CMS has posted the draft February 2013 FULs and Draft February 2013 Three-Month Rolling Average FULs. CMS will continue to accept comments on the draft average manufacturer price-based FULs and the draft three-month rolling average FULs, along with the methodologies used to calculate them.
CMS has posted the September 2012 draft average manufacturer price (AMP)-based Medicaid federal upper limit (FUL) files, along with updated three-month rolling average FUL file consisting of the weighted average of the current and two previous monthly draft AMP-based FULs. CMS continues to accept comments on the monthly and three-month rolling average draft AMP-based FULs and the methodologies used to calculate them.
The D.C. Circuit recently upheld a Department of Defense (DOD) rule that will require drug manufacturers to provide partial refunds on certain prescription drugs, dating back to 2008. The rule that was the subject of the case imposes a cap on the retail price of drugs and requires manufacturers to refund the difference between the retail price and the discounted rate of the drug benefits the DOD provides through TRICARE.
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CMS Medicaid Drug Pricing Webinar: Draft Federal Upper Limits and Draft Survey of Retail Prices (Dec. 5)
On December 5, 2012, CMS is hosting a webinar on various Medicaid drug pricing issues. The webinar will cover the CMS draft three-month rolling average FUL file; draft National Average Drug Acquisition Cost (NADAC) file; draft National Average Retail Price (NARP) file; and draft Monthly New Drug Report. A taping of the event and slides will be available for one week after the webinar. (This webinar originally was scheduled for Nov. 15).
The GAO has issued a report that responds to concerns raised by certain Democratic lawmakers that manufacturers participating in the Medicare Part D drug “Coverage Gap Discount Program” would raise prices for brand-name drugs used by beneficiaries in the coverage gap to offset the 50% discount that manufacturers must provide under the Affordable Care Act. Contrary to these concerns, the GAO found that prices for brand-name drugs used by beneficiaries in the coverage gap increased similarly to those used by beneficiaries who did not reach the gap, both before and after the Discount Program was implemented in January 2011. The GAO also reports that while pharmacy benefit managers (PBMs) interviewed believe that some manufacturers decreased brand name rebate amounts as a result of the Discount Program, most plan sponsors did not observe this, and manufacturers reported no effects on their rebate negotiations as a result of the Discount Program. Most sponsors and PBMs also reported that the Discount Program did not affect Part D plan formularies, plan benefit designs, or utilization management practices. The GAO cautioned that its findings are limited to those sponsors, PBMs, and manufacturers interviewed and may not be representative of the effects observed across all of these types of entities, and multiple factors besides the Discount Program can affect drug prices over time.
The OIG has issued a report on Medicaid pharmacy reimbursement that compares FUL amounts based on published prices to FUL amounts based on AMP and pharmacy acquisition costs. According to the OIG, FUL amounts based on published prices (from the fourth-quarter 2011 Redbook file) were more than four times greater than sampled pharmacy acquisition costs. Moreover, FUL amounts based on AMPs were 61 percent lower than FUL amounts based on published prices, at the median, but still exceeded sampled pharmacy acquisition costs by 43 percent in the aggregate. Notably, however, the study was subject to a number of limitations, including use of AMP-based FULs that have not been published by CMS (data for November 2010 was used, whereas CMS began releasing draft FULs in September 2011). While CMS has been issuing draft AMP-based FUL amounts for review and comment, the OIG recommends that CMS complete implementation of AMP-based FUL amounts, in conformance with the ACA. CMS concurred, and stated that it plans to implement FUL amounts based on AMPs “in the near future.”
CMS has posted the August 2012 draft average manufacturer price (AMP)-based Medicaid federal upper limit (FUL) files, along with updated three-month rolling average FUL file consisting of the weighted average of the current and two previous monthly draft AMP-based FULs. CMS continues to accept comments on the monthly and three-month rolling average draft AMP-based FULs and the methodologies used to calculate them.
