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.

FDA Meeting on Biomarker Development (Sept. 5)

On September 5, 2014, the FDA is holding a public meeting at the Washington Plaza Hotel, in Washington DC, to discuss current scientific and regulatory approaches to biomarker development, acceptance, and utility in the development of therapeutic products (e.g., drugs and biologics). Specifically, FDA will focus on (1) identifying challenges for biomarker applications in early- and late- phase clinical trials, and (2) emerging best practices for successful biomarker-based programs (including codevelopment of in vitro diagnostic devices and use of biomarkers as outcome measures in clinical trials). Public input from the meeting will be used to identify opportunities for biomarker-related regulatory guidance, improve understanding and consistency in regulatory review of therapeutic product applications that incorporate biomarkers in clinical trial designs, and identify potential strategies to facilitate scientific exchanges in regulatory and non-regulatory contexts. For more information on the meeting, which is being held in collaboration with Brookings Institution, and for early registration deadlines to attend the live meeting, see the FDA announcement.  FDA will also accept comments on this topic through November 5, 2014.

FDA Releases Drug/Device Industry Social Media Guidance Documents

The FDA released two draft social media guidance documents last week, describing how manufacturers, packers and distributors of prescription drugs and medical devices may: (1) communicate both benefit and risk information on Internet/social media platforms with character space limitations, and (2) correct independent third-party misinformation about a firm’s products.  For details, see Reed Smith's Client Alert posted on our Life Sciences Legal Update blog.

OIG Finds Drug Manufacturers' Medicaid AMP Determinations Follow Federal Rules

In a recent report, “Average Manufacturer Price Determinations by Selected Drug Manufacturers Generally Were Consistent With Federal Requirements,” the OIG has determined that the methodologies used by 20 selected (unnamed) drug manufacturers to determine average manufacturer price (AMP) for drugs reimbursed by Medicaid generally were consistent with federal requirements. In particular, the manufacturers consistently included transactions from retail community pharmacies rather than the more broadly-defined retail pharmacy class of trade. The OIG did note that manufacturers treated authorized generic sales to a secondary manufacturer differently, and suggested that CMS clarify this policy. The OIG also recommended that CMS permit a presumptive-inclusion methodology for wholesaler sales, since manufacturers would not have been able to calculate the AMP for a number of drugs without this methodology. Finally, the OIG recommended that CMS expand the use of a 12-month rolling average to estimate and remove indirect sales related to ineligible customers (in addition to using this for average for manufacturer price concessions).

Full Energy and Commerce Committee Approves Three Bipartisan Health Bills

On June 10, 2014, the full House Energy and Commerce Committee approved by voice vote three bipartisan public health bills:

  • H.R. 4299, “Improving Regulatory Transparency for New Medical Therapies Act,” which is intended to improve the Drug Enforcement Agency scheduling process for new FDA-approved drugs under the Controlled Substances Act and the registration process for the use of controlled substances in clinical trials to allow treatments to get to patients in a more timely and predictable manner.
  • H.R. 4709, “Ensuring Patient Access and Effective Drug Enforcement Act,” which would amend the Controlled Substances Act to clarify definitions, allow parties to submit a corrective action plan prior to revocation or suspension of a registration, and require a report identifying how collaboration between agencies and stakeholders can benefit patient access to medications and prevent diversion and abuse of controlled substances.
  • H.R. 4631, the "Autism Collaboration, Accountability, Research, Education and Support (CARES) Act," which would continue autism-related federal research, early identification and intervention, education, and activities of the Interagency Autism Coordinating Committee.

OIG Issues Advisory Bulletin Impacting Independent Charity Patient Assistance Programs

On May 21, 2014, the OIG issued its “Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs” (SSAB) to address recently observed risks stemming from the conduct of Independent Charity Patient Assistance Programs (PAPs). The SSAB, which expands on previous OIG guidance from 2002 and 2005, specifically focuses on PAPs’ definitions of disease funds and the identification of eligible recipients, as well as the conduct of donors with relation to Independent Charity PAPs.   A Reed Smith Client Alert analyzing the bulletin is available here.

CMS Finalizes ACA Exchange, Insurance Market Standards for 2015 and Beyond

On May 27, 2014, CMS published a final rule updating ACA Affordable Insurance Exchange and insurance market standards beginning in 2015. Among other things, the rule addresses standards related to: standardized consumer notices regarding insurance product discontinuation and renewal; Qualified Health Plan (QHP) quality data reporting to support quality ratings for plans on the insurance marketplace beginning in 2016; non-discrimination standards; employee choice in the Small Business Health Options Program (SHOP); enforcement remedies in federally-facilitated exchanges; the imposition of civil money penalties for providing false or fraudulent information to the Exchange and for improperly using or disclosing information; updated standards for “Navigators” and other consumer assistance programs; increases the risk corridor calculation ceiling on allowable administrative costs and the floor on profits by 2% “to account for uncertainty and changes in the market prior to and during benefit year 2015”; and modifies the allocation of reinsurance collections if those collections do not meet projections. The rule also provides for an expedited prescription drug exceptions process based on exigent circumstances (defined as when an enrollee is suffering from a health condition that may seriously jeopardize the enrollee’s life, health, or ability to regain maximum function, or when an enrollee is undergoing a current course of treatment using a non-formulary drug). Under this provision, health plans must make coverage determinations within 24 hours after receiving the request; once an exception is granted, issuers must continue to provide the drug throughout the duration of the exigency. CMS states that it will continue to monitor this issue to consider whether it should propose additional standards.

