House Bipartisan Bills Address Worries About COVID-19 Drug Price Gouging

Your 340B Report for Tuesday June 23, 2020

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A Message from Publisher and CEO Ted Slafsky:  Not only has the COVID-19 pandemic taken an enormous toll on health care workers, it has also been a major hit to 340B covered entities’ finances. I encourage all of you to read PSG Senior Vice President Jeff Spencer’s final installment in a three-part blog series on how 340B hospitals, health centers, and clinics can maximize cash flow and savings opportunities during the emergency. As a 340B Report sponsor, you too will have opportunities to publish sponsored content. Click on the button below or reach me at ted.slafsky@340BReport.com to learn more about the many benefits of becoming a sponsor.

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From left to right, U.S. Reps. Jan Schakowsky (D-Ill.), Lloyd Doggett (D-Texas), Francis Rooney (R-Fla.) Rosa DeLauro (D-Conn.), and Peter DeFazio (D-Ore.) yesterday introduced bipartisan bills in Congress designed to prevent price gouging for COVID-19 prescription drugs and improve oversight of federal spending on COVID-19 pharmaceutical research and development.

House Bipartisan Bills Address Worries About COVID-19 Drug Price Gouging

Bipartisan bills are being introduced in the U.S. House to prevent price gouging for COVID-19 prescription drugs and improve oversight of federal spending on COVID-19 pharmaceutical research and development. News of the bills comes just days after a West Health / Gallup poll found that nearly 90 percent of Americans are very or somewhat concerned that drug companies will use COVID-19 as cover to raise drug prices.

The bills were introduced yesterday by Reps. Jan Schakowsky (D-Ill.), Lloyd Doggett (D-Texas), Francis Rooney (R-Fla.) Rosa DeLauro (D-Conn.), and Peter DeFazio (D-Ore.).

The Make Medications Affordable by Preventing Pandemic Price-gouging Act (MMAPPP Act) would:

  • Prohibit pharmaceutical monopolies on new, taxpayer-funded COVID-19 drugs in order to ensure universal access to these drugs.

  • Require the federal government to mandate reasonable, affordable pricing of any new, taxpayer-funded COVID-19 drug used to diagnose, mitigate, prevent, or treat COVID-19.

  • Ensure transparency and require manufacturers to publicly report a specific breakdown of total expenditures on any COVID-19 drug, including what percentage of those expenditures were derived from federal funds.

  • Prevent excessive pricing of drugs used to treat any disease that causes a public health emergency by waiving exclusive licenses and compensating with a reasonable royalty.

“We have good reason to be skeptical about the role of the pharmaceutical industry,” said Schakowsky, the bill’s chief sponsor. “Well before this pandemic, we saw price gouging that cost lives. Now, during a global health crisis, many pharmaceutical companies will see another opportunity to benefit themselves by ‘pandemic profiteering.’ That cannot stand,”

The Taxpayer Research and Coronavirus Knowledge Act (TRACK Act) would require federal support of COVID-19 biomedical research and development to be monitored in a single database. It would include:

  • all financial and non-financial federal support provided to pharmaceutical companies

  • associated clinical trial data and patent information

  • full terms of the agreements made between the federal government and manufacturers.

Doggett, the TRACK Act’s main sponsor, said it “seeks universal access through fair pricing and open licensing, to prevent Big Pharma from co-opting the fruit of taxpayer investments and charging sky-high prices.”

“Without congressional action, we cannot know how much public resources pandemic profiteers are obtaining, nor prevent the taxpayers, who are the angel investors contributing billions, from being price gouged for the very pharmaceuticals they paid to develop,” he said.

While the bills may get some attention in a Democratic House, the chances of passage are doubtful. The Democratic sponsors are considered more progressive than their leadership and the Republican-controlled Senate is unlikely to even consider the bills. Nonetheless, the legislation underscores lawmakers’ continued interest in tackling drug pricing.


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Here's How We're Helping 340B Covered Entities Optimize Savings and Cash Flow

Jeff Spencer, Senior Vice President, PSG 340B

When we started this initiative a few weeks ago, we were focused on a single objective: in a time of turmoil, what more could we do to help covered entities optimize their 340B savings and accelerate cash flow? Harnessing the creativity and expertise of our finance, pharmacy and client services teams, we have explored dozens of ideas to determine which would result in immediate and material impact on your finances. (You can view part one of this series here and part two here.)

While we’ve seen that the impact of each specific opportunity varies depending upon entity type, 340B program setup and population served, we are encouraged by the total results to date. We’ve assisted entities in securing early registration and eligibility for more than 70 contract pharmacies and nearly 100 child sites and locations—and we’ve helped covered entities find more than $1.1 million in additional eligible 340B savings. We hope these opportunities are generating successes for your organization, as well.

This week, we are turning our attention to new tactics we believe could amplify those current savings by as much as ten-fold. Here’s what we’re recommending:

Review high-cost specialty drugs within specific drug therapy classes

We previously discussed the 340B savings leakage that results from high-value specialty prescriptions that have unique prescribing workflows. These scripts become difficult to automatically qualify due to preauthorization requirements, additional documentation or nonstandard date-written windows. However, among our clients, these scripts represent an average potential 340B savings of $3,400 per claim.

