Articles of the Week!

Courtesy of: John Jordan, CIS Senior Compliance Associate
johnjordan@cis-partners.com

1) Are You Ready For The Revolution?
http://pharmexec.findpharma.com/pharmexec/Strategy/Are-You-Ready-For-The-Revolution/ArticleStandard/Article/detail/631737?contextCategoryId=48158

2) GOP Strikes Back On Senate Health Vote
http://www.kaiserhealthnews.org/Daily-Reports/2009/November/23/GOP-health-bill-react.aspx

3) Health Care Debate Revives Abortion Campaigners
http://www.nytimes.com/2009/11/24/health/policy/24abortion.html?_r=1&hp

4) N.F.L. to Shift in Its Handling of Concussions
http://www.nytimes.com/2009/11/23/sports/football/23concussion.html?ref=health

5) HHS Secretary Sebelius Announces Senate Confirmation Of Pamela Hyde As Administrator, Substance Abuse And Mental Health Services Administration
http://www.medicalnewstoday.com/articles/171864.php

6) A Guide: How The Health Bills Might Affect Consumers
http://www.medicalnewstoday.com/articles/171801.php

Have a Happy Thanksgiving!

Articles of the Week!

Courtesy of: Debbe Saez, CIS Senior Compliance Manager
debbesaez@cis-partners.com

1) “Committee Leaders Call for GAO Analysis of Recent Prescription Drug Price Increases”
http://www.drugs.com/news/committee-leaders-call-gao-analysis-recent-price-increases-21015.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Drugscom-HeadlineNews+%28Drugs.com+-+Headline+News%29

2) “Senate Health Bill Released, Another Step Toward Democratic-Backed Reforms”
http://www.kaiserhealthnews.org/Daily-Reports/2009/November/19/Senate-Health-Bill-Overview.aspx

3) “Lean Comes to Pharma”
http://pharmexec.findpharma.com/pharmexec/Strategy/Lean-Comes-to-Pharma/ArticleStandard/Article/detail/641195?contextCategoryId=48158

4) “FDA Issues 22 Warning Letters to Web Site Operators”
http://www.pharmalive.com/News/index.cfm?articleid=668327&categoryid=56

5) “Seniors Struggle With Drug Costs While Congress Debates Medicare 'Doughnut Hole"
http://www.medicalnewstoday.com/articles/171493.php

6) “How Do You Solve a Problem Like Sidewiki?”
http://www.fdalawblog.net/fda_law_blog_hyman_phelps/2009/11/how-do-you-solve-a-problem-like-sidewiki-our-apologies-to-the-sound-of-music.html?utm_source=feedburner&utm_medium=email

Reform in Rare Form

By Sabrina Skari, CIS Business Development Manager
sabrinaskari@cis-partners.com

Saturday, November 7th marked a monumental moment in history for both the healthcare industry and the United States. After years of heated debate regarding healthcare reform, the House of Representatives narrowly passed the “Affordable Healthcare for America Act” or H.R. 3962 with only eight seconds left in the voting period. The bill passed with a vote of 220-215, and the body of Representatives who signed the bill into existence included only one Republican [1], marking one of the most partisan pieces of legislation ever passed in either house. It also represents the largest surge in healthcare coverage since the creation of Medicare in 1965.

The narrow passage of the bill speaks to the controversy surrounding HR 3692. Representative Jim Cooper (D-Tenn) called his vote for the bill “one of the best votes I ever cast.” However, this was not because of what the bill was but because of what the bill represented. Rep. Cooper said:

“The key is to keep the reform process alive. There are many things in the House bill I disagree with. But the Senate bill is the more likely final product due to the difficulty of getting 60 votes over there. If we had dropped the baton at this stage, it wouldn’t have given the Senate a chance to improve the bill. It would have given the House what amounted to a one-chamber veto. The Senate could have powered through, but those folks are not noted for their courage. The House had to perform here. And I am thankful that in the nick of time the leadership realized how short they were on votes [2].”