House Energy and Commerce Subcommittee Approves Health Bills

On May 28, 2014 the House Energy and Commerce Subcommittee on Health approved by voice vote three bipartisan public health bills:

  • H.R. 4299, “Improving Regulatory Transparency for New Medical Therapies Act,” which is intended to improve the Drug Enforcement Agency scheduling process for new FDA-approved drugs under the Controlled Substances Act and the registration process for the use of controlled substances in clinical trials to allow treatments to get to patients in a more timely and predictable manner.
  • H.R. 4709, “Ensuring Patient Access and Effective Drug Enforcement Act,” which would amend the Controlled Substances Act to clarify definitions, allow parties to submit a corrective action plan prior to revocation or suspension of a registration, and require a report identifying how collaboration between agencies and stakeholders can benefit patient access to medications and prevent diversion and abuse of controlled substances.
  • H.R. 4631, “Combating Autism Reauthorization Act of 2014,” which would continue autism-related federal research, early identification and intervention, education, and activities of the Interagency Autism Coordinating Committee.

Expedited Drug Development and Review: New FDA Resource Now Available

This post was written by Jennifer Pike.

A new guidance entitled “Expedited Programs for Serious Conditions – Drugs and Biologics” is now available from the Food and Drug Administration (FDA). The 40-page guidance is intended to serve as a single resource for information on FDA’s policies and procedures related to its four expedited drug development and review programs: (1) fast track designation, (2) breakthrough therapy designation, (3) accelerated approval, and (4) priority review designation. The guidance also defines the threshold criteria generally applicable to each program, including when a condition is considered “serious,” when a therapy is “available therapy,” and when a medical need is “unmet.”   The guidance follows the 2012 passage of the Food and Drug Administration Safety and Innovation Act, which called for FDA to expand its efforts to expedite the development and review of drugs intended to treat serious conditions.  Comments regarding the guidance may be submitted at any time.

OIG Examines Medicare Part B Payments for Compounded Drugs

The HHS OIG has examined Medicare Part B payments for compounded drugs and Medicare Administrative Contractors' (MAC) procedures for reviewing and processing claims for compounded drugs, in light of safety concerns involving a 2012 meningitis outbreak and increased scrutiny of compounded drugs. According to the OIG, neither CMS nor MACs tracked the number of Part B claims or payment amounts for compounded drugs, nor do Part B claims contain information that can be used to systematically identify claims for compounded drugs. The OIG observes that the current “inability to track claims for compounded drugs and identify the compounding pharmacies limits the ability of CMS and MACs to take steps that could stop payments for compounded drugs produced in violation of the [Federal Food, Drug, and Cosmetic] Act. The OIG therefore recommends that CMS (1) establish a method to identify Medicare Part B claims for compounded drugs, (2) explore the possibility of requiring providers to identify on Part B claims the pharmacy that produced the compounded drug, and (3) consider conducting descriptive analyses of Part B claims for compounded drugs.

CMS Invites Comments on Sunshine Act "Open Payments" Dispute Resolution/Corrections Process

CMS is inviting comments on the Physician Payment Sunshine Act “Open Payments Program” dispute resolution and corrections process. As previously reported, the Physician Payment Sunshine Act requires pharmaceutical and medical device manufacturers and group purchasing organizations (GPOs) to register with and submit to CMS data on their financial relationships with physicians and teaching hospitals. This financial data will be made publicly available on the CMS Open Payments website. On May 5, 2014, CMS published a notice soliciting additional feedback on the dispute resolution and corrections process, under which covered recipients and physician owners or investors have an opportunity to dispute certain information regarding a payment or other transfer of value. Comments will be accepted until June 2, 2014.