The HHS Office of Inspector General (OIG) has released its FY 2013 Work Plan, which outlines audit, inspection, and investigative initiatives that the OIG intends to conduct in the coming year. The OIG plans activities in a wide range of areas, including reviews of Medicare fee-for-service reimbursement and program integrity policies involving virtually all types of providers and suppliers (with a heavy concentration of reviews involving hospitals and medical equipment suppliers). The OIG also will focus attention on Medicare Advantage and Medicare Part D prescription drug plan policies, including payment policy and plan oversight reviews. Numerous Medicaid reports also are on the books, including investigations involving Medicaid prescription drug pricing and rebate policies, various provider and supplier payment issues, and state management of their Medicaid programs. The Work Plan also includes numerous reviews involving other HHS agencies, such as reviews targeting Food and Drug Administration (FDA) and National Institutes of Health programs. The Work Plan also includes a description of the OIG’s legal and investigative activities related to Medicare and Medicaid.
On October 5, 2012, CMS released a number of draft Medicaid drug pricing files and related documents for review and comment. Among other things, CMS has posted the June 2012 and July 2012 draft average manufacturer price (AMP)-based Medicaid federal upper limit (FUL) files. Based on comments that month-to-month fluctuations in the AMP-based FULs “may create problems for pharmacies because they will be unable to predict resulting state reimbursement rates,” CMS has developed a draft three-month rolling average FUL file consisting of the weighted average of the current and two previous monthly draft AMP-based FULs. CMS is posting these draft files, and the draft methodology used to calculate the draft three-month rolling average FUL, for review and comment only. While CMS expects three-month rolling average FULs to fluctuate less than monthly FULs, CMS observes that “the draft three-month rolling average FULs incorporates pricing data older than the current monthly pricing that may be less reflective of pharmacies’ current purchase prices.” CMS is accepting comments on the monthly and three-month rolling average draft AMP-based FULs and the methodologies used to calculate them.
CMS also released for comment draft National Average Retail Price (NARP) data, which reflects prices paid for drugs to retail community pharmacies for individuals with Medicaid, cash paying customers, and those with certain third party insurance. CMS expects the reference pricing to assist states in comparing their current pricing policies to that reflected in the draft NARP. In addition, CMS has posted for comment draft National Average Drug Acquisition Cost (NADAC) data, which is based on a voluntary survey of pharmacy invoices, and a draft Monthly New Drug Report that shows newly marketed single source drugs that are currently generally available through wholesalers. CMS states that after it considers comments on all of these files (a comment deadline is not specified), the agency plans to release these data files in final form, with updated files posted on at least a monthly basis. States can use the monthly AMP-based FUL, or the three-month rolling average FUL, once finalized, to develop a pharmacy reimbursement methodology that will allow their pharmacy payments to remain within the FUL in the aggregate. CMS points out that any state that wants to change its pharmacy reimbursement methodology must submit a state plan amendment to CMS for review and approval.
CMS has posted the October 2012 update to Medicare Part B average sales price (ASP) files, which will be used to pay for Part B covered drugs for the fourth quarter of 2012. CMS reports that drug prices in the market remain relatively stable, with average prices for the top Part B drugs decreasing by 1.7% in the fourth quarter of 2012 compared to the previous quarter. CMS also notes that it is continuing to delay implementation of average manufacturer price (AMP)-based price substitution policy at this time for “a variety of operational issues.”
The Social Security Act requires the OIG to notify the HHS Secretary if the average sales price (ASP) for a particular drug exceeds the drug's average manufacturer price (AMP) or widely available market price (WAMP) by a threshold, currently set at 5%. If that threshold is met, the Secretary is authorized to disregard the drug’s ASP and substitute the lesser of the WAMP or 103% of AMP. CMS’s 2012 Medicare physician fee schedule rule specified the circumstances under which AMP-based price substitutions will occur beginning January 2012 (although CMS has not announced any such substitutions to date, due in part to concerns about a developing drug shortage situation). According to a recent OIG report comparing fourth quarter 2011 ASPs and AMPs, reimbursement for 14 drugs would have been reduced in the second quarter of 2012, saving an estimated $4.6 million if CMS exercised its price substitution policy (the savings would have been higher if additional drugs with partial AMP data were included).