On the other hand, Representative Paul Ryan (R- WI) stated that “This is perhaps the worst bill I have seen come to the floor in my 11 years in Congress” and Republic leader John Boehner echoed Ryan’s sentiments when he stated that the requirement that individuals purchase insurance is "the most unconstitutional thing I've seen in my life [3]."

This bill has a tough road ahead and Representative Cooper made reference to this in his remarks. It will not be law until several steps, which many people see as impossible, happen. The Senate must pass its own version of the bill, while some key Senators are already referring to it as “dead on arrival.” Essentially, the bill needs the support of every independent and democratic Senator, including moderates, in order to pass. The chances of that happening seem slim due to one of the most hotly debated provisions in the bill - the creation of a government run health insurance program. At this point, the Senate hasn’t even scheduled time for floor debate [4]. If the Senate is able to eventually pass a version of the bill, then a Committee will merge the two proposals into a consensus version that requires final approval from the House, Senate and President Obama.

With all of the speculation on the process and its possible implications, how is the healthcare industry responding to the bill? The Blue Cross and Blue Shield Corporation released a statement, which stated:

“Instead of using this once-in-a-generation opportunity to expand coverage, rein in costs, and improve healthcare quality, the bill creates a new government-run plan that jeopardizes affordability and access to coverage for the 160million people who receive their benefits through their employers today; makes health coverage much more expensive, particularly for individuals and small employers; and represents a massive federal takeover of state regulatory functions [5].”

However, among those pleased with the new legislation are healthcare provider groups. The American Medical Association (AMA) released a statement proclaiming that the bill will “empower patient and physician decision making," as well as “kick off substantial insurance market restructuring, prevention and wellness initiatives and liability reforms.” The Medical Group Management Association (MGMA) says that the bill addresses four of its six core healthcare reform principles, which include: fixing the Medicare physician payment system, simplifying administrative transactions, enacting meaningful medical liability reform, expanding coverage, improving quality and safety, and finally, promoting the adoption of health information technology [6].

Regardless of the varying opinions swirling around this debate, everyone can agree on one thing; despite decades of failed reform efforts in the U.S., the passage of HR 3692 is historic because it has seen some success. One may cite the current downtrodden economic and political climate as a reason for why this bill was different. Perhaps it’s the momentum that President Obama brought into the office following his election. In any event, with the recession, war, a new political regime and a generation of baby boomers approaching Medicare eligibility, people are experiencing a perfect storm of events that may be impacting their perception.

The U.S. healthcare system must evolve to meet its population’s growing needs. Whether you are in favor of the proposed healthcare reforms or not, most people acknowledge that inaction is not an option. For all of the “hoopla” surrounding the events of last Saturday, let’s step back and note that whatever legislation emerges from this process, it will probably not take effect until 2013. We could even have another President in office by then. So for the time being, the responsible thing to do is to keep from making rash decisions based on “proposals” and to wait for direct guidance from the Federal Government, whenever that time comes.

Sources:
[1] http://www.cnn.com/2009/POLITICS/11/09/health.care/index.html
[2] http://voices.washingtonpost.com/ezra-klein/2009/11/rep_jim_cooper_house_health_ca.html
[3] http://www.politico.com/news/stories/1109/29282.html
[4] http://news.yahoo.com/s/ap/20091108/ap_on_bi_ge/us_health_care_overhaul
[5] http://www.fiercehealthcare.com/press-releases/house-bill-fails-deliver-affordable-healthcare-reform?utm_medium=nl&utm_source=internal
[6] http://www.fiercehealthcare.com/story/passage-health-reform-bill-house-dems-cheered-jeered/2009-11-09?utm_medium=nl&utm_source=internal

The Battle Against AIDS

By Craig Kubicek, CIS Compliance Associate
craigkubicek@cis-partners.com

Although HIV/AIDS is not as newsworthy nowadays as it was when it was first discovered in the 1980s, it affects 33.2 million world-wide and is a major concern for world leaders. [1] The world has been battling this disease for years and has recently been able to treat the symptoms of AIDS, as well as suppress the disease; however, no cure has been created by any governments, companies, or universities to this day. Due to the number of AIDS inflicted individuals throughout the world, there is a continual push for a cure.

