OMB Reviewing New HRSA 340B Omnibus Guidelines

Today the Health Resources and Services Administration (HRSA) officially requested White House Office of Management and Budget (OMB) review of new “omnibus guidelines” on the 340B drug discount program. While the guidelines are not yet available to the public, the document will presumably fulfill HRSA’s pledge last year to address “key policy issues raised by various stakeholders committed to the integrity of the 340B program.” This latest action follows HRSA’s request last month for OMB clearance of its proposed rule implementing 340B program enforcement authorities and pricing policies under the Affordable Care Act; that rule is still pending at OMB.

HRSA Moving Ahead on 340B Program Enforcement Rule, Including Manufacturer CMPs for Overcharges to 340B Entities

The Health Resources and Services Administration (HRSA) is seeking White House review of its proposed rule to implement new Affordable Care Act 340B drug discount program enforcement authorities and pricing policies. More than four years after soliciting comments on the planned rulemaking, the HRSA proposal will address its authority to impose civil monetary penalties (CMPs) on drug manufacturers that intentionally charge a covered entity a price above the ceiling price, and define standards and the methodology for the calculation of ceiling prices for purposes of the 340B Program. The text of the rule will be available when the Office of Management and Budget completes its review and the rule is sent to the Federal Register.

Congressional Health Policy Hearings

Recent Congressional health policy hearings have addressed the following issues:

Looking ahead to 2015, House Energy and Commerce Committee Chairman Fred Upton has indicated that his panel will hold a hearing on preparation for ICD-10 implementation

CMS Posts January 2015 Update to Medicare Part B Drug Pricing Files

CMS has posted the January 2015 update to the Medicare average sales price (ASP) drug pricing files, which contain the payment amounts that CMS will use to pay for Part B covered drugs for the first quarter of 2015. CMS notes that prices for the top Part B drugs decreased by 0.1 % on average this quarter, and prices changed 2% or less for 26 of the top 50 higher-volume drugs.

HRSA Withdraws Pending 340B Rule, Plans New 2015 Rulemaking

The Health Resources and Services Administration (HRSA) has officially withdrawn from Office of Management and Budget review a long-awaited proposed rule to establish comprehensive requirements for entities and manufacturers participating in the 340B Drug Pricing Program. HRSA notes in a web posting that it intends to issue proposed guidance for notice and comment in 2015 addressing “key policy issues raised by various stakeholders committed to the integrity of the 340B program.”  The agency also plans to release proposed rules on manufacturer civil monetary penalties, calculation of the 340B ceiling price, and administrative dispute resolution.

GAO Highlights Differences in Federal Program Drug Prices

The Government Accountability Office (GAO) has released data comparing retail prescription drug prices paid by the Department of Defense (DOD), Medicaid, and Medicare Part D for a sample of 78 high-utilization/high-expenditure drugs. In general, the GAO determined that Medicaid paid the lowest average net prices for both brand-name and generic drugs in the sample based on data for the third quarter of 2010. For the entire sample, Medicare Part D paid an estimated 32% higher average net price than Medicaid, while DOD paid 60% more than Medicaid (although Medicare Part D paid more for brand-name drugs than did DOD). Key factors affecting net prices paid by each program included the amount of any post-purchase price adjustments (e.g., refunds, rebates, or price concessions received by each program from drug manufacturers), which equaled approximately 15% of the gross price for Medicare Part D, 31% for DOD, and almost 53% for Medicaid across the entire sample.