HRSA Releases 340B Audit Results

On May 9, 2014, the Health Resources and Services Administration (HRSA) released the results of its FY 2012 audits of covered entity compliance with 340B drug discount program rules. Based on a review of 51 covered entities encompassing more than 410 outpatient facilities/sub-grantees and more than 860 contract pharmacy locations, HRSA identified “several recurring critical areas of non-compliance for hospitals and non-hospitals.” For non-hospitals, HRSA flagged the following major non-compliance areas: the covered entity’s inability to maintain accurate database information; billing contrary to the Medicaid Exclusion File (which may have resulted in duplicate discounts); and dispensing drugs to ineligible individuals (diversion) at the covered entity and contract pharmacies. For hospitals, the major area of non-compliance cited by HRSA was obtaining covered outpatient drugs through a Group Purchasing Organization (GPO) in violation of statutory restrictions. HRSA also identified best practices to minimize the risks of non-compliance by covered entities, including: development and documentation of comprehensive 340B Program policies and procedures; development of concrete methodologies for routine self-auditing; routine processes for internal corrective action; verification that contract pharmacy arrangements comply with the 340B requirements and are properly listed in the HRSA Office of Pharmacy Affairs database; and strong partnerships with state Medicaid agencies to meet state-specific requirements and prevent duplicate discounts.

Exploring the "Country of Origin" Question for Pharmaceutical Products

Because drugs and medical devices are often sourced, processed, and manufactured in multiple countries, manufacturers are often faced with difficult challenges in determining the country of origin for their products. As detailed in the article "Origin of the Pieces: How to Determine a Pharmaceutical Product's 'Country of Origin,'" written by Reed Smith lawyers Jeffrey Orenstein and Lorraine Campos, a variety of factors must be taken into consideration when answering the country of origin question for a pharmaceutical product. The alert is available on our Life Sciences Legal Update blog.  

Hundreds of Drugs and Biologics Face Labeling Changes under New FDA Plan

This post was written by Jennifer Pike.

In a notice published in the Federal Register on May 7, 2014, the U.S. Food and Drug Administration (“FDA”) announced its intent to incentivize manufacturers to voluntarily update their prescription drug and biologics labels by using a government contractor.

FDA’s announcement stems from a January 2006 final rule in which FDA established revised content and format requirements for prescription drugs and biologics (the “Physician Labeling Rule” or “PLR”). The PLR required drugs and biologics approved after June 30, 2001 to adopt the new labels. A detailed implementation schedule under the PLR, which only resulted in only 15% of all drug and biologics being labeled in the PLR format, expired in November 2013. Therefore, moving forward, the only products which will be labeled in the PLR format will be new drugs and biologics and drugs that are voluntarily updated. To address this lack of labeling conversion, on February 6, 2013, FDA proposed the Prescription Drug Labeling Improvement and Enhancement Initiative. As part of the initiative, and as explained in detail in FDA’s notice, FDA plans to use a government contractor to provide PLR conversion resources and services, including preparation of draft PLR format labeling, in hopes of facilitating voluntary conversion.

The number of drugs and biologics affected by FDA’s initiative is staggering. FDA estimates that 375 manufacturers will be contacted over a 5 year period regarding 750 products. FDA will select the products for labeling conversion based on criteria that would maximize the benefit to public health, including volume of prescriptions, clinical relevance, and risk-based  considerations. Beyond the 750 products selected for PLR conversion, FDA further estimates that over 1,800 generic products will require labeling updates to reflect changes made to the corresponding brand-name products.

FDA is seeking public comment on its collection of information related to the initiative. Comments should be submitted in writing, or electronically at www.regulations.gov, on or before July 7, 2014.

CMS Call: National Partnership to Improve Dementia Care in Nursing Homes (May 20)

On May 20, 2014, CMS is hosting another call to discuss the National Partnership to Improve Dementia Care in Nursing Homes, which includes as a goal reducing the use of unnecessary antipsychotic medications in nursing homes. This call will focus on efforts to monitor enforcement rates and track surveyor training completion; the role that activity professionals play in the mission to improve dementia care; and nonpharmacologic care approaches.

Will Physician Payment Sunshine Act Data Usher in a New Era of False Claims Act Litigation?

This post was authored by Scot Hasselman, Elizabeth Carder-Thompson, Katie Pawlitz and Jillian Riley.

While attention has been focused on Medicare physician payment data released by CMS yesterday, upcoming Sunshine Act data will shine a new spotlight on financial relationships between physicians and pharmaceutical and medical device companies – with potential FCA implications.

Last week marked the deadline for pharmaceutical and medical device manufacturers and group purchasing organizations (GPOs) to register with and submit aggregate 2013 payment and investment interest data to the Centers for Medicare & Medicaid Services (CMS) on certain financial relationships between themselves and physicians and teaching hospitals, as required by the Physician Payment Sunshine Act.1 In May, manufacturers and GPOs will be required to submit to CMS detailed 2013 payment data. With some exceptions, CMS will be making these data public by September 1, 2014. While the publicly available data are intended to provide more transparency for patients – to allow them to have a better understanding of the financial relationships between physicians and pharmaceutical and medical device companies – patients will certainly not be the only group interested in this public information. The Department of Health and Human Services (HHS) Office of the Inspector General (OIG), Department of Justice (DOJ), and relators’ attorneys will likely utilize these data to initiate investigations and support complaints under the federal False Claims Act (FCA). As with the recent release of the 2012 Medicare Part B Physician Fee Schedule data, members of the media will likely make inferences about certain financial relationships.

