Tricare: Whose side are you on?

An Anonymous GP Community Member writes:

With prescription drug costs rising, the DoD is seeking ways to control spending in the Tricare program. The options presented by the DoD over the last year include raising co-payments for beneficiaries or mandating larger discounts from drug manufacturers. Currently, the Veterans Health Care Act requires manufacturers to give substantial rebates for prescriptions delivered through Military Treatment Facilities (MTF) and their Mail-Order system (TMOP), but does not include retail pharmacies. Tricare prescriptions filled by commercial druggists alone have tripled over the past five years.

The VA has tried numerous times to enforce their interpretation of a provision in the Act that would which require pharmaceutical companies to give DoD discounts on all prescription drugs regardless of where they are dispensed.

October 2004: A Dear Manufacturer issued by the VA stated that the rebates paid to Tricare should include transactions made at retail pharmacies Subsequently a lawsuit was filed on behalf of over 300 companies, arguing that federal rebates do not apply to the Tricare retail program.

April 2006: the proposed 2007 DoD budget assumed payment of the rebates for the Tricare retail network, yet Congress never received a specific legislative proposal from DoD.

August 2006: Over forty House Democrats sent a letter to House and Senate conferees urging them to adopt a provision requiring pharmaceutical companies to give Tricare beneficiaries discounts on retail prescription drugs.

September 2006: the U.S. Court of Appeals for the Federal Circuit handed down a unanimous decision invalidating the VA interpretative ruling.

May 2007: The House passed its fiscal 2008 Defense Authorization Bill, which includes the Tricare retail network provision. The bill now faces the Senate for approval before moving to the President for endorsement, although the Administration is said to be "strongly opposed" to the provision. The chairman of the Armed Services Committee has agreed to support a study of the effect of the fair-pricing initiative on veterans and other beneficiaries.

Bush administration politicos have, reportedly, in effect aligned the president behind the drug makers, undercutting the DoD's plea for relief from high retail drug costs. Drug store chain lobbyists are concerned that efforts to protect drug manufacturers will keep costs so high in the Tricare retail network that officials will take other actions to curb costs, including forcing or enticing beneficiaries to have prescriptions filled by mail order.

In February 2007, Tricare made available a Voluntary Application (VARR) to participate in its retail pharmacy plan. As participation in this program is voluntary and does not impact formulary status, many manufacturers did not participate.

The conundrum is this: participation in industry efforts aimed at rebuking this bill would favor our industry and profitability, but supporting the bill by participating in the VARR would support a large group of our customers, namely retail pharmacies. What are your thoughts? Is your company waiting to sign the VARR until it becomes mandatory?

Small Physicians Shift Purchases Due to Medicare Reimbursement Structure

Medical News Today Reports:

Thousands of small physician offices are "getting out of the business of administering drugs for conditions ranging from anemia and cancer to arthritis and infections," the Wall Street Journal reports. The shift is "an unintended consequence of a change in the way Medicare reimburses doctors" to administer medications that are injected or infused, according to the Journal.

Companies that manufacture the medications, such as Amgen and Johnson & Johnson, offer large rebates or discounts for bulk purchases, but many smaller physician offices do not purchase such treatments in bulk. In addition, because Medicare determines the reimbursements for such medications based on the average price paid, the discounts reduce reimbursements for all physicians, regardless of whether they receive discounts.

Acting CMS Administrator Leslie Norwalk said that physicians who cannot afford the medications can enroll in a federal program called the Competitive Acquisition Program, which allows physicians to order treatments directly from companies and bill Medicare for the costs. However, most of the oncology community considers the program "impractical and unworkable" because of the large amount of paperwork involved, according to Frederick Schnell, president of the Community Oncology Alliance.

Medicare Statement Targets Abusive Practices

An Excerpt From Medical News Today:

Statement by Robert M. Hayes, president of the Medicare Rights Center, on Congressional actions that would put an end to Medicare private health plans' abusive marketing practices, particularly private fee-for-service plans which are paid 19 percent more than the cost for someone with Original Medicare:

"To protect people with Medicare, Congress must establish clear and enforceable safeguards against abusive and deceptive marketing practices. Congress must also permit state governments to vigorously enforce these standards: the Bush Administration has failed wretchedly to police private health plans and protect people with Medicare.

"Congress should establish minimum benefit standards for all private health plans, standardize the benefit packages to facilitate consumer comparison and remove special exemptions for private fee-for-service plans. The most egregious of these exemptions prevents the federal government from reviewing private fee-for-service benefit packages to ensure that they fairly and equitably reflect Medicare payments.

"Overpayments to private health plans should be cut. Only plans that efficiently and compassionately provide coordinated care to people with Medicare serve the public good."

