to Create Paradigm Shift in the Pharmaceutical Industry
http://www.worldpharmanews.com/content/view/1179/1/

5) Concerns Over Unregulated Medicinal Products Containing Stem Cells
http://pharmalive.com/News/Index.cfm?articleid=698181

Thursday, April 15, 2010

Cancer Vaccines

By: Venessa Piper-Givler, CIS Director of Manufacturing Compliance
Vanessapiper-givler@cis-partners.com

The FDA is now reviewing the submission of the prostate cancer vaccine Provenge by the Seattle-based company Dendreon. The FDA has not yet approved any cancer vaccine submission, but Provenge has been recommended for approval by the FDA advisory committee. In 2007, the FDA decided to wait on giving the vaccine approval until the IMPACT trial was completed [1]. Provenge is for the treatment of one of the most common epithelial cancers – prostate cancer.

Dendreon has a different approach to the prostate vaccine process. They are processing the patient’s own immune cells which they then nourish with a prostate protein, prostate acid phosphatase. The processed cells are then transfused back into the patient, with the hope that the T-cells will kill the prostate cancer cells. The Phase III clinical trial showed survival benefit higher than what has been seen in the past in men with prostate cancer. The study showed that men who received Provenge had a 34% chance of being alive compared to those men who did not receive Provenge, who had less than a 10% chance [3]. It was also revealed that Provenge has shown the greatest results when combined with other cancer drugs such as chemo [2].

“The vaccine augments [drug] treatment; it does not replace it,” said Andrew T. Parsa, M.D., Ph.D., an assistant professor in the Department of Neurological Surgery at the University of California. He goes on to state that he “sees two major points to make with the vaccine. One, it is virtually nontoxic. You are using your body not drugs to fight cancer. Two, it is not a cure, per se, but you are mobilizing an army to help with whatever treatment regimen you have chosen”. [1]

The other advantage of Provenge is that the side effects are minimal in that patients are only experiencing a fever and chills. The vaccine treatment helps the immune system to work better so the side effects are similar to the effects of the body mounting an immune response against the flu. This is great news for prostate cancer patients who may have something new in the near future to help them battle this disease.

Sources:
1) http://bit.ly/VChdN
2) http://chetday.com/provengeprostatecancer.html
3) http://bit.ly/cACLlC

Wednesday, April 14, 2010

More Than Just a Clipboard

Beth Kline, Compliance Manager
bethkline@cis-partners.com

It seems that every day we hear about some new technology that is the latest and greatest – that will make our lives easier, more convenient and save time, or that will entertain, re-connect, or motivate us toward change. The most recent “gadget” on the scene is the iPad™, the Apple® self-proclaimed “magical and revolutionary product”. [1] The iPad is an interactive touch-screen computer that gives access to and interaction with almost anything you might ever need, putting information right at your fingertips. On a personal level, this can add fun and convenience to our lives. On a professional level, this can change the way we do our jobs.

We have seen the way technology is changing our approach to clinical trials – it can touch every facet of the process from data collection to report submission. Over the years, companies have piloted ways to make clinical trial data collection and entry easier, faster and closer to the source. This month, Nextrials, Inc. has introduced the next version of their Prism™ electronic data capture (EDC) and clinical trial data management platform, which will support data access at anytime from anywhere through the iPad. [2] This could revolutionize the healthcare industry by allowing physicians and other healthcare providers the opportunity to immediately view electronic health records of patients at critical times, as well as all times, during patient care.
“With its bigger screen, imaging power and a number of medical applications in
development, the Apple iPad is expected to quickly advance the idea of entering
data at the bedside for use in both clinical trials and a patient’s permanent
electronic health record,” noted James Rogers, CEO and co-founder of Nextrials.
[3]

The thought of entering data at the bedside may not appeal to all investigator site staff, but as technology continues to develop, grow and pervade our society, it quite possibly could become routine. The amount of time saved can be astronomical – data entered into the iPad becomes the source, therefore no transcribing needs to occur. There will be fewer discrepancies in the data reported and less need for tedious queries between sponsors and sites. Not only will this free up time for site staff, it will also make reviewing the data for the sponsor easier and less time consuming. And, it will save space, since source documents will not need to be stored in a cabinet at the study site.

It seems as though the potential for the iPad in the healthcare arena is limitless. Hospital rounds can be done faster when all test results, scans and x-rays can be seen at the touch of a finger. As for clinical trials, sponsors will have instant access to “adverse event data, patient recruitment status, supply availability and other critical real-time data”. [4] With all of this new technology we are seeing, the possibilities are endless!