Some drug companies have devoted entire sectors of their business to AIDS. As a matter of fact, Bristol-Myers Squibb has a new HIV/AIDS drug going through FDA approval as you read this.[2] To really strengthen the race to find a cure, two large pharmaceutical companies have combined their power to focus on the disease. [3] GlaxoSmithKline (GSK) and Pfizer are putting their heads together and have created a spinoff company called ViiV Healthcare. Dr. Dominique Limet, the Chief Executive Officer of ViiV Healthcare, explained, “Rising infection rates and increasingly complex treatment issues have created a challenging landscape in the treatment of HIV and the need for innovative research and better patient resources.” [4] GSK holds a majority share in ViiV Healthcare, but hopes to cooperatively work with Pfizer to find a solution to the ongoing AIDS pandemic.

ViiV healthcare currently sells 10 HIV/AIDS treatments and medicines. The sales of these products and services will provide the company with revenue to support its operations. According to GSK’s press release, “The company also has a pipeline of seven innovative and targeted medicines, including five compounds in phase II development. Altogether, ViiV Healthcare has 17 molecules in its portfolio to develop as potential new HIV treatments.”[5]

Bringing companies together to tackle illnesses is a great approach to solving many of humanity’s problems. Sometimes, one company alone does not have the knowledge or resources to meet the world’s needs. As time progresses, I hope to see more companies do the same. I am all for businesses and competition, but sometimes there is more to life than profits and revenue. If these endeavors are successful, cooperation may prove to be key to conquering HIV/AIDS.

[1] http://data.unaids.org/pub/EPISlides/2007/2007_epiupdate_en.pdf
[2] http://www.rttnews.com/Content/BreakingNews.aspx?Node=B1&Id=1120611%20&Category=Breaking%20News
[3] http://www.nytimes.com/2009/11/10/health/10glob.html
[4] http://www.gsk.com/media/pressreleases/2009/2009_pressrelease_10123.htm
[5] http://www.gsk.com/media/pressreleases/2009/2009_pressrelease_10123.htm

Articles of the Week!

Courtesy of: Gary Miller, CIS Senior Compliance Associate
garymiller@cis-partners.com

1) Google Unveils New Pharma Ads
http://blog.pharmexec.com/2009/11/12/google-unveils-new-pharma-ads/

2) Pharma’s Fourth Hurdle – Market Access
http://www.medicalnewstoday.com/articles/170769.php

3) Researchers Make Recommendations For Minimizing Harm And Maximizing Benefits of Drug Ads
http://www.medicalnewstoday.com/articles/170764.php

4) PhRMA Statement About Accessing Online Health Information
http://www.drugs.com/news/phrma-statement-accessing-online-health-information-20823.html

5) New Survey: More Than Half Of Americans Do Not Take Prescription Medicines As Instructed, Pointing To Growing Public Health Problem
http://www.medicalnewstoday.com/articles/170776.php

CIS to Speak and Exhibit at CBI

CIS will be speaking and exhibiting at CBI’s VA, DoD, PHS Federal Pricing and Contracts for Bio/Pharmaceutical Companies

When: Thursday, November 18th – Friday, November 19th
Where: Loews Hotel, Philadelphia, PA

Dave Rice, CIS Director of Federal Contracting, will be holding a half day Workshop entitled DoD, TRICARE and Uniform Formulary Refund Process Workshop, during which he will address the following important issues:

• TRRx Time line
• Uniform Formulary Tier 3 Review
• Status of Compromise Requests
• Status of Coalition Litigation
• How well defined is the refund process?
• How can one prevent errors in data handling and reporting?
• How can one ensure that data is accurate and verifiable?
• How does the DoD define retail class of trade?

Please click here for additional Workshop information.

We hope to see you there!
*

Proposed Rule for Post-marketing Safety Reporting of Combination Products

By: Annette Horner, CIS Senior Director, Clinical Consulting Services
annettehorner@cis-partners.com

If you or someone you know uses a combination product to treat an illness or medical condition, you can sleep better tonight. But, if your company markets a combination product in the United States, you may want to read on. The reporting of safety issues related to these products is going to become more thorough and clear-cut.