What we’ve found is that, within a particular therapy class, there are examples where we can define an eligible encounter + eligible location for that specific therapy + a specific drug as a matching scenario for 340B eligibility. A few common examples include TNF blockers with a rheumatology, dermatology or gastrointestinal visit; oral oncology medications with an oncology visit; or MS medications with a neurology visit.

In specific situations such as these, where the likelihood of eligibility is high, we’re working with our clients to accelerate the manual qualification process through enhanced workflows that work in tandem with our ClaimsGuard tool. We suggest you discuss this strategy with your current 340B administrator to understand your options for improving the capture of eligible scripts within these specific situations.

Ensure accuracy of 340B pricing in wholesaler catalogs

We’ve found that missing 340B catalog prices can have a profound impact on 340B savings, and our pharmacy team has been working with McKesson, Amerisource Bergen and Cardinal Health to ensure our clients have access to 340B catalog pricing for all specialty medications.

In some cases, the missing price is due to a simple wholesaler catalog error. However, in many cases, we’ve discovered that an entity has never contracted for a specific specialty medication, and we’ll work with them to obtain access. Currently, we estimate that this one initiative could result in $9.8 million in savings for our entities, with individual impact ranging from a few thousand dollars to more than $2 million per entity.

We highly recommend that you investigate catalog pricing with your wholesaler(s) and work to remedy the gaps where 340B pricing is not available. Here at PSG, this practice is now a part of our standard operating procedures.

Fulfill outstanding orders for limited distribution drugs

Orders for limited distribution drugs require additional data that can present an administrative burden for covered entities and pharmacies. As a result, these drugs may age out before they can be replenished. We help our clients identify and resolve outstanding 340B savings opportunities related to un-replenished limited distribution drugs with eligible 340B accumulations, and we recommend you do the same. By providing the data needed to expedite these orders, you can ensure you capture the 340B savings you’ve earned on these limited distribution drugs.

Continue to align to best practices for telehealth

While the COVID-19 pandemic has quickly accelerated and expanded telehealth adoption, experts agree that it is here to stay as an alternative to in-person provider visits. In addition, the Health Resource and Services Administration has confirmed that telehealth visits are 340B-eligible beyond the pandemic. For this reason, we recommend a closer look at your data feeds, locations and policies and procedures to future-proof your program for telehealth realities. Here’s a quick checklist to review:

  • Do your 340B policies and procedures accurately reflect your telemedicine practices?

  • Are all eligible telehealth locations registered appropriately for 340B?

  • Is your 340B vendor receiving the correct visit types to ensure all telehealth visits are captured?

  • Do you have appropriate P&Ps to capture telehealth visits via alternative means in case you lose access to your EMR?

Expand 340B patient eligibility to include newly-registered offsite locations

While we previously addressed the topic of immediate registration and eligibility of offsite locations enabled by HRSA’s public health emergency exceptions for COVID-19, a nagging issue remained: these sites could not leverage the 340B program until the location appeared as a reimbursable outpatient cost center on the organization’s most recently-filed Medicare cost report, a process that can take up to 22 months.

Thanks to communications issued over the last two weeks, HRSA has clarified that patients seen in a newly-added child site will be 340B-eligible immediately, as long as they are patients of the covered entity.

It’s important to note that the Medicare cost report requirement is still in place to gain 340B eligibility for offsite locations, according to the Office of Pharmacy Affairs website. However, this requirement will not affect patient eligibility when patients of the covered entity have an encounter at the offsite facility. We recommend that you clarify your patient definition and revise your policies and procedures related to offsite locations accordingly.


AHA Asks Azar to Extend COVID-19 Public Health Emergency

The nation’s largest hospital group has asked U.S. Health and Human Services (HHS) Secretary Alex Azar to extend the national COVID-19 public health emergency beyond its current July 25 expiration date “so health care providers can continue to offer the most efficient and effective care possible during the continuing pandemic.”

The American Hospital Association (AHA) in a June 19 letter asked Azar to continue the declaration until these four criteria are met:

  1. The supply chain is able to continuously meet the increased demand for personal protective equipment (PPE) needed to keep health care workers safe in treating patients with and without COVID-19, and able to meet the demand for laboratory testing supplies and treatment medications necessary to safely and effectively treat COVID-19.

  2. The number of laboratory tests administered per day in the U.S. exceeds 500,000 per day, and the number of COVID-19-positive test results is equal to or fewer than 5,000 per day for a period of at least 14 days.

  3. The number of patients in intensive care unit (ICU) beds in the U.S. is fewer than 5,000 per day for a period of 14 days and no more than 10% of those patients are in any one city or region.