[1] http://www.apple.com/ipad/

[2]
http://www.nextrials.com/

[3]
http://www.lifescienceleader.com/index.php?option=com_content&task=view&id=1112& Itemid=139

[4]
http://www.pharmaceuticalcommerce.com/frontEnd/1418-What_the_iPad_Means_for_Pharma.html

Friday, April 9, 2010

The Dust is Just Starting to Settle on the PPACA

By: Chris Cobourn, VP of Regulatory Affairs
chriscobourn@cis-partners.com

It’s been almost two weeks since the enactment of major Healthcare Reform legislation, the Patient Protection and Affordable Care Act (PPACA) and the accompanying Health Care and Education Reconciliation Act, but there’s still some ambiguity in certain areas where we await to hear from CMS on specific methodology and operational aspects.

Even though it’s only been a short time since the bill was signed into law, there is already a lot of information out there to disseminate. I would like to provide a few thoughts, and also welcome you to participate in our free Webinar on April 14th from 2pm-3pm to discuss some of these changes (https://www1.gotomeeting.com/join/589887864).

There are several components of the legislation that go into effect immediately, such as the increase in base rebate percentages, and certain components that go into effect over time, the most significant of which are the AMP methodology changes that will be implemented in October.

As we mentioned in our blog article following Scott Brown’s Senate victory in Massachusetts, we felt that “the writing was on the wall,” indicating that certain changes were coming, regardless of how they came to be legislatively. It certainly appeared, and still appears, that Average Manufacturer Price (AMP) will generally increase and Medicaid liability will increase, though it is the onus of each manufacturer to look at their own calculations and methodologies to determine how they will be affected. Although there is now a much different, more restrictive definition of AMP based upon Retail Community Pharmacies, as well as fewer included discounts, there are also fewer units in the calculation, so manufacturers will have to evaluate how the changes and revised AMP math impacts them.

With that said, the key overall changes to the Medicaid program impacting manufacturers include:
  • Larger rebate payments by manufacturers based upon expanded eligibility, changes in AMP methodology, and increases in the base rebate percentage (it is of note that the general theme of the methodology changes align to the concepts expressed by the retail industry in response to the DRA Final Rule and the basis of the Final Rule injunction)
  • A shift in reimbursement to pharmacies by the states, to be based on AMP
Manufacturers must now evaluate their course of action to ensure that they will be in compliance with the evolving changes, and to re-adjust their accruals. Several key considerations include (Note: These are my thoughts from a read of the legislation and limited guidance to date, and are not intended to provide any legal advice):

The increase in the base rebate percentages are immediate, and retroactive to January, 2010.
With changes to the base rebate percentages (23.1% for Branded, 13% for Generic, and 17.1% for clotting factors and drugs approved exclusively for pediatric use), manufacturers should evaluate their payment of rebates immediately. Due to changes in AMP methodology taking effect in October, the process of the change in the rebate percentages should be driven operationally by CMS and the States (technically, the manufacturer does not calculate the Unit Rebate Amount (URA), which comes from CMS to the States, based upon AMP and BP values reported by the manufacturer to CMS.) Manufacturers should calculate and report AMP as normal, but start to accrue for and be prepared to pay the rebates based upon the revised URA calculations. This is certainly an area where we expect some immediate guidance.

Major AMP methodology changes will go in to effect in October.
Manufacturers should be prepared to incorporate methodology changes as of October 2010. Primary changes include the new definition of Retail Community Pharmacies as the basis for AMP, and the revised and more restrictive definition of Wholesalers. This will reduce the number of customers considered “retail,” and will reduce the types and number of rebates and price incentives that are included as reductions in the AMP calculation (again, theoretically increasing AMP along the general concept expressed in the AMP injunction on what prices are truly reflective of net prices at retail pharmacies.) Key activities that the manufacturer should start thinking about include:
  • Revise your Class of Trade (COT) schema, and your COT inclusions and exclusions
  • Evaluate and revise your AMP inclusions and exclusions, based upon new guidance on what should be included in AMP
  • Conduct financial modeling to see the true net impact of changes to COTs, inclusion and exclusions, and units to be included in GP calculations
  • Update your policy and procedure documentation to reflect the new legislation
Stay tuned for key CMS methodology guidance.
We have as many questions as we have answers, and I know our friends at CMS are putting in some long hours to publish guidance, operational requirements, and update systems. There are some aspects that are certainly more operational, such as when and how the new and retroactive base rebate percentages will be implemented by CMS and the States. There are also some looming methodology questions that will require further guidance, such as:
  • How to define drugs in your systems as exclusively pediatric
  • How to implement Base AMP changes for new formulations
  • How and when CMS will implement the maximum rebate percent (100% of AMP)
  • How to calculate AMP for products with no sales to Retail Community Pharmacies (such as ASP drugs)
  • Whether manufacturers will be able to “reset” historical Base AMP with the revised definition of AMP, as they were with the DRA Final Rule
  • How AMP smoothing will be impacted by a dramatic change in AMP methodology as of October, with 11 prior months being calculated under the DRA Final Rule AMP definition
Evaluate the impact of changes in the 340B program.
There will be many changes to come with the expansion of the 340B program, including the broadening of eligible entities. One key provision that was not included in the final legislation is expanding 340B purchases to include inpatient purchases. A major impact will occur when a new dispute resolution process is put in place. This is an area where a lack of clear guidance has made compliance difficult for manufacturers. Several areas for evaluation and consideration in the short term include:
  • How the expansion of 340B entities may impact your GPO purchasing and forecasting
  • How a new AMP calculation may impact your calculated PHS price