OIG Highlights Inconsistencies in State Reporting of the Federal Share of Medicaid Drug Rebates

The OIG issued a report today entitled “Inconsistencies in States’ Reporting of the Federal Share of Medicaid Drug Rebates.”  States are eligible for higher federal financial participation (FFP) rates for certain Medical Assistance services, such as those related to family planning, Indian Health Services, and breast and cervical cancer care. Based on prior work, the OIG was concerned that states may not always use the higher FFP rates when refunding to the federal government its share of drug rebates that drug manufacturers paid to the states, which could result in a loss of federal share. The new OIG report assesses whether states reported drug rebates at the applicable FFP rates for the period July 1, 2011 through June 30, 2012. According to the OIG, while states claimed drug expenditures at higher FFP rates, they did not consistently report the federal share of drug rebates at those higher FFP rates for one or more quarters during the review period. The OIG also found that states used different methodologies to determine the federal share of drug rebates, which could be attributed to a lack of specific national CMS guidance instructing states to report drug rebates at the FFP rates at which drugs were originally reimbursed or that identifies acceptable methods to determine the federal share of drug rebates. The OIG recommended that CMS issue guidance that clearly instructs states to report drug rebates at the applicable FFP rates and identify acceptable methods to determine the federal share of drug rebates; CMS concurred.

CMS Releases July 2014 Medicare Part B Drug ASP Update

CMS has released the average sales price (ASP) files that will be used to pay for Medicare Part B drugs for the third quarter of 2014. According to CMS, “average drug prices in the market remain relatively stable,” with prices for the top Part B drugs increasing by 1.8% on average.

CMS Abandons Plans to Finalize ACA Medicaid Drug Pricing Policy in July 2014

In an email today to stakeholders, CMS announced that it will not be finalizing the ACA Medicaid federal upper payment limits (FUL) for multiple source drugs in July 2014, as previously intended. CMS attributes the change to a delay in providing detailed guidance to the states in preparation for implementation. CMS expects to announce a new finalization date when it releases this subsequent guidance to states.

OIG Proposed Rule Would Expand Civil Monetary Penalty Authority

On the heels of its proposed rule to expand its health program exclusion authority, the Office of Inspector General (OIG) of the Department of Health and Human Services has published a proposed rule that would amend the health care program civil monetary penalty (CMP) regulations. The rule would codify the OIG’s expanded statutory authority under the Affordable Care Act to impose CMPs on providers and suppliers and would allow for significant penalties in a variety of scenarios, some of which could extend beyond what is currently permitted.

Reed Smith attorneys have prepared a Client Alert summarizing and analyzing the OIG’s proposed rule, including the various scenarios under which CMPs could be issued under the proposed regulations, such as: failure to report and return an overpayment; failure to grant OIG timely access to records upon request; ordering or prescribing items or services while excluded from a federal health care program, as well as arranging or contracting with an individual or entity who meets this criteria; making false statements or omitting or misrepresenting material facts in an application, bid, or contract; and failing to submit or certify drug-pricing and product information in a timely manner. In addition, the alert covers the changes in technical language proposed by OIG to clarify and more clearly define the scope of CMP regulations.

The Client Alert is available here.

OIG Recommends Adjustments to Medicare ESRD Drug Payment Policies

The OIG recently offered recommendations to CMS on how to update Medicare payments to end stage renal disease (ESRD) facilities for drugs used by dialysis patients. Based on a review of ESRD drug prices in the first quarter of 2012, the OIG concluded that independent dialysis facilities can purchase ESRD drugs for less than the levels provided in the ESRD base rate (9% below, in the aggregate), but average acquisition costs for hospital based dialysis facilities exceeded the reimbursement amounts (5% above, in the aggregate). Thus the OIG cautioned that any reductions to the ESRD base rate could potentially harm hospital-based dialysis facilities. While dialysis facilities’ average acquisition costs for the majority of drugs under review have decreased over the last 3 years, the average costs for epoetin alfa (which represented more than three-quarters of drug costs in responding facilities) have increased by at least 17%. The OIG also determined that the concluded that the Producer Price Index (PPI) for Prescription Drugs was not an accurate predictor of cost changes for most drugs under review. In addition to rebasing the ESRD base rate to reflect current trends in drug acquisition costs (as is required by law), the OIG recommends that CMS (1) distinguish payments in the ESRD base rate between independent and hospital-based dialysis facilities, and (2) consider updating the ESRD payment bundle using a factor that takes into account drug acquisition costs.