  4. The number of deaths per day from COVID-19 in the U.S. is fewer than 500 for a period of 14 days.

HHS’s Health Resources and Services Administration (HRSA) has relaxed several 340B program requirements for the duration of the emergency, including documentation related to patient eligibility and group purchasing usage. HRSA has announced that two flexibilities are permanent: one permitting use of 340B drugs at hospital offsite facilities not yet listed on the hospital’s most recently filed Medicare cost report, and other accepting telemedicine as a mode of delivering health care services for 340B purposes.


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Health Centers Feeling Forced to Choose Between COVID-19 Relief and Protecting Some Patients’ Privacy

Community health centers are concerned about federal guidelines requiring them to include patients’ Social Security or state driver’s license / state identification numbers with claims for reimbursement for testing and treating uninsured patients with COVID-19.

The U.S. Health Resources and Services Administration (HRSA), the long-time overseer of the federal 340B and health center programs, is also in charge of distributing $175 billion in CARES Act COVID-19 relief for health care providers. As Modern Healthcare (subscription required) reported June 19, health centers must serve all patients regardless of ability to pay, including individuals who entered the country illegally. “That means some clinics don't generally ask patients for their Social Security numbers,” the magazine noted.

Some health centers, it said, say the ID collection requirement “needlessly forces healthcare providers to either ask for information that could undermine patient trust, or forgo reimbursement.” Advocates for those lacking legal permission to be in the country “say that asking for Social Security numbers could discourage immigrants from seeking needed care in the midst of a pandemic.”

As of May 29, U.S. health centers had tested 898,107 individuals for the virus that causes COVID-19, according to the National Association of Community Health Centers (NACHC).


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HHS Inspector General Will Study Telemedicine Expansion in Medicaid

The U.S. Health and Human Services Department (HHS) Office of Inspector General (OIG) has launched a study to determine whether state Medicaid programs and health care providers are complying with federal and state laws for telehealth services under the national emergency declaration, and whether the states gave providers adequate guidance on telehealth requirements.

OIG announced the new study yesterday. It said expects to issue its report next year.

As a result of the COVID-19 pandemic, “state Medicaid programs have expanded options for telehealth services,” OIG said. “Rapid expansion of telehealth may pose challenges for state agencies and providers, including state oversight of these services.”

The Centers for Medicare & Medicaid Services (CMS) broadened access to Medicare telehealth services in March. In April, CMS released a toolkit to help states “accelerate adoption of broader telehealth coverage policies” in the Medicaid and Children’s Health Insurance Programs (CHIP) during the pandemic.

Medicaid coverage and payment policies “vary by state within federal parameters, and this toolkit will help states identify policies which may impede the rapid deployment of telehealth when providing care,” CMS said. “States enjoy broad federal flexibility to cover telehealth through Medicaid, including which methods of communication (such as telephonic, video technology commonly available on smart phones and other devices) a state may use.”

States File Third Price-Fixing Suit Against Generic Drug Manufacturers

A coalition of 51 states and U.S. territories have filed a third lawsuit alleging that generic drug manufacturers have conspired “to artificially inflate and manipulate prices, reduce competition, and unreasonably restrain trade for generic drugs sold across the United States.”

The latest complaint, filed June 10 in federal district court in Connecticut, “focuses on 80 topical generic drugs that account for billions of dollars of sales in the United States,” according to Connecticut Attorney General William Tong. The complaint names 26 corporate defendants and 10 individual defendants. The states and territories are seeking “damages, civil penalties, and actions by the court to restore competition to the generic drug market.”

The first lawsuit was filed in 2016. It originally alleged that industry leaders Teva and Mylan and four smaller companies conspired to fix prices. Now it covers 18 corporate defendants, two individual defendants, and 15 generic drugs. The second lawsuit was filed last year against Teva and 19 of the nation’s largest generic drug manufacturers. It  names 16 individual senior executive defendants and involves more than 100 generic drugs.

Court Rules Against Drug Company in Suit Over Setting AMP for Medicaid Rebates

The U.S. Centers for Medicare & Medicaid Services (CMS) acted correctly when it told a drug manufacturer it had to use a drug’s lower 2007 average manufacturer price (AMP) to calculate Medicaid rebates, rather than a higher 2014 price for a new version of the product, a federal district judge has ruled.

Bloomberg Law (subscription required) reported yesterday about the court’s June 19 ruling in the case involving Ipsen Biopharmaceuticals’ original 2007 product Somatuline Depot Injection and 2014 successor product Somatuline Enhanced Device (ED). Ipsen informed CMS it intended to begin calculating Medicaid rebate obligations for Somatuline ED based on the 2014 AMP. CMS told Ipsen it had to use the 2007 AMP because the enhancements made to the drug did not meet the criteria for establishment of a new base date AMP.

The determination of a drug’s base date AMP can affect whether a manufacturer owes additional Medicaid rebates due to price increases in excess of the inflation rate after the drug first comes to market. A manufacturer also can owe deeper 340B drug discounts for the same reason.

Although the court’s decision in the case does not mention the 340B program, it is possible Ipsen eventually could owe 340B covered entities repayments for overcharges if the federal district court’s decision is upheld on appeal.

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