Evaluate long term financial modeling.
With the expansion of Medicaid eligibility, the increase in Medicaid rebates, and requirements that pharmaceutical manufacturers broadening their coverage of the “donut hole,” manufacturers should evaluate the growth and expansion of government programs on their products and contracting strategies, and model the longer term financial impact.

If you would like more information or have any questions, please email me at chriscobourn@cis-partners.com, and be sure to tune in to our free webinar on April 14th from 2pm-3pm.

Articles of the Week!

Courtesy of: Jess Ebert, CIS Compliance Associate
jessicaebert@cis-partners.com

1) Fruits and vegetables are no miracles in cancer prevention
http://www.cnn.com/2010/HEALTH/04/08/fruit.vegetable.cancer/index.html

2) Vaccine Reverses Type 1 Diabetes in Mice
http://www.healthday.com/Article.asp?AID=637852

3) FDA cracking down on fat-melting injections
http://news.yahoo.com/s/ap/20100407/ap_on_bi_ge/us_fat_melting_drugs_fda

4) Achoo! Pollen at its worst in years in many areas
http://bit.ly/bDSE9b

5) Scientists Grow Replacement Blood Vessels From Stem Cells
http://www.healthday.com/Article.asp?AID=637864

Tuesday, April 6, 2010

Common Field Sales Complaint #2 – “The company took away all of my stuff"

By Judy Fox, CIS Compliance Director
judyfox@cis-partners.com

Last month I wrote my first article about my role as an auditor and a common complaint that I hear when interacting with pharmaceutical sales representatives (Common Field Sales Complaint #1- It Always Feels Like Somebody's Watching Me). I don’t know if there is enough space to detail all of the things I have seen and heard from field sales forces, but there are some common complaints that I want to share. A little investigating as the result of complaints from the field can lead to the discovery of compliance concerns.

Most of the pharmaceutical manufacturers I’ve worked with over the past few years have adopted the Pharmaceutical Manufacturers of America Code on Interactions with Healthcare Professionals (PhRMA Code) for all of their promotional activities and a few have only adopted the PhRMA Code in states that require it. From either perspective, everyone I have worked with has chosen to adopt at least a portion of the code and has eliminated all of the ‘reminder items’ for Health Care Practitioners (HCP), such as pens and mugs. All of the companies have conducted training on the PhRMA Code and the representatives have understood that the company would no longer be providing these items.

Before I get started, I have to clarify that I work with all types of sales representatives: those that are in their first job after college and others who have been selling pharmaceuticals for 20+ years. The seasoned and successful sales representatives seem relieved by last year’s change in the PhRMA Code and are grateful that they don’t have a bunch of ‘stuff’ to carry around. The less experienced representatives seem to miss being able to supply an office with pens or post-it notes. This is where Common Field Sales Complaint #2 – “The company took away all of my stuff” rears its ugly head and compliance concerns pop up.

As a compliance consultant who is often called upon to conduct ride-along assessments and audits of field sales forces, I try to engage representatives in a conversation about their work habits. A part of those conversations include questions about company policies and procedures and any Corporate Code of Conduct. Experienced representatives know that no HCP is going to write a script because of a pen. The less experienced representatives sometimes feel like they are missing out on an important business tool to such an extent that they have come up with some pretty interesting interpretations of company policy. Most of the results of these interpretations are creating a compliance risk. The following examples are true stories that may seem far-fetched at first, but some compliance concerns were uncovered. As with any compliance issue, if left alone, they can become serious.