The U.S. government recovered $3.8 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2013.2 Fiscal 2014 looks to be a record-breaking year, with ever-increasing civil settlements by major pharmaceutical companies.3

As the reporting deadlines approach, it is worth considering an interesting, and largely unknown, potential implication of the public availability of these data: How will it affect future FCA litigation? The publically available Sunshine Act data could become relevant to FCA litigation in a variety of ways; two in particular are discussed below.

Anti-Kickback Statute Violations

The data could give rise to suspicions of violations of the federal Anti-kickback Statute (AKS). The AKS makes it a criminal offense to knowingly and willfully offer or pay remuneration to induce the referral of, or arrange for the provisions of, federal health care program business.4 In other words, the law prohibits any person or entity from giving, receiving – or offering to give or receive – anything of value in return for or to induce referrals for businesses covered by Medicare, Medicaid, or any other federally funded health care program. Violators of the AKS face imprisonment, criminal, and civil fines, as well as exclusion from federal health care programs.5

It is easy to see how publishing information regarding payments from pharmaceutical and medical device manufacturers to physicians and teaching hospitals could implicate the AKS, and by extension, the FCA. The Patient Protection and Affordable Care Act (ACA) made explicit that violations of the AKS are also violations of the FCA.6 Any payment from a pharmaceutical or medical device manufacturer to a physician who prescribes a product manufactured by the company providing the payment could be viewed as potentially inappropriate remuneration intended to influence prescribing behavior.

Off-Label Promotion

Publically available information reported as a result of the Sunshine Act may also have off-label promotion implications. Notably, reports to CMS must include the name of the drug or the type of device that forms the basis of the payment.7 Tying the payment to a particular drug or type of device could raise suspicions of off-label promotion. A pharmaceutical or medical device manufacturer that promotes its products for uses for which the product has not yet been approved by the United States Food and Drug Administration (FDA), i.e., off-label uses, is at risk of FCA liability. A false claim can arise when a manufacturer promotes a product for off-label, non-covered uses (that is, for a use that both has not been approved by FDA and is not covered by the federal health care programs). Payments going to physicians who specialize in an area that is outside the scope of a pharmaceutical or medical device’s approved indication could necessarily raise suspicions that the manufacturer is promoting the product for unapproved uses.

Potential Limits

Besides the risk of government identifying potential issues for further investigation and prosecution as a result of reported Sunshine Act data, private parties may also mine the publically available data. One substantial impediment to relators’ attorneys using Physician Sunshine Payment data in FCA litigation is the limitation that publicly available data cannot form the basis of a whistleblower claim.8 This is known as the public disclosure bar, although the effectiveness of this defense has been diminished with recent FCA amendments.

That said, the Sunshine Act data, even if not the basis of a claim, could nonetheless impact the litigation in many ways. For example, it could provide additional evidence for the government to review in reaching its decision whether to intervene in a qui tam action. Both OIG and DOJ could review the data before it is publicly available to assist in the determination that a given matter warrants intervention. Additionally, the publicly available data – beyond providing flavor in support of an FCA claim and assisting with meeting the heightened pleading standard associated with fraud allegations9 – could be a potential mine for plaintiff attorneys to locate areas of focus. Relators’ attorneys will no doubt track the data to ascertain potential problem drugs or companies about which they can then dedicate efforts to uncovering fraud and abuse in the federal health care system.

Going Forward

It remains to be seen how all of these risks will play out going forward. Courts will have to decide how these new data will fit into FCA litigation. OIG and DOJ will have to determine how much to rely on the new information. And relators’ attorneys will need to make decisions about how many resources to dedicate to mining the Sunshine Act data.

One potential consequence that we are already starting to see occur is that pharmaceutical and medical device manufacturers may halt or limit payments to physicians, and/or that physicians themselves will be reluctant to accept such payments, e.g., for research, for expenses associated with training on a device, and the like. Companies may decide to do so for a variety of reasons, including avoiding the administrative burdens associated with tracking and reporting such payments for purposes of the Sunshine Act, fear of FCA litigation, or for public relations reasons. Many physicians simply do not want their names publicized. It remains to be seen how these trends will evolve.
 

1 42 C.F.R. § 403.908(a).
2 DOJ Press Release, available at: http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html. 3 See, e.g., DOJ Press Release, available at: http://www.justice.gov/opa/pr/2013/November/13-ag-1170.html.
4 42 U.S.C. § 1320a-7.
5 Id.
6 42 U.S.C. § 1320a-7b(g). Note that manufacturers may submit “assumptions documents” as part of Sunshine reporting. Although CMS stated in the preamble to the Sunshine regulations its belief that the contents of such documents “should not be made public,” it acknowledged that it could provide access to the documents during an audit or investigation by other HHS divisions, the Office of Inspector General, or the Department of Justice.
7 42 C.F.R. 403.94(c)(8).
8 31 U.S.C. § 3730(e)(4).
9 Fed. R. Civ. P. Rule 9(b).