CMS has posted updated draft Medicaid drug federal upper limit (FUL) files, reflecting May 2012 average manufacturer price data. CMS invites comments on the draft FUL files, but a comment deadline is not specified.
CMS is hosting a webinar on July 26, 2012 to discuss the draft methodology for Estimating National Average Retail Prices (NARP) for Medicaid Covered Outpatient Drugs.
CMS has posted updated draft Medicaid drug federal upper limit (FUL) files, reflecting April 2012 average manufacturer price (AMP) data. CMS continues to invite comments on the draft FUL files; a comment deadline is not specified.
CMS is hosting a webinar on June 28, 2012 to discuss its "Draft Methodology for Calculating the National Average Drug Acquisition Cost," which may be used as a reference price for states to consider when setting their Medicaid drug reimbursement methodology. Advance registration is required. CMS will post a taping of the webinar and related slides for one week on its Medicaid drug pricing website. CMS intends to host two additional webinars on the survey of retail prices later this summer, focusing on: (1) the draft methodology document for Part I of the Retail Community Pharmacy Consumer Prices; and (2) the draft results for the National Average of Retail Prices NARP and the NADAC files.
CMS has released the July 2012 Medicare average sales price (ASP) files, which will be used to pay for Part B covered drugs for the third quarter of 2012. According to CMS, prices for the top Part B drugs increased by 0.2% compared to the previous quarter, and prices changed 2% or less for the majority of the higher-volume drugs. As it did last quarter, CMS notes that it is authorized to substitute AMP for the ASP in certain circumstances (set forth in the final 2012 Medicare physician fee schedule rule), but the agency is continuing to delay implementation of this substitution policy for “a variety of operational issues.”
CMS has posted updated draft Medicaid drug federal upper limit (FUL) files, reflecting March 2012 average manufacturer price (AMP) data. CMS continues to invite comments on the draft FUL files.
CMS Accepting Comments on Draft Methodology for Calculating National Average Drug Acquisition Cost (NADAC)
CMS has released its "Draft Methodology for Calculating the National Average Drug Acquisition Cost," which may be used as a reference price for states to consider when setting their Medicaid drug reimbursement methodology. Among other things, the draft methodology indicates that CMS plans monthly surveys of chain and independent – but not specialty – pharmacies, and that NADACs will be reviewed and updated both weekly and monthly. CMS also proposes a “quality assurance” process to remove survey response “costs that do not fall within a reasonable range,” which appears to give CMS’s contractor (Myers and Stauffer LC) wide latitude to disregard survey responses. Comments will be accepted until June 21, 2012.
Recent hearings on health policy issues include:
- Senate Health, Education, Labor and Pensions Committee hearings on HIV/AIDS drug costs, health care delivery reforms, and federal laws to ensure patients’ access to care and privacy.
- A Senate Finance Committee hearing on “Progress in Health Care Delivery: Innovations from the Field.”
- A House Judiciary Subcommittee on Intellectual Property and Competition hearing on health care consolidation and competition after the ACA.
- A House Veterans’ Affairs Committee hearing on the Veterans Affairs Department’s prosthetics purchasing policy.
Coming up, the House Education and the Workforce Health Subcommittee is holding a hearing May 31 on “Barrier to Lower Health Care Costs for Workers and Employers.” In addition, on June 6, the House Veterans’ Affairs Committee has scheduled a hearing entitled “Through the Looking Glass: Return to PPV (Pharmaceutical Prime Vendor program).”
On May 8, 2012 CMS posted the latest draft Medicaid drug federal upper limit (FUL) files (relating to February 2012 AMP data). CMS continues to invite comments on the draft FUL files (note that the formal comment period on CMS’s February 2, 2012 proposed rule implementing ACA Medicaid drug payment provisions has closed).