Example #1 – Company XZY has adopted the PhRMA Code across their entire company. I was asked to conduct a sample accountability and general compliance audit of sales representative, John Doe. John was able to rattle off the Corporate Code of Conduct practically verbatim; he had received training on the PhRMA Code and said he knew ‘the company is not allowed to give us stuff like pens or notepads anymore.’ Part of the audit included an inventory of his prescription drug samples as well as an inspection of the sample storage area. We arrived at a commercial storage site and John asked me if I wanted to start with his sample storage unit or his ‘other one’. (His other one? This is the point when an auditor sees a red flag and I will admit, also gets a little rush.) As it turns out, John has two small storage units, one for his samples and the second for his marketing materials. When he opens the door to the second storage unit, it is filled with all kinds of pens, stickers and other ‘reminder items’ as well as the company supplied marketing materials such as detail aids and patient education brochures. When questioned about the items, John proudly tells me that since the company is no longer able to supply the items and they took away all of his stuff, he has used his territory’s budgeted discretionary funds to have the items made on his own. He had been having pens, prescription stampers and coffee mugs made with XYZ’s product logos on them. None of the items had gone through Company XYZ’s legal, medical and regulatory review process, because John didn’t even know there was such a thing. His interpretation was such that the items weren’t prohibited completely, but that the company just couldn’t provide such items and that it was up to each representative to figure out what they needed and to get it themselves. His major complaint was that since the company took all of his stuff away, he had to have the items made on his own. The discovery of the items led to an XYZ review of the compliance training and language in the Code of Conduct and Corporate Policies and all were revised with specific instructions.

Example #2 – Company ABC has adopted the PhRMA Code in a limited capacity. ABC has policies in place that adopt the code in the states where it, or a more restricted code, is required by law. ABC had conducted training on the PhRMA Code and company policies as well as specific training for the representatives who were impacted by state laws. ABC does provide representatives who are not impacted by the state laws with some reminder items, but they have kept them to a limited and monitored quantity to avoid sales representatives sharing the items with other colleagues. ABC’s Corporate Compliance Office contracted with CIS to conduct a corporate compliance assessment and representative ride-alongs were a part of the project. This was Jane Doe’s (no relation to John in example #1) first job as a pharmaceutical representative and she had experienced great success in her first few years with the company. Jane details ABC’s pharmaceutical products in a state requiring adherence to the PhRMA Code. When the subject of the code came up during the ride-along, she acknowledged that she could no longer give her prescribers items such as pens and coffee mugs and that she was given company approved educational items. Jane felt slighted that some of her co-workers did not get their ‘stuff’ taken away and she thought about increasing the frequency of her calls. Jane liked the idea that reminder items helped keep her products in front of the prescriber and the staff. Since Jane is limited to providing modest meals to her prescribers in their offices during ‘lunch and learn’ programs, she came up with her own solution: product stickers. She had printed her own stickers with product logos taken off of the company website. She said she made sure she did not alter the logos at all. Jane then purchased various decorative jars, filled them with candy and put product stickers on them. She then brings a jar with her as part of the meals. She also makes sure the covers for any deli trays or pizza boxes always have a product sticker on them as well. For the holidays, Jane gave the office staff gifts with product stickers on them. She made it clear that she did not give a gift to the prescribers in the office, just the staff. Oh Jane, the concern here is not just with the use of the unapproved stickers, but with Jane assuming that she could provide the office with items as long as she did not give it to the prescriber. State laws vary, but in this case, the state law Jane works in is specific in that the restrictions extend to the employees of the prescriber. The report of the activity led to an evaluation and revision of the training program. In this case, Jane’s manager, Sally was also given refresher training based on the assumption that Sally either knew what Jane was doing or should have known.

As evident in the examples above, sometimes it isn’t enough to just take away everyone’s stuff and provide employees with company policies. It usually takes very specific training that literally spells out: “Do this and don’t do that!”

CIS has the knowledge and experience to create a comprehensive training program that addresses not only Federal and State requirements, but also tackles the interpretive issues that other training programs might overlook.

Feel free to send me some of your own examples where you were left shaking your head and saying, “What were they thinking?” I would love to share them anonymously and as well as some thoughts on compliance.

Sunday, April 4, 2010

The Curious Case of Scooter Boy

(Disclaimer: This blog post is meant to be humorous. If you take this seriously, you should stop taking yourself so seriously. However, if you are incapable of this, I promise to buy you a discounted plate of pancakes at IHOP at 4AM next Tuesday…)

Regardless of your political affiliation and feelings on President Obama’s most recent sweeping Health Care legislation, I have found an area that needs some change and oversight: The systems and interchanges utilized for tracking certain pieces of data. Why, you ask? Well, at the ripe age of 30 years old, I was sent an official card and letter letting me know I am now eligible for an AARP membership! I posit that by renting my now infamous Scooter, that I was placed into a ‘system’ or ‘criteria’ that automatically got kicked to the fine folks at AARP.

Therefore, since AARP’s CEO Addison Barry Rand was kind enough to send this letter and list the 6 major benefits of being an AARP member, I’d like to list the 6 things I’m most looking forward to as a card-carrying member:

1) The Stuff I’m Going to Get Away With: Perhaps it’s stealing batteries. Perhaps it’s going 45 in the fast lane. Perhaps it’s an errant smack of a formative year’s bum. Perhaps it’s holding up traffic crossing the street. Perhaps it’s keeping the ball that gets hit over my fence. In the immortal words of perhaps the most underrated Seinfeld character, Uncle Leo, I shall proclaim: “I’m an old man! I’m confused.”