OIG Recommends Expansion of CMS's Medicare Part B Drug Pricing Substitution Policy

The OIG has issued a report, “Comparing Average Sales Prices and Average Manufacturer Prices for Medicare Part B Drugs: An Overview of 2012,” which assesses CMS’s use of its authority to lower reimbursement for Medicare Part B drugs when a drug’s average sales prices (ASP) exceeds its average manufacturer prices (AMP) or widely available market price (WAMP) by a threshold, currently set at 5%. In April 2013, CMS began exercising its payment substitution authority, which currently applies only to certain codes with complete AMP data, and when the ASP for the code exceeds the 5% threshold in two consecutive quarters. The OIG estimates that CMS has generated more than $800,000 in savings under this policy, but the agency could achieve greater savings by expanding the circumstances under which it exercises its substitution authority to include drug codes with complete AMP data in a single quarter and drug codes with partial AMP data. CMS did not concur with these recommendations.

OIG Examines 340B Program Contract Pharmacy Arrangements in Advance of HRSA Rules

A recent OIG report examined potential problems associated with the growing use of contract pharmacies under the 340B discount drug program. The OIG describes these arrangements as when a 340B covered entity, such as a community health center or disproportionate share hospital, contracts with a pharmacy to dispense drugs purchased through the 340B program on the entity’s behalf. In short, based on interviews with covered entities and 340B administrators, the OIG found that some contract pharmacy arrangements create inconsistencies with regard to which prescriptions are treated as 340B eligible. Contract pharmacies also may not make necessary arrangements to prevent duplicate discounts (when a drug manufacturer pays a Medicaid drug rebate program on a drug sold at the already-discounted 340B price). The OIG also found that most covered entities it reviewed did not conduct all of the oversight activities recommended by the Health Resources and Services Administration (HRSA). In discussing its findings, the OIG stated that it was not making recommendations since HRSA has announced plans to propose new regulations for the 340B program this year the OIG’s results are intended to inform HRSA’s efforts. The OIG also intends to continue monitoring the issue.

CMS Announces Plans to Finalize ACA Medicaid Drug Pricing Policy in July 2014

After more than two years of releasing draft average manufacturer price (AMP)-based federal upper payment limit (FUL) files and methodology documents, CMS now expects to finalize the ACA Medicaid FULs for multiple source drugs in July 2014. While CMS intends to provide additional guidance in the months to come, the agency is encouraging states to consider what changes may be needed to contracts with pharmacy claims processors and pricing compendia, as well as state plan amendments that need to be submitted to use the FUL data.  CMS also has posted final National Average Drug Acquisition Cost (NADAC) pricing files, which CMS points out could be used by states to meet the FULs aggregate upper limit if a state plan amendment is submitted. CMS suggests that as states revise their reimbursement for the ingredient cost of a drug to stay within the FUL aggregate, they should consider whether current dispensing fees continue to provide adequate reimbursement for the cost of dispensing prescriptions to a Medicaid beneficiary.

CMS Suspends Medicaid NARP Drug Data Collection

CMS has suspended Part I of its National Average Retail Price (NARP) survey, through which the agency collected prices paid for drugs to retail community pharmacies for individuals with Medicaid, cash paying customers, and those with certain third party insurance. CMS notes that the survey is being suspended, effective July 1, 2013, “pending funding decisions.” While the resulting draft NARPs file will not be published, archive files will remain on the CMS website. CMS also has suspended posting of the monthly draft New Drug Report file that listed newly marketed single-source drugs.

GAO Compares DOD and VA Drug Purchase Prices

A recent GAO report compares direct purchase prices paid by the Department of Defense (DOD) and the Department of Veterans Affairs (VA) for a sample of 43 brand-name and 40 generic drugs for the first quarter of 2012. In short, the GAO found that each agency obtained better prices on the type of drugs its beneficiaries use more, with generic drugs accounting for 83% of VA's utilization of the sample drugs, and brand-name drugs accounting for 54% of DOD's utilization. For instance, DOD's average unit price for the 40 generic drugs was 66.6% higher than the VA's average price, while the VA's average unit price for the 43 brand-name drugs was 136.9% higher than DOD's average price. The GAO points out that different pricing can result from factors such as variations in agency formulary design and prescription practices, differences in price and rebate negotiations with manufacturers, and differences in beneficiary populations.