The FDA plans to plug a very large hole in the regulation of combination products – those that govern products formed from any combination of drugs, devices, or biological products. Current combination product rules fail to describe clear and concrete standards and timeframes for reporting post-marketing safety issues to the FDA.

The Proposed Rule, “Postmarketing Safety Reporting for Combination Products” will create 21 CFR Part 4, Subpart B.[1] The proposed rule is important because the safety reporting process for a combination product is governed by one of three sets of reporting provisions: 21 CFR Parts 310 and 314 for drugs; Parts 600 and 606 for biological products; and Part 803 for medical devices.

Currently, manufacturers of combination products must report safety issues to the FDA by following the regulations for the product component, under which the product was approved for marketing. For example, if a combination product was approved and marketed under an NDA, safety reporting follows the requirements of 21 CFR Part 314. However, this safety reporting method does not accommodate the unique safety reporting provisions for all product components, and could lead to a loss of information needed by the FDA to protect public health.

The proposed rule will remedy this potential loss of valuable safety information by requiring that reporters of postmarketing safety issues continue “. . . to comply with the requirements associated with the application used to approve or clear the combination product, as long as there is compliance, as appropriate, with the five unique provisions.”[2]

In the “Description of the Proposed Rule” the five unique provisions are clearly explained, and examples are provided (see the Proposed Rule for detail).[3] Once the proposed rule becomes effective (comments are due by December 30, 2009), combination product manufacturers will be required to provide more consistent and complete safety reports, and the FDA will have more information on combination products, upon which to make sound regulatory decisions about product safety and public health. In this era of rapidly developing medical technologies, this long-anticipated rule is making progress.

Sources:
[1] Federal Register/Vol. 74, No. 189/Thursday, October 1, 2009/Proposed Rules, pp. 50744-50758.
[2] Federal Register/Vol. 74, No. 189/Thursday, October 1, 2009/Proposed Rules, pp. 50750.
[3] http://edocket.access.gpo.gov/2009/pdf/E9-23519.pdf

Does the Federal Trade Commission want you to be Boring?

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

Advertisement: Tired of being boring? Do you dread going to work on Mondays because you can’t ever answer the question ‘what did you do this weekend’ without revealing that your weekends consist of repainting action figures and building replica airplanes? Well worry no more, because we have a product for you; it’s called BOR-NO-MOR.
Testimonial: “I used to be so boring. Now with BOR-NO-MOR, I’m not only the coolest Cat in the office on Mondays, but Tuesday through Friday as well. I even crack jokes! Thanks BOR-NO-MOR!”
Disclaimer: “Results Not Typical.”

The Federal Trade Commission (FTC) has released its final revisions to the guidance it gives advertisers. These revisions detail how advertisers can keep their endorsements and testimonial advertisements within the confines of the FTC Act. According to the FTC’s website, the FTC “works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.”[1]

With the new guidelines in place, advertisers who decide to run an advertisement or testimonial that features a consumer experience are now expected to clearly disclose the results that consumers typically expect from using the product being advertised. Taking this into consideration, the healthcare industry might no longer see advertisements and testimonials like the example of ‘BOR-NO-MOR’ illustrated above. The FTC is very specific in announcing that the advertiser and the person/entity endorsing the product must fully disclose their relationship. Material connections between these two parties must be exposed to the general consumer, including connections that consumers may not expect, such as offering someone money or free products to endorse your product.[2]

The guidelines specifically address celebrity endorsers. It is important to note that the guidelines implicitly state that “both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement – or for failure to disclose material connections between the advertiser and endorsers.”[3] The revised guidelines also outline regulations the FTC is trying to impose on “new-media” outlets, such as the internet; more specifically the FTC is targeting websites, bloggers, and social networking sites such as Facebook.[4]

Richard Cleland, Assistant Director of the Division of Advertising Practices at the FTC, said, “We were looking and seeing the significance of social media marketing in the 21st century and we thought it was time to explain the principles of transparency and truth in advertising and apply them to social media marketing.”[5]

For those of us who are interested in blogging, social networking sites, or having high-profile celebs endorse our products, the FTC may have just changed how viral marketing works forever, and our days of seeing advertisements, like the one for fictional “BOR-NO-MOR” may be numbered. The FTC is concerned about consumers and has implemented these guidelines in order to help them make better decisions about the products they use. Whether or not you agree with these new guidelines, it is difficult to criticize their intended purpose.