2) Adult Incontinence Products: I was recently on a trip to a client and a freak, unpredicted snow storm (like that’s possible) caused a traffic jam the likes of which I’ve never seen. I tend to be energetic with a rip-roaring metabolism (which could also be the 45 cups of coffee I drink every day), so I had to pee like the Dickens (what does that actually mean?). Now that I’m officially an AARP member, I will certainly enjoy my discounted supply of products that will clearly help this situation. Need I really go into more detail?

3) Discounts: The amount and array of discounts offered to folks with an AARP card is staggering! Who doesn’t love a $30 hotel room or a $1 Subway sandwich (cue, Dolla, 1 Dolla Footlong)? When the girl over the counter looks at me perplexed because I look 25 (I’m seriously 30 ladies, I shizit you not), I’ll simply whip out the card that good ‘ol Adds (we’re close) sent me and say that I’d like that Double Cheeseburger off the Nickel Menu.

4) Eating: I’m really going to dig getting up at 3:30AM, breakfast at Denny’s at 4AM, Lunch at the club at 10:30AM and dinner at 4PM.

5) Driving: When I hit my own mailbox and my neighbor’s tree with my wife chasing after me with a golf club, I’ll have a legitimate excuse and alibi. My age, of course; which is clearly better than being under the influence of alcohol and painkillers due to the recent confession of my 15 affairs, including that friendly waitress at Perkins.

6) Being a Grandparent: I’m at the age where I’m constantly being asked when children are coming. It’s kind of a personal thing, but I can certainly understand the want to be a Grandparent. Now that I’m officially in ‘The Club’, I’m thinking I’m just going to skip the Parent thing and go straight to being a Grandparent. Who doesn’t want that? The kids always want to see you, you can give them candy and get away with it, they bring you gifts, smiles and cheers and, the best part: You get to give them back at the end of the day.

There you have it. I’m totally psyched to begin my official life as an old person. After typing the above, I’m realizing more and more just how awesome it is to be old.

For Your Space,

Steven.




Thursday, April 1, 2010

Not So Fast…

By: Amy Lotman, CIS Compliance Manager
amylotman@cis-partners.com

Very early March 25th, 2010, the Senate parliamentarian ruled that two portions of the House's "fix" bill do not directly affect the budget, which is a violation of the Byrd rule[1]. Republicans identified problems with two provisions relating to Pell Grants for low-income students that violated the rules of the budget reconciliation process, which Democrats used to speed the bill's passage and block a filibuster. Enacted under the Congressional Budget Act of 1974, reconciliation2 is the procedure by which Congress implements budget resolution policies primarily affecting permanent spending and revenue programs.

A quick look at last week, March 21-25th, in review helps explain how the bill got to this point. Last Sunday March 21st, the House passed the Senate health bill and the Houses passed the budget reconciliation bill containing compromise amendments to the health bill. Both bills pass with no Republican support.

On Tuesday March 23rd, the Senate opened up debate on the budget reconciliation bill. Under reconciliation rules, the legislation had to get kicked back to the House because of the changes. Finally, President Obama signed the health bill into law. After he took pen to paper, more than a dozen states filed suit arguing, among other things, that the insurance mandate in the new health care law is unconstitutional and Congress has no authority to force people to buy insurance.

That takes us to Thursday March 25th, a very busy day on the Hill. Senate Republicans found language in the reconciliation bill regarding student loans that violates process rules. One by one, Democrats vote down the GOP proposals that, for example, would have rolled back cuts to Medicare and barred tax increases for families earning less than $250,000 [4]. They also defeated an amendment that would have prohibited federal money for the purchase of Viagra and other erectile-dysfunction drugs for sex offenders [4]. After the provisions were stripped from the bill, the Senate voted to pass it. The changed reconciliation bill was sent back to the House, which passed the measure that evening (passed 56-43), clearing the way for Obama's signature.

It was not immediately clear when the House would take up the legislation. The House Majority Leader Steny Hoyer of Maryland3 expected same day turnaround of the “fix” bill.

Another House vote wasn't that surprising as almost all of the two-dozen reconciliation bills in the last 30 years have had to be tweaked and re-voted on.[4]

Sources:
1 http://www.rules.house.gov/Archives/byrd_rule.htm
2 http://www.rules.house.gov/archives/bud_rec_proc.htm
3 http://thehill.com/blogs/blog-briefing-room/news/89007-hoyer-confident-house-will-re-approve-final-health-bill-fixes
4 http://www.examiner.com/x-15870-Populist-Examiner~y2010m3d25-The-public-option-back-in-the-health-care-bill-after-all

Wednesday, March 31, 2010

HealthCare Reform Questions…Worried about Government Pricing Changes…Can’t Sleep…Who are you going to call – CIS!

