Is HHS Secretary too high for Price?

The presumptive nomination of Rep. Tom Price (R-Ga) to lead HHS as the agency’s Secretary was considered on January 18, 2017, by the Senate Committee on Health, Education, Labor and Pensions. The committee’s chair, Lamar Alexander (R-Tenn), praised the nomination of Price, calling him an “excellent nominee” and highlighting how he will “build a better bridge” to repeal and replace the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The top Democrat in the committee, Senator Patty Murray (D-Wash) questioned Price on policy, conflicts of interest, and past statements, including one suggesting cost is not an issue for women buying birth control.

Opening statement

In his opening statement, Price talked about his passion for medicine, experience as a physician, and fascination with “fixing things.” He pointed to problems in the health care industry, recalling the point when he noticed “more individuals within our office who were dealing with paperwork, insurance filings, and government regulations than there were individuals actually seeing and treating patients.” He highlighted his goal of returning the focus of health care to the patient.

ACA

Price also noted his belief that the ACA should be repealed and replaced simultaneously and concurrently—a position that is consistent with the most recent stances of President-elect Trump (R) and House Speaker Paul Ryan (R-Wis). Price and Alexander both expressed a desire to avoid a “quick-fix” and to, instead, develop health care reform “that’s done in the right way, for the right reasons, in the right amount of time.”

Critique

Murray challenged Price’s qualifications and positions, including Price’s prior opposition to allowing Medicare to negotiate drug prices and plans to shift $1 trillion in Medicaid costs onto states. Additionally, Murray suggested that Price did not meet a basic, necessary qualification to lead HHS, namely the ability to put science before ideology. Finally, Murray condemned the Senate’s decision to move forward with Price’s confirmation hearings amidst an ongoing investigation into Price’s allegedly unethical medical stock trades during his time in the House.

Highlight on Virginia: Medicaid agency fails to collect $2.9M in drug rebates

For a covered outpatient drug to be eligible for federal reimbursement under the Medicaid program’s drug rebate requirements, manufacturers must pay rebates to the states. States bill the manufacturers for the rebates to reduce the cost of the drugs to the program. Previous HHS Office of Inspector General (OIG) reviews found that states did not always bill and collect all rebates due for drugs administered by physicians to enrollees of Medicaid managed-care organizations (MCOs).

An OIG review of Virginia’s Department of Medical Assistance Services, Division of Health Care Services (Virginia), from January through December 2013, found that Virginia did not bill manufacturers for some rebates for physician-administered drugs dispensed to enrollees of Medicaid MCOs. As a result, it failed to collect an estimated $2.9 million (federal share) in rebates.

Virginia uses a contractor to manage its drug rebate program. According to the OIG audit, in calendar year 2013, Virginia paid MCOs $2,411,629,093 ($1,238,462,930 federal share), which included expenditures for physician-administered drugs.

The OIG found that Virginia properly billed manufacturers for rebates for drugs associated with the National Drug Codes (NDCs) in its audit sample. However, Virginia did not have valid NDCs for other drug utilization data submitted by MCOs for physician-administered drugs, and it did not bill manufacturers for rebates for these drugs. Virginia estimated average rebates per claim billed to manufacturers, and the OIG determined these estimates to be reasonable. The OIG applied the estimates and determined that Virginia did not bill rebates of $5,831,528 ($2,915,764 federal share) to manufacturers for physician-administered drug utilization without valid NDCs.

The OIG concluded that Virginia did not bill manufacturers for rebates for these drugs because the MCOs submitted utilization data to Virginia with a blank NDC field or an invalid NDC. Although Virginia required MCOs to submit valid NDCs for all physician-administered drug utilization, Virginia did not implement edits in its Medicaid Management Information System to ensure that MCOs submitted valid NDCs. As a result, Virginia did not obtain rebates for these drugs.

The OIG recommended that Virginia: (1) work with CMS to resolve the drug utilization data without valid NDCs by determining the correct NDCs, billing manufacturers for the estimated $5,831,528 ($2,915,764 federal share) in rebates, and refunding the Federal share of rebates collected; (2) implement Medicaid Management Information System edits to verify that NDCs are present and valid in all drug utilization data; and (3) ensure that MCOs submit drug utilization data containing NDCs for all physician-administered drugs.

Virginia concurred with the OIG’s findings and plans to take corrective actions.