Updated Draft Medicaid Federal Upper Limit (FUL) Files Posted

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 Releases Updated Draft Medicaid FUL Files

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.

D.C. Circuit Decision Upholding DOD Rule May Leave Drug Manufacturers on the Hook for Refunds

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.

Please click here for a more detailed analysis on our sister blog, Global Regulatory Enforcement Law Blog.

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).

Older Entries

October 30, 2012 — GAO Finds Part D Coverage Gap Discount Program Did Not Spur Increased Drug Prices

October 30, 2012 — OIG Calls on CMS to Implement Medicaid Drug AMP-Based FUL Payments

October 30, 2012 — CMS Posts Updated Draft Medicaid Drug Pricing Files

October 16, 2012 — OIG Issues FY 2013 Work Plan

October 16, 2012 — CMS Invites Comments on Draft Medicaid Drug Pricing Data (FULs, NARP, NADAC)

September 27, 2012 — CMS Releases October 2012 Update to Medicare Part B Drug ASP Files

August 20, 2012 — OIG Report Reviews Updated Medicare Part B Drug Pricing Data

July 31, 2012 — Updated Draft Medicaid Drug Payment FUL Files Released

July 25, 2012 — CMS Webinar on Retail Community Pharmacy Consumer Prices Survey (July 26)

July 18, 2012 — CMS Releases Updated Draft Medicaid Drug Payment FUL Files

June 23, 2012 — CMS Webinar on Medicaid National Average Drug Acquisition Cost Survey (June 28)

June 18, 2012 — CMS Releases July 2012 Medicare Part B Drug ASP Files

June 13, 2012 — CMS Posts Updated Draft Medicaid Drug Payment FUL Files

June 8, 2012 — CMS Accepting Comments on Draft Methodology for Calculating National Average Drug Acquisition Cost (NADAC)

May 31, 2012 — Congressional Health Policy Hearings

May 10, 2012 — Updated Draft Medicaid Drug Payment FUL Files Posted

January 31, 2012 — CMS Releases Long-Awaited Proposed Rule to Implement ACA Medicaid Manufacturer Rebate and Pharmacy Reimbursement Provisions

January 25, 2012 — CMS Releases Additional Draft ACA Medicaid Drug Pricing/FUL Files

November 29, 2011 — CMS Posts Third Draft Federal Upper Limit (FUL) Files Under ACA

November 29, 2011 — OIG Report Compares ASPs, AMPs for 2010

November 14, 2011 — CMS Issues Final Medicare Physician Fee Schedule Rule for 2012

November 14, 2011 — CMS Finalizes CY 2012 OPPS/ASC Rates, Policy Changes

October 28, 2011 — OIG Reviews Medicaid Drug Expenditure Controls

October 28, 2011 — OIG Report Examines Drug Costs to Medicaid Pharmacies

October 28, 2011 — CMS Releases Second Draft Federal Upper Limit (FUL) Files Under ACA

September 29, 2011 — GAO Examines Manufacturer Discounts Under 340B Drug Program

September 28, 2011 — CMS Issues Subregulatory Guidance on ACA Medicaid Drug Pricing Policy

September 1, 2011 — OIG Reports on Medicaid Drug Rebates: Rebate Collections, Impact on Medicaid Prices

August 5, 2011 — CMS Discusses Details of New "National Average Drug Acquisition Cost" Survey

August 1, 2011 — OIG Report on Medicaid Drug Payment Policy

August 1, 2011 — OIG Report Compares ASP/AMP Payments for Medicare Part B Drugs

July 29, 2011 — Congressional Health Policy Hearings

July 27, 2011 — CMS Stakeholder Meeting on Survey of Drug Retail Prices -- August 4