Sources:
[1] http://www.ftc.gov/bcp/edu/pubs/consumer/general/gen03.shtm
[2] http://www.ftc.gov/opa/2009/10/endortest.shtm
[3] http://www.ftc.gov/opa/2009/10/endortest.shtm
[4] http://news.cnet.com/8301-13577_3-10368064-36.html
[5] http://www.nytimes.com/2009/10/06/business/media/06adco.html

One Step Closer to Healthcare Reform

By: Katie Lapins, CIS Director of Small and Mid-Market Pharma
katielapins@cis-partners.com

The House of Representatives passed its version of healthcare reform on Saturday, November 7, 2009. As described, the purpose of H.R. 3962 is, “To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.” With almost 2,000 pages, I think they covered “other purposes” pretty well.

If you have been following the various legislative proposals that have been presented, you’re probably wondering how H.R. 3962 differs from the original proposal, H.R. 3200. These changes are highlighted below in red.
* Note: The court injunction currently prohibits the publishing of AMP, and this legislation will not overrule the injunction.

Implementing these changes in as few as eight weeks may create an operational challenge for manufacturers, but based on my experience, the majority will figure it out. However, the changes will also pose a challenge for federal and state government agencies. Manufacturers usually only have one, maybe two systems to update, but the systems used by the various government agencies are different, as evidenced by the various formats of the Medicaid rebates required.

The next few steps we would anticipate in this process are for the Senate to vote, for the two bills to be “harmonized” and consolidated into one, and then for the bill to be presented to President Obama for approval. Depending on the timing of these activities, it appears that changes could be imminent for manufacturers.

CIS will continue to monitor all of the activities and will continue to post updates as they become available. To see the full version of H.R. 3962 click here.

Articles of the Week!

Courtesy of: Amanda Zanetti, CIS Compliance Associate
amandazanetti@cis-partners.com

1. Sweeping Health Care Plan Passes House
http://www.nytimes.com/2009/11/08/health/policy/08health.html?scp=2&sq=November+8+2009&st=nyt

2. House, Senate differ sharply on health care reform
http://www.cnn.com/2009/POLITICS/11/09/health.care.congress/index.html

3. Bill Clinton Presses Senators to Pass Health Bill
http://online.wsj.com/article/SB125786406778841165.html

4. Reid Considers Payroll Tax Hike for Health Care
http://www.foxnews.com/politics/2009/11/12/reid-eyes-payroll-tax-hike-health-care/

5. Health reform bill could boost drug companies
http://milwaukee.bizjournals.com/milwaukee/stories/2009/11/09/daily50.html

Texas Medicaid Reporting Requirements

By: Jessica Ebert, CIS Compliance Associate
jessicaebert@cis-partners.com

Have you received a request from the Texas Vendor Drug Program (VDP) that looks something like this?

“Please send us current net pricing after all charge backs, discounts and
rebates to wholesalers/distributors or pharmacies are applied, other than
commercially reasonable prompt pay discounts for this product, and any other
products under your label that may have had a recent price change. If possible,
please attach to an e-mail, with reply to all.”

If you have products listed in the Texas Drug Code Index (TDCI) for Medicaid, chances are you’ve seen this before. You are responsible for keeping the Texas VDP notified of any price changes, NDC changes, and terminated products within 15 days of the change. As you know, it’s important that you report information that accurately reflects the market prices paid within the class of trade for which pricing information is requested. For products that are already listed in the TDCI, Average Manufacturer Price (AMP) reporting is required every quarter, and can be sent by either a text email or on a disk to Jerry.Rodriguez@hhsc.state.tx.us.