The Medicare Rights Center describes the typical problems encountered by private health plan members and cites case examples gleaned from thousands of calls to the group's national consumer hotlines in its recent report Too Good to Be True: The Fine Print in Medicare Private Health Plan Benefits which is available on the national consumer group's website.

Pharma Data-Mining Practices Criticized

Medical News Today Reports:

The Washington Post on Tuesday examined opposition to a "common practice" in which pharmaceutical companies contract with data-mining companies to "track exactly which medicines physicians prescribe and in what quantities -- information marketers and salespeople use to fine-tune their efforts." The American Medical Association licenses information on physicians -- such as their names and the names and quantities of the medications that they prescribe -- to data-mining companies.

Pharmaceutical company sales representatives use the information to "zero in" on physicians who prescribe medications manufactured by competitors and "target them with campaigns touting their own products," the Post reports. In addition, pharmaceutical company sales representatives use the information to determine the effectiveness on their marketing efforts -- which can include office visits, meals and small gifts -- on targeted physicians.

Some physicians have criticized the practice as an invasion of privacy and maintain that "using such detailed data for drug marketing serves mainly to influence physicians to prescribe more expensive medicines, not necessarily to provide the best treatment," the Post reports. Jean Silver-Isenstadt, executive director of the National Physicians Alliance, said, "We don't like the practice, and we want it to stop. We think it's a contaminant to the doctor-patient relationship, and it's driving up costs."

PhRMA Makes Site Improvements

Washington, D.C. (May 23, 2007) — Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Billy Tauzin today issued the following statement regarding improvements to PhRMA’s home page (www.phrma.org):

“In an effort to better educate patients, caregivers and other health care stakeholders, PhRMA has upgraded its Web site with expanded sections on drug safety and patient safety. Ensuring the safety of patients is the highest priority of America’s pharmaceutical research companies, and access to accurate, user-friendly information and education plays a crucial role.

“America’s medicine supply is the world’s safest. As a result of the combined efforts of the U.S. Food and Drug Administration (FDA) and pharmaceutical research companies, about 97 percent of medicines approved for patient use in the past 20 years have remained on the market, while only about 3 percent have been withdrawn for safety reasons. Patients, health care providers, policymakers and the media need to know this, but more importantly, they need to understand why and how.

“The new ‘Safety’ section on PhRMA’s Web site provides the answers to these questions, explaining in understandable, accessible terms how drug safety monitoring is an ongoing process that begins long before a medicine enters the marketplace and continues long after it is made available to patients.

“Central to the information posted on the site is a set of four core principles expressing PhRMA member companies’ commitment to the development and continued monitoring of safe and effective medicines. The principles are:

- Patient safety is our highest priority. We need a strong and effective FDA with the resources and personnel necessary to ensure the safety of the U.S. drug supply and continued access to innovative medicines.

- Patient welfare should be at the center of any effort to enhance drug safety and ensure that benefit and risk are balanced.

- Drug safety and effectiveness monitoring must be comprehensive and continuous. PhRMA supports efforts that seek to continually improve these activities.
Patients and health care providers must have accurate, timely, and useful information on which to base their decisions.

“These key themes are reflected throughout the ‘Safety’ section on www.phrma.org. Accompanying materials include an overview of the medicine monitoring process and an easy-to-read summary and interactive illustration of how drug safety is evaluated throughout a drug’s life cycle, from early discovery through post-market monitoring.

“As part of PhRMA’s ongoing efforts to promote safe medicine use and help empower and educate patients, the ‘Patient Safety’ section of the site includes a 'My Health Information' form that enables patients to keep track of their prescribed medicines and other key information relevant to their health care. The form can be completed electronically, or printed out and completed by hand.

“Also available on the site are clear answers to frequently asked questions about drug safety, user-friendly information to help patients maximize the benefits and minimize the risks of their medicines, and resource links for both patients and health care providers. Additional medicine safety and patient safety resources will be added to the site in the future.

“PhRMA continually looks for new and better ways to serve the patients who use the medicines researched and developed by our member companies, and our evolving web presence reflects those efforts.”

CMS issues press release pertaining to Medicare Advantage Plans

CMS PROPOSES REFORMS OF COMPLIANCE REQUIREMENTS FOR MEDICARE ADVANTAGE PLANS

Provisions also extend to Part D Prescription Drug Plans

To further safeguard Medicare beneficiaries, the Centers for Medicare and Medicaid Services (CMS) today proposed strengthening its current oversight requirements and penalties for Medicare Advantage plans and Part D prescription drug plans.