CMS Seeking Comments on Supervision Levels for Select Hospital Outpatient Services

CMS has released its preliminary decisions on potential changes to outpatient supervision level requirements for a number of medical services in response to recommendations made last month by the Hospital Outpatient Payment (HOP) Panel. Notably, CMS proposes not to change the supervision level from direct to general for several codes describing injection and intravenous infusion of chemotherapy or other highly complex drugs or complex biological agents. While CMS is proposing to maintain the direct supervision standard for chemotherapy administration, the agency is raising the question of whether to distinguish the supervision level between initial and subsequent administrations of a given chemotherapeutic or biological agent. CMS will accept comments on the preliminary supervision level determinations until April 30, 2014, and final decisions will be effective on July 1, 2014.

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.

Drug Companies are Reminded - FDA is Following Facebook

Our Life Sciences Legal Update blog reports today that the FDA’s Office of Prescription Drug Promotion has warned a Swiss drug company about statements the company made on its Facebook page, suggesting that consumers talk to their doctor about a drug without disclosing the risks associated with the product (risks serious enough to require a boxed warning on the label). The FDA action is a reminder that that FDA’s advertising and promotion rules apply regardless of how or where the product is promoted, and the FDA is monitoring social media sites for such activities. For more information, see the full post.

Obama Administration Proposes FY 2015 Budget with Medicare, Medicaid Savings Provisions

On March 4, 2014, the Obama Administration released its proposed federal budget for fiscal year (FY) 2015. Virtually all types of health care providers, health plans, and drug manufacturers would be impacted by the budget provisions if adopted as proposed – an unlikely scenario given the Republican House leadership’s reaction to the document. Nevertheless, the Medicare and Medicaid savings proposals (many of which are carry-overs from prior budgets) could resurface as spending offsets in the pending negotiations on Medicare physician fee schedule reform legislation or in future budget negotiations. Highlights of the Administration’s Medicare and Medicaid legislative proposals include the following (all savings estimates are for the 10-year period of FYs 2015-2024):

Major Medicare Provider Payment Provisions

The proposed FY 2015 budget includes a package of Medicare legislative proposals estimated to save $407.2 billion over 10 years.

  • Reduce Medicare coverage of bad debts from 65% in most cases to 25% over three years starting in 2015 ($30.8 billion/10 years).
  • Reduce Medicare indirect medical education add-on payments by $14.6 billion (although a new targeted grant program would reinvest $5.2 billion of these savings).
  • Reduce critical access hospital (CAH) reimbursement to 100% of costs ($1.7 billion) and limit CAH designation eligibility for hospitals within 10 miles of another hospital ($720 million).
  • Reduce payment updates for inpatient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs), skilled nursing facilities (SNFs), and home health agencies (HHAs) by 1.1 percentage points each year from 2015 through 2024 (the update could not fall below 0%). The SNF reduction would be accelerated, beginning with a -2.5% update in FY 2015, tapering down to a -0.97% update in FY 2022. These provisions would save $97.9 billion over 10 years.
  • Implement bundled payment for post-acute care providers, including LTCHs, IRFs, SNFs, and HHAs beginning in 2019, with rates set to produce a permanent and total cumulative adjustment of 2.85% by 2021, and beneficiary coinsurance equal to current levels ($8.7 billion).
  • Adjust the standard for classifying a facility as an IRF (at least 75% of patient cases admitted to an IRF must meet one or more of 13 designated conditions), saving $2.4 billion.
  • Reduce by up to 3% payments to SNFs with high rates of care-sensitive, preventable hospital readmissions, beginning in 2018 ($1.9 billion).
  • Equalize IRF and SNF payments for certain conditions involving hips and knees, pulmonary conditions, and other conditions selected by the Secretary ($1.6 billion).
  • Implement a budget neutral value-based purchasing program for additional provider types, including SNFs, HHAs, ambulatory surgical centers, and hospital outpatient departments beginning in 2016. At least 2% of payments must be tied to the quality and efficiency of care.
  • Align Medicare payment for clinical laboratory services with private sector rates and encourage electronic reporting of laboratory results ($7.9 billion).
  • Strengthen the Independent Payment Advisory Board (IPAB) by reducing the target rate of Medicare cost growth from gross domestic product plus one percentage point to plus 0.5 percentage point, which would make it easier to trigger ACA provisions requiring reductions to Medicare provider reimbursement ($12.9 billion).
  • The budget endorses reform of the sustainable growth rate formula used to update Medicare physician fee schedule payments, including a period of predictable payments followed by reimbursement tied to alternative payment models and value-based purchasing, along the lines of pending Congressional reform legislation.