If you want to add a new or reformulated product to the TDCI, you must apply for the addition by completing the questionnaire provided by the Texas Health and Human Services Commission. The questionnaire is only to be used for new and reformulated products. If you have a valid rebate agreement under the Social Security Act §1927 you can apply for the addition of a drug that is not currently listed in the Texas Drug Code Index (TDCI). The form must be completed in full and requests the following:

1. Full drug description, including dosage form, maximum and recommended daily dose, ingredients, shelf life, estimated average and maximum duration of therapy, orange book rating, etc.
2. Specific pricing information, including Average Wholesale Price to pharmacy (AWP), AMP, price to wholesaler and/or distributor, direct price to pharmacy, central purchase price to chain (such as warehouse price), and institutional or other contract price. You may also provide a range of prices if you do not sell at a single price and wish to disclose only the lowest and highest prices. Be sure that you do not leave any pricing areas blank, as this will be interpreted that you DO NOT sell the product to entities in that category.
3. Companies to whom pricing information is reported (e.g., Red Book, Medi-Span)
4. Attach a listing of distributors, re-packagers, or re-labelers, other than full-service drug wholesalers, that you sell your product to who in turn sell your product to retail trade under your NDC number.
5. Attach a copy of your Vendor Liability Insurance, unless you have previously submitted it.
6. List the date that your drug is available through wholesalers.
7. The name and address of the firm, manufacturer, and government affairs persons covering the Texas area (if applicable).
8. Submit a copy of the FDA letter of approval of the NDA or ANDA for your product. If not applicable, submit a copy of the FDA letter for approval for marketing.
9. Indicate the DESI classification of the product.

You may only submit 20 questionnaires per month, and each drug and strength must be submitted on a separate questionnaire. In addition, the questionnaire(s) must be accompanied by a cover sheet that lists all products, strengths, and package sizes. For reformulated products where the NDC number has been changed, the cover sheet must also state that the product has been reformulated, and list the old NDC number and the last lot expiration date.

If an NDC number for a product has changed without a reformulation, you do not need to complete a new questionnaire. However, you must submit the information on your company’s letterhead with the old NDC number (with last lot expiration date listed), the new NDC number (when available in the marketplace) and the current net pricing for that product. This also applies to terminated products; you must submit the NDC number and the last lot expiration date on your company letterhead.

Questionnaires should be sent to:
HHSC
Attn: VDP/Formulary H630
11209 Metric Blvd, Bldg H
Austin, TX 78758

After the questionnaire has been submitted, it will be reviewed and evaluated by the Commission. The Commission determines if there is a need for the product on the TDCI, as well as a need for appropriate restrictions.

Some of the key factors that the Commission looks at when reviewing applications are the:

1. “Expansion of the prescriber’s armamentarium by a new drug or an additional multisource drug
2. Predominant use of the drug in an outpatient setting
3. Cost of the drug to pharmacies compared to the wholesale estimated acquisition cost (WEAC), or direct estimated acquisition costs (DEAC) listed in Redbook”, the AMP, or other generically equivalent products

The Commission may deny a request if the product is included in certain classes including, but not limited to, fertility drugs, immunizing agents, amphetamine used for weight loss, cosmetics and experimental drugs. If your product is denied, you can seek reconsideration by the Commission. If after the second submission the product is still denied, you will have to wait six months until you can resubmit again.

All inquiries regarding the questionnaire and revisions are to be directed to:
Vendor Drug Program-FormularyMC: H630
Health & Human Services Commission
PO Box 85200
Austin, Texas 78708-5200

Vendor Drug Program-Formulary MC: H630
Health & Human Services Commission
11209 Metric Blvd, Bldg H
Austin, Texas 78758

Sources:
Health and Human Services Commission, Chapter 35. Pharmacy Services, Subchapter H. Texas Drug Code Index – Addition, Retention, and Deletion of Drugs
http://www.hhsc.state.tx.us/hcf/vdp/RULES042408.pdf

Texas Health and Human Services Commission Questionnaire
http://www.hhsc.state.tx.us/contract/52904324/RFPDocs/AppK.pdf

Upcoming PCF Conference

CIS will be exhibiting at PCF’s Pharmaceutical Regulatory and Compliance Congress and Best Practices Forum Conference!
http://www.pharmacongress.com/

When: Wednesday, November 11th - Friday, November 13th
Where: JW Marriott, Washington D.C.