In its rule, CMS proposes clarifications to Medicare program provisions relating to contract determinations involving Medicare Advantage organizations and Medicare Part D prescription drug plan sponsors, including:

* New steps to help expose potential fraud or misconduct through mandatory self-reporting; and
* Changes to streamline the process relating to intermediate sanctions and contract determinations (including non-renewals) and to better clarify the process for imposing civil money penalties.

“While the majority of Medicare Advantage and Medicare Prescription Drug Plans that offer important benefits to beneficiaries are conducting themselves professionally, it is important for CMS to be able to take swift action to safeguard beneficiaries from unlawful or questionable business practices,” Acting Administrator Leslie V. Norwalk commented. “There should be no uncertainty -- complete compliance with Medicare rules is essential to the integrity of the program. We want to have every enforcement tool available to ensure that Medicare beneficiaries are protected.”

The proposed rule will go through a 60 day period of public notice and comment and a final rule is expected to be released later this year.

“Medicare managed care plans and prescription drug plans have been very popular among older, disabled, low income and minority Americans,” Norwalk said. “With a growing program, it is important to ensure that the plans under contract to Medicare meet the high standards necessary to handle the health care needs of Medicare beneficiaries.”

CMS is also releasing another proposed rule which makes technical changes to the regulations implementing the Part D prescription drug benefit. In general, the proposal makes certain technical corrections and clarifications to the January 28, 2005 final rule. Areas addressed in the regulation include inhaled insulin, coordination of benefits, and the retiree drug subsidy, among others.

CMS also proposes, effective, 2009, to refine certain rules relating to the determination and reporting of prescription drug costs. CMS is also proposing to update the requirements of Part D sponsors to ensure adequate access to home infusion pharmacies.

Market Date versus Product Purchase Date--A Message to Manufacturers

By Anonymous

Recently, my company purchased and re-labeled a product with a market date of 2002. We began selling it in March of this year.

As required, I added the appropriate product data on the new product to DDR. I was impressed that DDR allowed entry of the Base AMP in the proper base AMP quarter of 2002 even though it warned it was beyond the 12 quarter restatement period. Unfortunately, as soon as the product was updated, DDR displayed the message “labeler out of compliance” for the Monthly AMP periods of January and February 2007 for that labeler code. The “Drugs Missing Pricing” Report showed the new re-labeled product missing pricing. Shortly thereafter I received a response from CMS advising that I was out of compliance for not having submitted a complete monthly submission for January or February.

Apparently, the Market Date Field caused the technical problem. Since the system was reading a product that had a market date from 2002, it was expecting to find information for every period since the base AMP quarter. If you have any acquired re-labeled products you probably already noticed that the quarterly “Drugs Missing Pricing” report contains many of them. We’re dedicated to compliance and submitting information in a timely fashion at my organization, so naturally I was quite worried and a bit perplexed at first.

I continued to correspond with CMS and eventually received a response from Operations. They informed me that they were aware of the glitch in their system, and that they were working toward a solution. Operations advised that it was considering adding a field for Product Purchase Date that would solve this problem.

I wanted to offer this piece of news to the GP community, in case there were others who had experienced similar issues—CMS is aware of the potential problem and is addressing it. As a footnote, if you have an extensive catalog of acquired re-labeled products as we do, hopefully CMS will be able to populate the field with the old Accretion Date from MDRI so it won’t require updating literally hundreds of products with the Product Purchase Date when the field becomes available.

The Latest from OPA & Jimmy Mitchell

A GP Community Member Thinks About the "Jimmy Mitchell Letter"

A fellow GP Community Member writes:

A timely subject I would love to see on the PCB is how to calculate PHS prices in the light of Jimmy Mitchell’s “Dear Manufacturer” letter, and if anyone has received any further guidance. Just what is the compliant price calculation now? It seems like there are multiple possibilities:

- Use the DRA AMP and CMS URA ignoring the HRSA position. This would be non-compliant in HRSA’s view.
- Recalculate the DRA AMP including the prompt pay discount and use CMS URA
- Recalculate the DRA AMP including the prompt pay discount and recalculate the URA based on recalculated AMPs.
- Calculate AMP according to totally pre-DRA methodology including customary prompt pay discounts with no DRA changes (like combining authorized generic data and using authorized generic BP in the URA calculation). Use CMS URA or recalculate URA with -PHS recalculated AMPs?
- Calculate AMP according to pre-DRA methodology including customary prompt pay discounts combining authorized generic data. Use CMS URA or recalculate with PHS AMP?
Any other variation of the above……..