Prescription Drug Provisions

  • Reduce payment for physician-administered Medicare Part B drugs from 106% to 103% of average sales price (ASP). If a physician’s cost for purchasing the drug exceeds 103% of ASP, the drug manufacturer would be required to provide a rebate to ensure that the provider’s net cost to acquire the drug equals 103% of ASP minus an overhead fee to be determined by the Secretary. The Secretary would be authorized to pay a portion of the entire amount above ASP as a flat fee rather than a percentage in a budget-neutral manner. This proposal is estimated to result in $6.8 billion in savings.
  • Provide Medicaid-level drug rebates for brand name and generic drugs provided to Medicare beneficiaries who receive Part D low-income subsidies, beginning in 2016 ($117.3 billion).
  • Effectively close the Medicare Part D coverage gap by 2016, rather than 2020, by increasing manufacturer “coverage gap” discounts from 50% to 75% beginning in plan year 2016 ($7.9 billion).
  • Allow the Secretary to suspend coverage and payment for Part D drugs (1) prescribed by providers who have misprescribed or overprescribed drugs with abuse potential, and (2) that pose an imminent risk to patients. The Secretary also could require additional information on certain Part D prescriptions, such as diagnosis and incident codes, as a condition of coverage.
  • Encourage the use of generic drugs by Part D low-income subsidy beneficiaries by modifying copayments ($8.5 billion).
  • Lower Medicaid drug costs by clarifying the definition of brand drugs, collecting an additional rebate for generic drugs when prices grow faster than inflation, and including certain prenatal vitamins and fluorides in the rebate program. The plan also would make a technical correction to the Affordable Care Act (ACA) alternative rebate for new drug formulations, limit to 12 quarters the timeframe for which manufacturers can dispute drug rebate amounts, exclude authorized generic drugs from average manufacturer price calculations for determining rebate obligations for brand drugs, and calculate Medicaid federal upper limits based only on generic drug prices. These proposals are projected to save $8.6 billion over 10 years.
  • Direct states to track high prescribers and utilizers of Medicaid prescription drugs ($540 million).
  • Require manufacturers to pay Medicaid rebate equal to the entire amount that the state has paid for the drugs in cases where the state improperly reported non-drug products as covered outpatient drugs, or where the state improperly reported drugs that the Food and Drug Administration (FDA) has found to be less than effective. In addition, the budget would allow more regular audits and surveys of manufacturers to ensure compliance with Medicaid drug rebate agreement requirements; require drugs to be electronically listed with the FDA to receive Medicaid coverage; and increase penalties for reporting false information for the calculation of Medicaid rebates.
  • Increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission (FTC) to stop companies from entering into “pay for delay” agreements ($9.1 billion) and modifying the length of exclusivity on brand name biologics ($4 billion).

Major Program Integrity/Efficiency Provisions

  • Expand funding for the Health Care Fraud and Abuse Control (HCFAC) program, the Medicaid Integrity Program, and Medicaid Fraud Control Units, and other Department of Health and Human Services (HHS) program integrity efforts.
  • Expand the current authority to exclude individuals and entities from federal health programs if they are affiliated with a sanctioned entity by closing a “loophole” that allows an officer, managing employee, or owner of a sanctioned entity to avoid exclusion by resigning his or her position or divesting his or her ownership; and extending the exclusion authority to entities affiliated with a sanctioned entity ($60 million in savings).
  • Authorize civil monetary penalties or other intermediate sanctions for providers who do not update enrollment records ($90 million).
  • Expand authority to investigate and prosecute allegations of abuse or neglect of Medicaid beneficiaries in non-institutional settings.
  • Exclude radiation therapy, therapy services, advanced imaging, and anatomic pathology services from the in-office ancillary services exception to the prohibition against physician self-referrals (Stark law), except in cases where a practice meets certain accountability standards, as defined by the Secretary effective for calendar year 2016 ($6 billion).
  • Expand the authority of the Centers for Medicare & Medicaid Services (CMS) to require prior authorization for all Medicare fee-for-service items, and mandate prior authorization of advance imaging services and power mobility devices ($90 million).
  • Allow the Secretary to create a system to validate practitioners’ orders for certain high-risk items and services.
  • Increase reporting and review of so-called “higher-risk” banking arrangements to receive Medicare payments (such as “sweep accounts” that immediately transfer funds from a financial account to an investment account in another jurisdiction, preventing Medicare from recovering improper payments).