Stop by our booth: #202!

Please click here for conference information.

Below are some past blog articles relevant to Commercial Compliance:
Assessments versus Audits
By: Judy Fox

Paper Compliance Just Isn’t Enough
By: Meredith Taylor

SOPs: Periodic Review and Process Improvement
By: Suma Kallurkar
*

A Quick Look at the 340B Program Improvement and Integrity Act of 2009

By Matt Hotz, CIS Senior Associate
matthotz@cis-partners.com

The 340B Program Improvement and Integrity Act of 2009, known as S.1239 [1] in the Senate, would bring some significant changes to the 340B program if enacted. Sponsored [2] by Sen. Jeff Bingaman [D, NM], the bill has been referred to the Senate Committee on Health, Labor, Education, and Pensions for review.

To familiarize our clients and blog readers with the bill and the changes it could bring, CIS has prepared a summary of the proposed changes and what these changes could mean to you.

Key changes in the bill include:

1. More Covered Entities – Several new types of facilities, including children’s hospitals, rural referral centers, and critical access hospitals, would be eligible to participate as covered entities in the program.
2. Broader Coverage – Discounts would be expanded to cover drugs prescribed in both inpatient and outpatient settings. Currently, the 340B program only covers drugs prescribed in an outpatient setting.
3. Integrity and Program Management Improvements – More administrative structure will be implemented on the management of the program, including heightened scrutiny and oversight on manufacturers as well as guidance regarding calculations and restatements.

Key components to improve the management and integrity of the program include:

1. Pricing data submitted by manufacturers will be more closely scrutinized.
2. Recalculations and resubmissions may be required of manufacturers in cases when covered entities are overcharged.
3. The Office of Pharmacy Affairs (OPA) will be authorized to establish standard methodologies for calculating prices and to develop a process for handling recalculations and resubmissions.
4. Selective proactive audits of manufacturers and wholesalers may be conducted.
5. Sanctions will be imposed on manufacturers and wholesalers in cases of knowing and intentional overcharging.
6. Sanctions will be imposed on covered entities in cases of knowing and intentional fraud, including the possibility of removal from the 340B program.

Potential impact for manufacturers could include:

1. Manufacturers may have to revise their PHS policies and procedures to match the standardized methodologies that could be established by the bill, potentially increasing their administrative costs.
2. Manufacturers may also need to calculate two Average Manufacturer Prices (AMPs), one for Medicaid and one for the PHS program. This is one of the biggest areas of uncertainty – there are pending legislative changes regarding AMP calculation on the Medicaid side as well.
3. Administrative costs may increase in cases where recalculations and/or resubmissions are required.
4. Audit risk may increase with more oversight and selective proactive audits.
5. Financial exposure may increase with the establishment of sanctions for fraud.
6. Revenues may decrease as discounts are expanded to include drugs prescribed in both inpatient and outpatient settings.

A slightly different version of this bill (HR444) is circulating in the House of Representatives [3], but the two bills are very similar in both content and their implications for the industry. The main points of both bills are covered in this primer.

CIS continues to monitor and analyze both the House and Senate bills and related proposed legislation. If you want to know more about this issue, what it could mean to pharmaceutical manufacturers, and what you can do during this interim phase, please contact CIS.

Sources:
[1] S. 1239: http://thomas.loc.gov/home/gpoxmlc111/s1239_is.xml
[2] Press Release from the Office of Sen. Jeff Bingaman regarding S. 1239: http://bingaman.senate.gov/news/20090611-02.cfm
[3] H.R. 444: http://thomas.loc.gov/home/gpoxmlc111/h444_ih.xml