By: Lauren Pellicciotti, CIS Project Manager
laurenpellicciotti@cis-partners.com

“Perfect timing!” – If you are currently working in the pharma industry, you can probably interpret the sarcasm in that comment. For all of those GP geeks out there, just when you thought the DRA Final Rule changes were implemented with consistent methodologies in place, with the new law passed there comes another indefinite change to your calculations. Yes – I said it! According to Steven Moore, who you all know as “Scooter Boy”, Healthcare Reform was the hot topic at the most recent IIR GP Summit conference. Most of our clients were consistently asking these two questions: how is healthcare reform going to affect us, and when do we need to implement changes? CIS will be posting a timeline on how it will affect our industry. Stay tuned!

The Patient Protection and Affordable Care Act was signed into law by President Barack Obama on March 23, 2010[1]. Although the law was intended to help provide insurance to approximately 31 million uninsured Americans, and regulate healthcare costs, it is also going to have a huge impact on pharma companies and their internal cost containment strategies. The law has a timeline that could have a costly effect on the government and commercial operations of pharma companies beginning this year.

So how can you react to these changes? I first recommend understanding the new law. If your company does not have a Pricing Committee in place with regular meetings scheduled, I would encourage getting your internal thought leaders together to ensure the impact and changes of the law are addressed immediately. In addition, if you have not already done so, check out our summary of the Act because the 2000 plus page document can definitely put you into a deep coma – sad, but true.

In reading the law, in 2010 alone pharma companies will have to think about how to cut costs to ensure they are still hitting margins, while paying more dollars out to the states with the increase to rebate drug percentage for all drug category types. If you do not know, according to the new law, all brand name drugs will go from 15.1% to 23.1%, and for non-innovator multiple source drugs the rebate percent will increase from 11% to 13% of AMP.

CIS has the knowledge and expertise to help your company comply with these ever-changing requirements. If you have not heard about our services, please feel free to visit our website at www.cis-partners.com.

Sources:
[1] http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act

A Summary of H.R. 3590: Patient Protection and Affordable Care Act

By: Jordan Mummau, CIS Compliance Associate
jordanmummau@cis-partners.com

Healthcare Reform is on the tip of everyone’s tongue, and the best way to successfully implement the required changes into your company’s government and commercials programs is to have a thorough understanding of the Patient Protection and Affordable Care Act. Understandably, that task may seem daunting, considering the Act is over 2,000 pages long. To give our readers the pertinent knowledge they need, we’ve created the following summary of the Act to highlight the most important and relevant points to the pharmaceutical industry. As always, CIS is here to answer any questions you have about Healthcare Reform and how it affects you.

MEDICARE

2010
• Provide a $250 rebate to Medicare beneficiaries who reach the Part D coverage gap in 2010 and gradually eliminate the Medicare Part D coverage gap by 2020.
Expand Medicare to individuals exposed to environmental health hazards.

2011
• Manufacturers to provide a 50% discount on brand-name prescriptions filled in the Medicare Part D coverage gap.
• Begin phasing-in federal subsidies for generic prescriptions filled in the Medicare Part D coverage gap.
• Provide a 10% Medicare bonus payment to primary care physicians and to general surgeons practicing in health professional shortage areas.

2013
• Begin phasing-in federal subsidies for brand-name prescriptions filled in the Medicare Part D coverage gap (to 25% in 2020, in addition to the 50% manufacturer brand-name discount).
Pilot program is established; evaluates paying a bundled payment for acute, inpatient hospital services, physician services, outpatient hospital services, and post acute care services.

2014
Reduce Medicare Disproportionate Share Hospital (DSH) payments by 75%.
Increase payments over time based upon the % of uninsured population and the amount of uncompensated care provided.

MEDICAID (Section 2501)

2010
Increase the Medicaid drug rebate % for brand name drugs to 23.1%.
Exception: rebates for clotting factor drugs and drugs approved exclusively for pediatric use increases to 17.1%.
Increase the Medicaid rebate for non-innovator, multiple source drugs to 13% of Average Manufacturer Price (AMP).
Extend drug rebate to Medicaid managed care plans.

2011
• Prohibit federal payments to states for Medicaid services related to health care acquired conditions.
• State balancing incentive program

2013
Increase Medicaid payments for primary care services provided by primary care doctors for 2013 and 2014 with 100% federal funding.

2014
Expand Medicaid to all individuals under age 65 with incomes up to 133% Federal Poverty Level (FPL) based on modified adjusted gross income.
Reduce states’ Medicaid DSH allotments.