Other Medicare & Medicaid Provisions

  • Increase the minimum Medicare Advantage (MA) coding intensity adjustment ($31 billion).
  • Modify documentation requirement for face-to-face encounters for durable medical equipment (DME), orthotics, prosthetics, and supplies (DMEPOS) to allow certain non-physician practitioners to document the face-to-face encounter.
  • Revise beneficiary cost-sharing requirements, including increased income-related premiums under Parts B and D, a new home health copayment, increased Part B deductible for new enrollees, and increased premiums for beneficiaries with Medigap policies with particularly low cost-sharing requirements.
  • Base Medicaid rates for DME on Medicare rates ($3.1 billion).
  • Rebase future Medicaid Disproportionate Share Hospital (DSH) allotments to account for levels of uncompensated care under ACA coverage expansion ($3.3 billion).

Older Entries

February 24, 2014 — FDA to Overhaul an OTC System That "Isn't Working"

February 24, 2014 — Coming to a TV Near You? FDA Seeks Public Input on Limiting Risks Presented in Direct-to-Consumer Television Ads

February 13, 2014 — House Panel, GAO Examine Drug Shortages

January 30, 2014 — Omnibus Government Spending Signed to Fund HHS, Other Departments

January 30, 2014 — CMS Call on Partnership to Improve Dementia Care in Nursing Homes (Feb. 26)

January 28, 2014 — FDA Provides Direction on "Dear Doctor" Letters

January 20, 2014 — FDA Seeks Comments on Drug Company Social Media Guidance

January 8, 2014 — CMS Proposes Updates to Medicare Advantage/Part D Policies for 2015

January 7, 2014 — FDA Releases Final Guidance on Qualification Process for Drug Development Tools

January 7, 2014 — DOJ Touts $3.8 Billion in FY 2013 False Claims Act Recoveries

December 10, 2013 — CMS Issues Final Medicare OPPS, ASC Policies for 2014

December 10, 2013 — CMS Finalizes 2014 ESRD PPS Rates; Phases in ESRD Drug Utilization Cut

December 10, 2013 — Drug Distribution Security Legislation Signed into Law

November 11, 2013 — CMS Update on Medicare IVIG Demonstration (Nov. 22)

October 30, 2013 — CMS Call on Dementia Care in Nursing Homes (Nov. 25)

October 8, 2013 — HHS OCR Releases HIPAA Privacy Rule Guidance Documents

September 17, 2013 — HHS Seeks Comments on Draft National Action Plan for Adverse Drug Event Prevention

August 2, 2013 — FDA Proposes New Rule to Exercise its Administrative Detention Authority for Drugs

August 2, 2013 — New Draft Guidances from FDA Address Expedited Review, Safety Labeling and More

July 29, 2013 — CMS Issues Proposed OPPS, ASC Policies for 2014, Including Expanded OPPS Packaging Proposal

July 29, 2013 — CMS Proposed Rule Calls for 9.4% Cut in CY 2014 ESRD PPS Rates

July 29, 2013 — July Health Policy Hearings

July 29, 2013 — In Advance of Sunshine Act Reporting, CMS Releases Physician & Industry Resources

June 27, 2013 — Health Policy Hearings

June 25, 2013 — CMS Call on Improving Dementia Care in Nursing Homes (July 10)

June 20, 2013 — FDA Amends Orphan Drug Regulations

June 11, 2013 — OIG Recommends Changes to Medicare Dialysis Payments to Reflect Lower Drug Utilization

May 28, 2013 — FDA Issues New Draft Guidance Documents on Access to Investigational Drugs

May 28, 2013 — OIG Report Examines High-Risk Compounded Sterile Preparations

May 10, 2013 — Congressional Health Policy Hearings & Markups

May 8, 2013 — Updated Draft Medicaid Federal Upper Limit (FUL) Files Posted

April 24, 2013 — Lawmakers Float Draft Drug Distribution Security Plan; Comment Opportunity

April 15, 2013 — CMS Letter to Issuers on Federally-Facilitated and State Partnership Exchanges

March 13, 2013 — CMS Plans to Include DME Infusion Drugs in Competitive Bidding in Response to OIG Findings

March 12, 2013 — FDA Issues New Guidance Documents

February 18, 2013 — CMS Proposes Medicare Advantage, Part D Drug Plan Medical Loss Ratio Rule and Advance 2014 Rate Information

February 18, 2013 — CMS Announces Dates for 2013 HCPCS Public Meetings

February 1, 2013 — CMS Releases Physician Payments Sunshine Act Final Rule

January 30, 2013 — CMS Proposes Changes to Medicaid Eligibility, Benefits, and Appeals Rules

January 29, 2013 — FDA Issues Final Rule on Current Good Manufacturing Practice Requirements for Combination Products

January 29, 2013 — FDA Announces 2013 Generic Drug Active Pharmaceutical Ingredient and Finished Dosage Form Facility User Fee Rates

January 29, 2013 — New FDA Draft Guidance Addresses Combination Product Postapproval Modification Submissions

January 14, 2013 — Obama Administration's Regulatory Agenda Points to Busy 2013 for HHS

January 14, 2013 — CMS Call to Focus on Improving Dementia Care in Nursing Homes (Jan. 31)