It seems HRSA is focused on the prompt pay discount in AMP, but DRA has much more impact with redefinition of the retail class of trade, authorized generics data, the proposal to include PBM rebates, Part D rebates, and SPAP rebates in AMP, etc. I have not seen any definitive guidance on whether the CMS URA is the discount from AMP to use or whether it should be recalculated based on the PHS AMPs that will be used. What guidance or best assumptions are out there to calculate compliant PHS pricing now that the quarterly submission is in? It is “show time”. Any help out there?

CIS's Clarissa Crain Discusses Tonight's Drug Reimportation News

The Associated Press reports tonight that, in a 49-40 vote, the Senate has passed a bill that would require the certification of a drug’s safety and efficacy before importation into the United States. This vote has in effect nullified the Senate’s previous vote that would have allowed for imports from such foreign bodies as Canada, Japan, Australia, and Europe. The administration has already stated that this type of certification is not feasible, and therefore the vote tonight has once again blocked the importation of drugs into the United States.

While the idea of lower priced drug imports in the US market is backed by a large percentage of the US population, the Congressional Budget Office published a 2004 report that contends that lower priced imports would not necessarily result in lower priced drugs being available to consumers. It seems this report, coupled with concerns in regards to safety and efficacy were enough to keep imports out of the US market for now. The question is, if the public continues to support legislation that would allow for drug imports, how long will the industry and the government be able to keep it from becoming a reality? And, in order for it to become a reality, how will the government address safety and efficacy concerns?

Authorized Generics—Who Reports GP Calculations?

Per the DRA of 2005, Section 6003, manufacturers are required to report AMP and BP on all covered drugs, including “drugs that are sold under a new drug application.” We know that the Legislature wants us to include authorized generics sales data in our calculations.

But who is supposed to report these numbers?

The authorizing manufacturer or the authorized manufacturer?

Or, can be settled contractually between the two entities?

The Top 25 in the Industry

From Reuters (click on images for a better view):

By Size:

By Revenue:

Where does your company stack up?

Cut and paste the following into your browser:

http://www.investor.reuters.com/business/BusRankingsCompanies.aspx?showallrows=1&segment=US_INDUSTRY_HEALTH&target=%2fbusiness%2fbussecindustry%2fbussecindfake%2fbusrankcomp&rankcategory=2

Medicare Part D: Free Market, State-Run, or Both?

Brian O'Rourke, CIS PCX Product Manager, muses:

On January 5, 2007, House Democrats introduced H.R. 4, a Bill entitled “Medicare Prescription Drug Price Negotiation Act of 2007.” If this Bill were to become law, it would require the Secretary of Health and Human Services to negotiate prices on behalf of Medicare recipients.

Considering that Part D is based upon a free market model, this Bill is a bit oxymoronic and would cause Part D to suffer a major identity crisis. And manufacturers would be impacted the most. As opposed to negotiating prices with just Prescription Drug Plan Sponsors, manufacturers will also have to negotiate with the Secretary of Health and Human Services. How can manufacturers effectively, and consistently, negotiate prices for the same product with two separate entities?

We Ponder the Medicare Fair Prescription Drug Price Act...

From the Desk of Clarissa Crain, GP & Compliance Specialist, Compliance Implementation Services

On April 18, 2007 the Senate blocked the Medicare Fair Prescription Drug Price Act of 2007 with a vote of 55 to 42; just shy of the 60 needed for the Act to pass. The Act proposed giving the Secretary of Health and Human Services the power to negotiate drug prices with manufacturers. Only days before the vote, on April 16, 2007, the Congressional Budget Office released cost estimate for the Medicare Fair Prescription Drug Price Act 2007 in which it stated that it did not feel that the legislation, in its current format, would result in lower drug prices or program cost savings. Did this release sway some Senators? As Democratic backers of the bill, including Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi speak out on their disappointment with the vote, pharmaceutical manufacturers breathe a sigh of relief. However, this relief is likely to be short lived. With a majority of the US population said to be backing this Act, it is likely that the Act will surface again. The question is, what changes will be in the revised Act? And, how will the Act be changed to address the findings of the CBO?

http://www.cbo.gov/ftpdocs/80xx/doc8006/s3.pdf

The CMS "10 Year Rule"

We have had many thoughtful discussions related to the CMS “10 year rule,” relating to exactly what has to be retained and what does not. Where it is not exactly clear what has to be retained, manufacturers want to make sure they have enough documentation, the right documentation, and also not too much documentation.

My thought has been that you must be able to “reproduce” your calculations for any given period, showing what data you used, that it reconciled to your financial systems, and that you maintain supporting documentation demonstration your methodology and key assumptions.

- Chris Cobourn, VP Regulatory, Compliance Implementation Services

CIS's PCX featured in May's PharmaVoice

Chris Cobourn gets part of his 15 minutes of fame!