HealthCare Roundtable e-News – July 11, 2022

Posted on by HealthCare Roundtable

 

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Top News

Senate Democrats Release Prescription Drug Pricing Reform Legislation

Friday, Senate Democrats released the drug pricing reform legislation they intend to pass via reconciliation procedures in the Senate. This drug pricing reform package is largely similar to the draft legislation the Senate Finance Committee Democrats released in December 2021, however there are some key differences. Overall, the legislation comes in three parts: 1. Lower prices through drug price negotiation; 2. Prescription drug inflation rebates; and 3 Part D improvements and maximum out-of-pocket cap for Medicare Beneficiaries. Senate Democrats intend to pass this legislation, along with proposals to repeal the Trump tax cuts and climate change reforms, via reconciliation which would only require 51 votes to pass the Senate, rather than the typical 60 votes. Senator Schumer also presented this proposal to the Senate Parliamentarian, who will make the final decision on whether the bill conforms to the strict requirements to pass via reconciliation.

Part 1: Lower Prices through Drug Price Negotiation

Under Part 1 of the legislation, Congress provides a framework for Medicare to negotiate the prices of a select group of high-cost, first in class, drugs and biologics. Starting in 2024, the Secretary will be authorized to begin a two-year negotiation with prescription drug manufacturers. Beginning in 2026, after the two-year negotiation period, 10 drugs on the market will be priced based on what was negotiated by Medicare and the manufacturer. For certain biologics, the legislation allows for delay of negotiation for biosimilar market entry. Specifically, the bill allows the Secretary to delay negotiation of a biologic drug for up to two years, if a biosimilar demonstrates a high likelihood of entering the market before the negotiated price would take effect.

Part 2: Prescription Drug Inflation Rebates

This section of the legislation provides Medicare the tools to charge prescription drug manufacturers with a rebate penalty if the cost of their medication rises faster than inflation. Under this legislation, the implementation of the Part D rebates will begin in October 2022, rather than July 2022. Start of Part B inflation rebates remains January 2023. Also, the application of inflation growth cap to beneficiary coinsurance in Part B will begin in April 2023 (rather than January 2023).

Part 3: Part D Improvements and Maximum Out-of-Pocket Cap for Medicare Beneficiaries

Beginning in 2024 beneficiaries will owe $0 out-of-pocket in the catastrophic phase; by 2025, beneficiary total out-of-pocket spending for Part D drugs will be capped at $2000 per year. The legislation also expands the Part D low-income subsidy. Specifically, the income threshold for eligibility for the Part D LIS has been expanded from 135% to 150% of the FPL. Premium growth will also be capped at 6% per year through 2029, instead of 4% through 2027. They also removed the $35 copay cap for insulin.

Click here to view our comprehensive scorecard that outlines the exact provisions of this comprehensive legislation and compares it to the Senate Finance Committee’s previous iteration. To read the summary of changes click here.

 

FTC Eyes Robinson-Patman Act to Combat Unfair Market Power

The Federal Trade Commission (FTC) is exploring the possibility of using anti-price discrimination law to crack down on large companies’ unfair use of market power. This decision comes after the FTC announced efforts to increase enforcement against illegal bribes and rebate schemes involving pharmacy benefit managers (PBM) last month. The Commission’s statement noted the possible use of the Robinson-Patman Act, a Great Depression-era price discrimination law that highlights FTC Chair Lina Khan’s significant efforts to prevent unfair market power. Attorneys with case experience related to Robinson-Patman noted that the courts are unlikely to allow for its use due to the act’s complexity and the judicial narrowing of its application.

Section 2(c) of the Robinson-Patman Act gives the FTC power to examine whether pharmaceutical companies were paying rebates to PBMs to exclude competitors’ products without knowledge of insurers or hospitals. Similar actions may be taken against companies in other sectors wielding significant market power.