January 11, 2013 — New Law Establishes IVIG Demonstration/Makes MSP Policy Revisions

January 11, 2013 — CMS Releases Updated Draft Medicaid FUL Files

January 11, 2013 — D.C. Circuit Decision Upholding DOD Rule May Leave Drug Manufacturers on the Hook for Refunds

January 11, 2013 — FDA Issues Final Guidance Documents on Drug and Medical Device Submissions

January 11, 2013 — FDA Releases Draft Guidance Documents on Providing Submissions in Electronic Format

December 20, 2012 — IRS Issues Notice on ACA Branded Prescription Drug Fee Parameters for 2013

December 19, 2012 — GAO Examines Medicare Dialysis Reimbursement

December 18, 2012 — FDA Issues Two New Draft Guidance Documents Related to the Conduct of Clinical Trials

December 17, 2012 — OIG Releases 2012 Compendium of Unimplemented Recommendations

November 28, 2012 — Upcoming FDA Public Meeting: Framework for Pharmacy Compounding/State and Federal Roles (Dec. 19)

November 28, 2012 — CMS Posts Information on Medicaid Data and the ACA Branded Prescription Drug Fee Program

November 27, 2012 — Massachusetts Issues Final Drug/Device "Sunshine" Rules

November 12, 2012 — November Congressional Health Policy Hearings

November 5, 2012 — Massachusetts Approves Emergency Amendments on State "Sunshine Act" Drug/Device Manufacturer Reporting Requirements

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

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

September 27, 2012 — State Collection of Medicaid Rebates for Drugs Paid Through Medicaid MCOs

September 27, 2012 — FDA Meetings on Patient-Focused Drug Development Initiative

September 6, 2012 — Vermont Offers Limited Amnesty to Device and Biologic Manufacturers who Failed to Report Payments to Health Care Providers

September 5, 2012 — FDA Establishes FY 2013 User Fee Rates for Biosimilars and Prescription Drugs

August 16, 2012 — IRS Schedules Nov. 9, 2012 Hearing on ACA Branded Prescription Drug Fee

July 31, 2012 — Congressional Health Policy Hearings

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

July 18, 2012 — OIG Examines Medicare Part D Drug Payments for Hospice Beneficiaries

July 18, 2012 — OIG Reviews Nursing Facility Compliance with Rules for Residents Receiving Atypical Antipsychotic Drugs

July 17, 2012 — Massachusetts Loosens Drug/Device Manufacturer Gift Ban and Disclosure Law, Allows Certain Drug Coupons and Vouchers

July 16, 2012 — FDA Small Entity Compliance Guidance: Toll Free Number Labeling for Drugs

July 16, 2012 — FDA Draft Guidances Describe Product-Specific Bioequivalence Recommendations

July 16, 2012 — FDA Guidance Addresses Genotoxicity Testing and Data Interpretation for Human Drugs

June 28, 2012 — Congress Clears FDA Safety & Innovation Act

June 27, 2012 — Health IT Pilot Targets Prescription Drug Abuse

June 27, 2012 — House Approves Medical Product Counterfeiting Act

June 27, 2012 — GAO Examines HHS Action on Privacy and Security of Prescription Drug Data

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

June 18, 2012 — House Panel Clears Legislation to Address Medical Product Theft, Counterfeiting

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

May 30, 2012 — CMS Partnership Seeks to Improve Dementia Care In Nursing Homes

May 14, 2012 — Congressional Health Policy Hearings

May 11, 2012 — House Panel Unanimously Approves FDA User Fee Act

May 11, 2012 — FDA Reports on Post-Approval Drug Safety Monitoring

May 11, 2012 — International Collaboration Highlighted in FDA Global Engagement Report

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

May 4, 2012 — CMS Announces Data Collection for the Physician Payments Sunshine Act Will Not Be Required Before 2013

April 23, 2012 — HHS Requests Input on Medication Non-Adherence

April 23, 2012 — HHS Issues its Open Government Plan Version 2.0

April 2, 2012 — OIG Release Report from Pharmaceutical Compliance Roundtable

March 30, 2012 — FDA Announces Delayed Enforcement of ACA Drug Sample Distribution Reporting Requirement

March 30, 2012 — Updated Draft Medicaid Drug Payment FUL Files Posted

March 29, 2012 — Congressional Health Policy Hearings

March 29, 2012 — Draft FDA Guidance Targets Direct-to-Consumer Television Marketing

March 14, 2012 — 340B Enforcement Activities.

March 14, 2012 — Senate Approves Bill to Increase Counterfeit Drug Penalties

March 14, 2012 — Congressional Hearings on Drug Issues.

March 14, 2012 — GAO Reviews Research on Generic Drug Savings

February 24, 2012 — CMS Posts Draft FUL Files for November 2011

February 24, 2012 — CMS 2012 Public Meetings on HCPCS Applications