 

Biosimilar dispute headed to the Supreme Court

Biosimilar manufacturers will soon have a definitive answer on the timing of giving notice of commercial marketing, thanks to the Supreme Court. On January 13, 2017, the Court granted and consolidated Sandoz, Inc.’s petition for writ of certiorari and Amgen, Inc.’s conditional cross-petition for writ of certiorari. The dispute appeals the Federal Circuit’s July 21, 2015 decision holding that Amgen was entitled to an additional 180-day marketing exclusivity period because of Sandoz’s late notification of its intention to market a biologic product that is biosimilar to Amgen’s Neupogen® (see Court interprets biosimilar ‘enigma’ in favor of abbreviated biologic license applicant, Health Law Daily, July 22, 2015).

The Court also granted Apotex, Inc.’s motion for leave to file a brief as amici curiae; Apotex was involved in a similar dispute with Amgen (see Biosimilar applicant must give 180-day post-licensure notice to reference sponsor, Health Law Daily, July 6, 2016), though the Court denied Apotex’s petition for writ of certiorari earlier this term (see SCOTUS denies cert in biosimilar licensing dispute, Health Law Daily, December 12, 2016).

The Biologics Price Competition and Innovation Act (BPCIA), which was passed in 2010 as sections 7001-7003 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), created an abbreviated pathway for FDA approval of a “biosimilar” biologic product. Amgen originally brought suit against Sandoz in federal court asserting various violations of Amgen’s approved license for its cancer-fighting biologic Neupogen (filgrastim) and infringement of Amgen’s patent for a particular method of using filgrastim. The Court will be hearing arguments relating to Sandoz’s question regarding the 180-day notice of commercial marketing and Amgen’s cross-petition on the optionality of a process to settle patent disputes known as the “patent dance” (see Shall we dance? Biosimilars step toward new legal and regulatory future, Health Law Daily, March 31, 2016).

Makeup of the Court

Since the February 13, 2016, death of Justice Antonin Scalia, there have been eight Justices sitting on the Court. President Barack Obama’s nominee to replace Scalia, D.C. Court of Appeals Chief Judge Merrick Garland, was not considered by the Senate; President-elect Donald Trump plans to nominate a successor early into his term. In order to receive a vote in cases pending before the Court, a Justice must be seated on both the day of the oral argument and the day the written decision is released. Trump’s nominee will only be part of the decision if he or she is confirmed and duly sworn in before the oral arguments, which are not yet scheduled.

Value-based payments and EHRs expected to continue trajectory during reform

Despite the uncertainty surrounding health care reform under the upcoming Trump administration, health law experts project that the transition to value-based payments and further development of electronic health record (EHR) systems will be a constant in the coming years. Four of Avalere Health’s senior vice presidents offered their opinions during the 2017 Healthcare Industry Outlook webinar, making educated guesses about what upcoming changes the industry may see.

What will change?

The webinar started with the topic on everyone’s mind: what will happen to the Patient Protection and Affordable Care Act (ACA)? Broadly, the presenters expect that federal spending on health care will be capped and states will be granted more flexibility in designing their Medicaid programs. Reduction of regulations to encourage the private sector to provide a range of products in a competitive market is also to be expected.

The likelihood of repeal was discussed for several different ACA sections. The most likely to be repealed were the individual and employer mandates, subsidies, industry taxes, Medicare tax for high earners, and cuts to disproportionate share hospitals. Certain reforms, like protection for pre-existing coverage, drug related provisions, and changes to Medicare Advantage and Medicaid payment provisions are considered likely to remain. Subjects likely to be up for serious debate are Medicaid expansion, the Center for Medicare & Medicaid Innovation (CMMI), essential health benefits, and the preventive services coverage requirement.

Other areas

The focus on quality and value in health care is not expected to waver during the new administration. In light of significant regulatory and policy barriers, providers are unable to establish outcome-based contracts and create more innovative payment arrangements. More flexibility in the ability to establish and agree on value between parties is expected to be a policy pressure point.

The value discussion typically focuses on provider performance, but the presenters noted that drugs are an important value consideration, especially in light of rising costs. The traditional approach to determining drug value is expected to evolve, as frameworks had previously been established based on clinical benefit, toxicity, and product cost, which ignored patient considerations and relied too much on data from limited populations. In addition to incorporating more real world data, drug value frameworks have begun to focus on not only on health outcomes, but patient experiences and financial considerations during treatment.

Although “virtually every hospital” is using some sort of EHR system, interoperability continues to be a sticking point. In the near future, the ability to more effectively use, share, and interact with data is expected to improve. Continued advancements in studying data is also expected to change the way providers practice, including big advances in population health.