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Four Essentials In The New Trump Drug Pricing Reform Plan

May 26, 2018
 

What you need to know about the Trump drug pricing reform plan as the administration releases “American Patient First” blueprint to lower drug prices, reduce out-of-pocket costs.

The Department of Health and Human Services (HHS) has released the two-part blueprint that describes how the Trump administration plans to drop the prices for  prescription drugs for all Americans. The first part of this plan will be implemented instantly while the second part will come later since the Secretary of HHS Alex Azar is calling for public suggestions and additional feedback.

The four essentials established to address the high cost of prescription drugs are as follow:

  1. Improved competition and approval process
  2. Support better negotiation
  3. Create incentives to lower list prices
  4. Reducing patient out-of-pocket cost

Azar stated that the Trump administration has been taking action under these four points since their beginning.

1. Improved competition and approval process

A. What has been done?

  • Accelerating FDA approval process of generic drugs.
  • The Implementation of the Drug Competition Action Plan.
  • Enhancing information sharing between manufacturers, healthcare providers, and patients regarding medical products.
  • Promoting the development of biosimilars at a lower cost.

B. What requires immediate attention by the HHS?

  • Steps that prevents gaming of regulatory process.
  • Advocate in the promotion and innovation of biologics.

C. What actions can be implemented in the future after public feedback, and pertinent legislation?

  • Cost shifting and underpricing.
  • Access to the reference product samples distribution restrictions imposed by manufacturers.
  • Engage the healthcare providers in the use of biosimilars and interchangeable products.
  • Enhance The Purple Book.

2. Support better negotiation

A. What has been done?

  • Medicare Part D program is restructuring the way to negotiate drug prices for its participants to become more competitive in the current market. Proposed changes to modernize Medicare Part D includes changing plan formulary standards to require a minimum of one drug per category or class instead of two.

B. What requires immediate attention by the HHS?

  • Development of projects to promote the value-based care at the lowest cost.
  • Authorization of Medicare Part D to change their formulary and negotiate generics with manufacturers without CMS approval related increasing in price.
  • Update to the Drug Plan Customer Service star rating.
  • Evaluation of drug price based on the indications.
  • Direct reports to the President regarding savings that could happen by moving drugs from Medicare Part B to Part D.
  • Taking advantage of the Part B Competitive Acquisition Program regarding drugs and biologics.
  • Interagency coordination to deal with the discrepancy between drug prices in the US and foreign countries.

C. What actions can be implemented in the future after public feedback, and pertinent legislation?

  • Changes in value-based arrangements and pricing reports.
  • Evaluation of payments based on drug indications.
  • Implementation of long-term financing models to create uniformity between the payments issued by the states.
  • Standardization of drug pricing regarding the inpatient and outpatient status.

3. Create incentives to lower list prices.

A. What has been done?

  • The list price of a drug can be influenced by the discounts or concessions paid to third parties affecting negatively the patient’s costs. Proposed changes are intended to promote manufacturer’s transparency in the list price of a drug and to encourage lower list prices. These changes included: establishing a beneficiary out-of-pocket maximum in the Medicare Part D catastrophic phase and some improvements to the 340B program.

B. What requires immediate attention by the HHS?

  • The inclusion of prices on DTC advertising.
  • Transparency between the Centers for Medicare and Medicaid service and the patients regarding the drug costs.
  • Promote the Affordable Care Act’s Maximum Rebate Amount provision.

C. What actions can be implemented in the future after public feedback, and pertinent legislation?

  • Imposing fiduciary task of Pharmacy Benefit Managers by restructuring of Medicaid rebates programs.
  • Minimizing the impact of rebates on list prices and prices paid at the point of sale.
  • Scrutiny of PBM rebates and fees based on the percentage of the list price in order to determine if the incentives are favoring higher list prices rather than lower prices.
  • Seeking commitment by part of Medicare Part B and Part D drug manufacturers to set up the price over an implemented look-back period, elimination of caps on Medicaid rebates and changes in the exclusion of certain payments, rebates, and discounts from the determination of Average Manufacturer Price and Best Price.
  • Changes in the 340B program.

4. Reducing patient out-of-pocket cost

A. What has been done?

  • Proposed rules between manufacturer rebates and pharmacy to benefit the patient at the point of sale.

B. What requires immediate attention by the HHS?

  • Prohibition of the “Pharmacy Gag Clauses”
  • Enhanced Explanation of Benefits by giving the patient updated information regarding a rise in price and cheaper alternatives.

C. What actions can be implemented in the future after public suggestions and   feedback, and pertinent legislation?

  • Improvement in the Medicare Part D annual statements to provide the patients with more concise information.
  • Continue efforts in overcoming communication barriers between pharmacist and patients.

Three different time frames are included in the blueprint. Comments must be submitted via the Federal Register on or before July 16, 2018.

Practice Pearls:

  • Modernizing and changing the structure of Medicare Part D is one of the main challenges that the Trump administration has to overcome.
  • Significant changes regarding profit modeling of PBM’s and rebates have been proposed prompting the need to keep a close eye on them.
  • HHS is soliciting public suggestions and feedback regarding the structure and function of the pharmaceutical market. The blueprint is a vast list of regulatory and legislative proposals to take into consideration in the future part. Comments must be submitted on or before July 16, 2018.

References:

Azar AM. HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. Federal Register. 2018; 83(95): 22692-22700. https://www.federalregister.gov/documents/2018/05/16/2018-10435/hhs-blueprint-to-lower-drug-prices-and-reduce-out-of-pocket-costs#footnotes. Accessed May 16, 2018.

Fein AJ. The Trump Drug Pricing Plan: Short Term Reprieve, Long Term Disruption. Drug Channels. http://www.drugchannels.net/2018/05/the-trump-drug-plan-short-term-reprieve.html. Published May 15, 2018. Accessed May 16, 2018.

Kennen Munoz Munoz, Pharm. D. Candidate 2019, LECOM College of Pharmacy