July 12, 2011 — CMS Awards "Survey of Retail Prices" Contract to Myers and Stauffer - Moves One Step Closer to Average Acquisition Cost

June 27, 2011 — CMS Releases July 2011 Medicare Part B Drug ASP Files

June 27, 2011 — OIG Examines State 340B Drug Program Policies

June 27, 2011 — OIG Report on Medicaid Rebates for Physician-Administered Drugs

May 25, 2011 — HRSA Publishes Proposed Rule Regarding the Exclusion of Orphan Drugs for Certain 340B Covered Entities

April 29, 2011 — OIG Report Compares ASPs, AMPs for 2009

March 29, 2011 — Medicare Part B Drug ASP Files - Second Quarter 2011

March 29, 2011 — Medicare Payment for Oral ESRD Drugs Examined by GAO

March 29, 2011 — GAO Reports on Pricing Trends for Commonly-Used Drugs

February 18, 2011 — HHS Offers States Ideas for Cutting Medicaid Costs

January 13, 2011 — OIG Report on Medicare Payments for Newly Available Generic Drugs

December 28, 2010 — ACA Impact on Medicaid Outpatient Drug Pricing

November 16, 2010 — CMS Withdraws Medicaid AMP Regulations

November 15, 2010 — OIG ASP/AMP Report for First Quarter 2010

October 28, 2010 — OIG Report on Medicare Payment for OPPS Drugs

September 28, 2010 — Fourth Quarter 2010 Medicare Part B Drug ASP Files

September 17, 2010 — OIG Report on End Stage Renal Disease (ESRD) Drug Payment Policy

September 8, 2010 — CMS Proposes Withdrawal of Medicaid AMP Rules

July 10, 2010 — Comparison of 4th Quarter 2009 Part B Drug ASPs/AMPs

June 8, 2010 — Physician Fee Schedule Cut Takes Effect; Fix Awaits Senate Action

May 28, 2010 — Congress Wrestles with Legislation to Delay Medicare Physician Fee Schedule Cut, Make Other Health Policy Changes

May 27, 2010 — DOJ Health Fraud Activities, Focus on Pharmaceutical Companies

April 30, 2010 — Upcoming Hearing on Health Care Pricing Transparency (May 6)

April 30, 2010 — OIG Report Compares ASPs, AMPs

March 31, 2010 — Congressional Hearings

March 30, 2010 — Medicaid Rebates for Brand-Name Drugs With Multiple Versions

March 15, 2010 — Congressional Hearings

March 15, 2010 — Medicare Part D/High-Cost Drugs

February 26, 2010 — OIG Reports on ASP Reporting/Pricing

January 27, 2010 — OIG Medicaid Drug Payment Reports

January 13, 2010 — GAO Report on Medicaid Drug Pricing

January 13, 2010 — Brand-Name Prescription Drug Pricing

December 16, 2009 — CMS Releases 1st Quarter 2010 Medicare Part B Drug ASPs

December 4, 2009 — Recent Health Policy Hearings; Upcoming Drug Pricing Hearing

September 28, 2009 — Upcoming Hearings and Markups

September 28, 2009 — Medicare ESRD PPS Proposed Rule

September 28, 2009 — Beneficiary Utilization of Albuterol and Levalbuterol

September 4, 2009 — 340B Drug Pricing Program and Children's Hospitals

May 18, 2009 — Senate Finance Releases Health Reform Financing Options -- Comments Due May 26, 2009

March 18, 2009 — Payment for TRICARE Retail Pharmacy Drugs

March 6, 2009 — Obama Budget Proposal

March 6, 2009 — Part D/Medicaid Pharmacy Reimbursement

December 19, 2008 — Congressional Budget Office Reports on Health Care Budget Options, Insurance Reform

August 22, 2008 — OIG Report on Drug Prices

July 29, 2008 — Medicare Physician Payment/DMEPOS Bidding Delay Legislation Enacted

May 21, 2008 — OIG Report on Drug Prices