Physician Ownership/Reporting/and Other Transparency - (Section 1128G)

If providing a payment or other transfer of value to a covered entity, a Manufacturer must submit:
• The name of the covered recipient.
• The business address of the covered recipient and, in the case of a covered recipient who is a physician, the specialty and National Provider Identifier of the covered recipient.
• The amount of the payment or other transfer of value.
• The dates on which the payment or other transfer of value was provided to the covered recipient.
• A description of the form of the payment or other transfer of value, indicated (as appropriate for all that apply) as: cash or a cash equivalent.
• In-kind items or services.
• Stock, a stock option, or any other ownership interest, dividend, profit, or other return on investment; or any other form of payment or other transfer of value (as defined by the Secretary).
• A description of the nature of the payment or other transfer of value, indicated (as appropriate for all that apply) as: Consulting fees.
• Compensation for services other than consulting
• Honoraria
• Gift
• Entertainment
• Food
• Travel (including the specified destinations)
• Education
• Research
• Charitable contribution
• Royalty or license
• Current or prospective ownership or investment interest
• Direct compensation for serving as faculty or as a speaker for a medical education program
• Grant; or any other nature of the payment or other transfer of value (as defined by the Secretary).
• If the payment or other transfer of value is related to marketing, education, or research specific to a covered drug, device, biological, or medical supply, or to the name of that covered drug, device, biological, or medical supply.
• Any other categories of information regarding the payment or other transfer of value the Secretary determines appropriate.

Monetary penalties for non-compliance can range from $10,000 – $1,000,000. See section 1128G if you have specific questions regarding penalties.

More Information:

• Physician-owned hospitals that do not have a provider agreement prior to August 2010 will not be able to participate in Medicare.

• Drug, device, biological and medical supply manufacturers must report gifts and other transfers of value made to a physician, physician medical practice, a physician group practice, and/or a teaching hospital.

• Referring physicians for imaging services must inform patients in writing that the individual may obtain such service from a person other than the referring physician, a physician who is a member of the same group practice, or an individual who is supervised by the physician or by another physician in the group.

• Prescription drug makers and distributors must report to the Health and Human Services (HHS) Secretary information pertaining to drug samples currently being collected internally.

• Pharmacy benefit managers (PBM) or health benefits plans that provide pharmacy benefit management services that contract with healthy plans under Medicare or the Exchange must report information regarding the generic dispensing rate, rebates, discounts, or price concessions negotiated by the PBM.

Drug Sampling; Reporting – (Section 1128H)

Beginning in 2012, no later than April 1st of each year each manufacturer and authorized distributor of an applicable drug shall submit to the Secretary the following information from the preceding year:

• In the case of a manufacturer or authorized distributor which makes distributions by mail or common carrier reports: the identity and quantity of drug samples requested and the identity and quantity of drug samples distributed, aggregated by: the name, address, professional designation, and signature of practitioner making the request.

• In the case of a manufacturer or authorized distributor of record which makes distributions by means other than mail or common carrier reports: the identity and quantity of drug samples requested and the identity and quantity of drug samples distributed under such subsection during that year, aggregated by: the name, address, professional designation, and signature of the practitioner making the request.

Expanded Participation in the 340B Program – (Section 7101)

Expansion of Covered Entities Receiving Discounted Prices – Section 340B of PHS is amended by adding:

• A children's hospital excluded from the Medicare prospective payment system pursuant to section 1886(d)(1)(B)(iii) of the Social Security Act.
• A free-standing cancer hospital excluded from the Medicare prospective payment system
Critical Access Hospitals
Rural referral centers (must have disproportionate share adjustment percent equal or greater than 8%)
• Extension of Discount to Inpatient Drugs
• Prohibition on Group Purchasing Arrangements
• Medicaid Credits on Inpatient Drugs: not later than 90 days after the date of filing of the hospital's most recently filed Medicare cost report, the hospital shall issue a credit as determined by the Secretary to the State Medicaid program for inpatient covered drugs provided to Medicaid recipients.

Quick Facts/ At a Glance


Dual Eligible Coverage and Payment Coordination –
HHS will establish a Federal Coordinated Health Care office.

• Improve coordination among the federal and state governments for individuals enrolled in both programs.

Medicare Advantage (Part C) –
‘MA’ payments will be based on the average number of bids submitted by insurance plans in each market.

• MA plans will be prohibited from charging beneficiaries cost sharing for covered services greater than what is charged under fee-for-service.

Medicare Prescription Drug Plan Improvements (Part D) –
In order to have their drugs covered under the Medicare Part D program, drug manufacturers will provide a 50% discount to Part D beneficiaries for brand-name drugs and biologics purchased during the coverage gap beginning July 1, 2010.