Administrative Action

  • The Centers for Medicare & Medicaid Innovation (CMMI) released a review of three existing experimental payment and service delivery models, conducted to determine whether implicit bias may be present. One of the CMMI’s primary objectives is advancing health equity, which includes identifying the rules, algorithms, or standard processes which create different impacts among beneficiary populations. The assessment focused on three of CMMI’s established models: the Kidney Care Choices Model, Comprehensive Care for Joint Replacement Model, and the Million Hearts Cardiovascular Risk Reduction Model Detailed results can be found here, but overall the review discovered that certain risk-assessment and screening tools, provider tools, and payment design features have led to the exclusion of some beneficiaries from these models. The Center is piloting a process for systematic evaluation of implicit bias in current and future models.
  • The U.S. Food and Drug Administration (FDA) revised the Emergency Use Authorization for the oral antiviral treatment Paxlovid, authorizing state-licensed pharmacists to prescribe Paxlovid to eligible patients. FDA hopes that allowing state-licensed pharmacists to prescribe Paxlovid will expand access to timely COVID-19 treatment, since Paxlovid must be taken within five days of symptoms appearing. Paxlovid is authorized for the treatment of mild to moderate COVID-19 in adults and pediatric patients (12 years of age or older weighing at least 88 pounds) who are at high risk of progression to severe COVID-19. Full text of the FDA letter is available here.
  • The Center for Medicaid and CHIP Services (CMCS) released a comprehensive set of resources on Medicaid managed care, including new reporting templates and toolkits. The resources support data collection and standardization to improve CMS’s and states’ ability to monitor managed care programs, including managed long-term services and supports (MLTSS). Specifically, CMS released an update on implementation of the web-based managed care reporting portal that will make web-based forms available for each report. Additionally, CMS released new MLR reporting template for states submitting rate certification packages after October 1, 2022. CMS will also make all reports submitted through MDCT-Managed Care Reporting available after CMS has completed an initial review of the reports. Lastly, CMS released a new MLTSS Access Monitoring Toolkit that provides an overview of MLTSS program requirements, defines specific documentation states may require MLTSS plans to provide, and defines six elements of state oversight of MLTSS programs.
  • CMS released (proposed rule, fact sheet) the CY 2023 Medicare Physician Fee Schedule (MPFS) and Quality Payment Program (QPP) Proposed Rule. CMS notes in its press release that the MPFS is one of several proposed rules that reflect a broader Administration-wide strategy to create a more equitable health care system that results in better accessibility, quality, affordability, and innovation. Comments are due by September 27th. Healthsperien will be developing a detailed summary in the coming days. CMS proposed several changes to RVU impacts, evaluation and management (E/M) visits, telehealth services, behavioral health services, audiology services, colorectal cancer screening, Medicare Shared Savings Program (MSSP), and the Quality Payment Program (QPP). A full report from Healthsperien can be found here.

Congressional Action

Senate Finance Committee Chair Ron Wyden (D-OR) released an interim report in his investigation into big pharma’s tax practices. The report focused on AbbVie, a publicly traded pharmaceutical company based in Chicago that has ownership of the drug Humira. The report found that 99% of AbbVie’s taxable income was reported by offshore subsidiaries, making only 1% of their taxable income subject to the corporate income tax rate of 21%.

The report claims that, as a result of the Global Intangible Low-Tax Income (GILTI) rate of 10.5% created by 2017 Republican tax law, pharmaceutical companies like AbbVie are taking advantage of American consumers, by selling to them but paying significantly less in taxes. The report’s recommendations include applying GILTI on a “country-by-country” basis to shut down tax haven abuse and offshoring, increasing the GILTI rate to bring it closer to the U.S. corporate income tax rate, and fixing additional design flaws that incentive offshoring. The Committee intends to continue its investigations in order to provide Congress and the public with a complete understanding of the effects of the 2017 Republican tax law on the pharmaceutical industry. 

Congressional Update – Revised ‘Build Back Better’ Prescription Drug Legislation Draft Includes Protections for EGWPs

This morning, the Roundtable received draft compromise language negotiated between U.S. Senate Majority Leader Chuck Schumer and Senator Joe Manchin with respect to the prescription drug reform provisions of the “Build Back Better” legislation. This legislation includes a number of provisions that the Roundtable strongly supports, including Medicare negotiating prices directly with manufacturers to lower prescription drug costs.

For several years, the Roundtable has coordinated and led efforts with a broad and diverse set of stakeholder allies to ensure that language protecting EGWPs was included in the Medicare Part D redesign provisions of this legislation. We are pleased to report that the language released this morning maintains these protections.

While the future of the scaled-back legislative package is unclear, we are very pleased that the language to protect public sector retirees remains. We will continue to work with our stakeholder allies to ensure public sector retiree coverage is protected in future iterations of the legislation.

Please do not hesitate to contact the Roundtable Senior Policy Advisor, Andrew MacPherson, with questions (Andrew@healthcareroundtable.org).

Research

The Kaiser Family Foundation (KFF) released a study on the Patient Protection and Affordable Care Act’s (ACA) “subsidy cliff.” This refers to a sliding scale where Americans with incomes over four times the federal poverty level did not qualify for ACA insurance subsidies. This changed under the American Rescue Plan Act of 2021 (ARPA), which temporarily capped silver plan premiums at 8.5% of incomes. If Congress does not make these subsidies permanent, at an estimated Congressional Budget Office (CBO) cost of roughly $22 billion per calendar year, these Americans will return to paying a full price for their premiums. The increase of premiums capped at 8.5% to 10% or upwards, represents an estimated cost increase of $365 per month in 2022 to an unsubsidized $438 for 2023. Vermont, West Virginia, and Wyoming are expected to have the largest increases, with an average of 18% individual incomes going towards silver plans. For older residents, that amount could increase over 40% of personal incomes, based on 2022 premiums. Across the board, premiums are expected to increase for the approximately 13 million enrolled Americans in this subsidized marketplace.

Roundtable Reminders

SAVE THE DATE – November 9-11, 2022
Annual Conference Returns to Alexandria, VA

After two years of virtual meetings, the Roundtable is planning an in-person Annual Conference for this November. We will return to The Alexandrian Hotel in Old Town Alexandria, Virginia for our annual policy conference from Wednesday, November 9 to Friday, November 11, 2022.

Details will be released later this year. For now, save the dates!