• Initial coverage limit in the standard Part D benefit will be expanded by $500 for 2010.

Pharmacy Reimbursement – (Section 2503)

Use of AMP in Upper Limits – Secretary shall calculate the Federal upper reimbursement limit as no less than 175% of the weighted average of the most recently reported monthly AMP for pharmaceutically and therapeutically equivalent multiple source drug products.

Smoothing process will be implemented for AMP (similar to Average Sales Price (ASP) smoothing)

Definition of AMP:
o Wholesalers for drugs distributed to retail community pharmacies
o Retail community pharmacies that purchase drugs direct from the manufacturer

AMP should exclude:
o Customary Prompt Pay Discount extended to wholesalers

o Bona fide service fees paid by manufacturers to wholesalers or retail community pharmacies, including (but not limited to) distribution service fees, inventory management fees, product stocking allowances, and fees associated with administrative services agreements and patient care programs (such as medication compliance programs and patient education programs.)

o Reimbursement by manufacturers for recalled, damaged, expired, or otherwise unsalable returned goods, including (but not limited to) reimbursement for the cost of the goods and any reimbursement of costs associated with return goods handling and processing, reverse logistics, and drug destruction.

o Payments received from, and rebates or discounts provided to, PBMs managed care organizations, health maintenance organizations, insurers, hospitals, clinics, mail order pharmacies, long term care providers, manufacturers, or any other entity that does not conduct business as a wholesaler or a retail community pharmacy.

• AMP should include:
o Any other discounts, rebates, payments, or other financial transactions that are received by, paid by, or passed through to, retail community pharmacies shall be included in the AMP for a covered outpatient drug.

Medicare, Medicaid, and CHIP Program Integrity Provisions

The Secretary will establish procedures to screen providers and suppliers participating in Medicare, Medicaid, and CHIP.

• Providers and suppliers enrolling or re-enrolling will be subject to new requirements including a fee, disclosure of current or previous affiliations with any provider or supplier that has uncollected debt, has had their payments suspended, has been excluded from participating in a Federal health care program, or has had their billing privileges revoked.

• Secretary of HHS is authorized to deny enrollment in these programs.

Enhanced Medicare and Medicaid Program Integrity Provisions – (Section 1128J)

CMS will include in the integrated data repository (IDR) claims and payment data from Medicare (Parts A, B, C, and D), Medicaid, CHIP, health-related programs administered by the Departments of Veterans Affairs (VA) and Defense (DoD), the Social Security Administration, and the Indian Health Service (IHS).

• New penalties will exclude individuals who order or prescribe an item or service, make false statements on applications or contracts to participate in a Federal health care program, or who know of an overpayment and do not return the overpayment.

• Each violation would be subject to a fine of up to $50,000.

• The Secretary will take into account the volume of billing for a Durable Medical Equipment (DME) supplier or home health agency when determining the size of a surety bond.

• The Secretary may suspend payments to a provider or supplier pending a fraud investigation.

• Health Care Fraud and Abuse Control (HCFAC) funding will be increased by $10 million each year for fiscal years 2011 through 2020.

• The Secretary will establish a national health care fraud and abuse data collection program for reporting adverse actions taken against health care providers, suppliers, and practitioners, and submit information on the actions to the National Practitioner Data Bank (NPDB).

• The Secretary will have the authority to dis-enroll a Medicare-enrolled physician or supplier who fails to maintain and provide access to written orders or requests for payment for DME, certification for home health services, or referrals for other items and services.

• The HHS Secretary will expand the number of areas to be included in round two of the DME competitive bidding program from 79 of the largest metropolitan statistical areas (MSAs) to 100 of the largest MSAs, and to use competitively bid prices in all areas by 2016.

Additional Medicaid Program Integrity Provisions

States must terminate individuals or entities from their Medicaid programs if the individuals or entities were terminated from Medicare or another state’s Medicaid program.

• Medicaid agencies must exclude individuals or entities from participating in Medicaid for a specified period of time if the entity or individual owns, controls, or manages an entity that:
o (1) Has failed to repay overpayments;
o (2) Is suspended, excluded, or terminated from participation in any Medicaid program;
o (3) Is affiliated with an individual or entity that has been suspended, excluded, or terminated from Medicaid participation.

• Agents, clearinghouses, or other payees that submit claims on behalf of health care providers must register with the state and the Secretary.
• States and Medicaid managed care entities must submit data elements for program integrity, oversight, and administration.
• States must not make any payments for items or services to any financial institution or entity located outside of the United States.

Pharmaceutical Manufacturers Fee
This provision imposes an annual flat fee of $2.3 billion on the pharmaceutical manufacturing sector beginning in 2010 allocated across the industry according to market share.

• The fee does not apply to companies with sales of branded pharmaceuticals of $5 million or less.