Late Night Budget Bill Contains Provisions of Interest to Big Pharma

The changes set forth in the Act impacts the Medicare Coverage Gap Discount Program (CGDP), provides for sponsors of prescription drug plans to receive certain claims data from Medicare, and directs the Government Accountability Office to conduct studies on prescription drugs used to treat obesity as well as the use and impact of  medication synchronization programs. 

Significant Changes to the Medicare Coverage Gap Discount Program

The Affordable Care Act created the CGDP. Under this Program, pharmaceutical manufacturers enter into agreements with the Secretary of the Department of Health and Human Services (the Secretary) and provide a fifty percent discount on the negotiated price of eligible drugs to Medicare Part D plans. Drugs eligible for the discount must be single source drugs, innovator multiple-source drugs, or biologic products (Branded Drugs) that are on the formulary or otherwise provided through an exception or appeal under the beneficiary’s plan. The discount applies to Branded Drugs dispensed to non-low income Medicare Part D beneficiaries who are in the coverage gap phase (often referred to as the ‘donut hole’) of their Part D benefit.

Medicare Part D beneficiaries will see their cost sharing responsibility for drugs decrease to 25 percent in 2019, which is a year earlier than the decrease set forth in the original legislation implementing the CGDP. The CGDP discount on Branded Drugs increases from a 50 to 70 percent discount off the negotiated price starting in 2019 under the Act. The current discount of 50 percent is already a significant concession from Branded Drug manufacturers; monitoring the behavior of drug manufacturers who participate in the program going forward will reveal just how significant the newly mandated discount is to industry engagement.  

Also beginning in 2019, manufacturers of biosimilars must participate in the CGDP and offer a 70 percent discount on biosimilars in order for Medicare Part D plans to cover their drugs (absent a CMS exception).

Provision of Medicare Parts A and B Claims Data to PDPs

In an effort to promote care coordination (and possibly potential financial savings to the Medicare program), the Act directs the Secretary to establish a mechanism through which a prescription drug plan (PDP) sponsor of a stand-alone prescription drug plan can request “standardized extracts” of Medicare Part A and B claims data. The PDP may use the data it receives to “optimize therapeutic outcomes through improved medication use,” improve “care coordination to prevent adverse health outcomes such as preventable emergency department visits and hospital readmissions,” and for any other purpose specified by the Secretary. The Plans may not, however, use the claims data to inform coverage determinations, to facilitate enrollment changes, for marketing of benefits, or to conduct retroactive reviews of medically accepted indication determinations.

New Reports Commissioned of the Government Accountability Office (GAO) Related to Drugs

The Act directs the GAO to conduct studies and report on the following:

• “[T]he extent to which Medicare prescription drug plans (MA–PDPs) plans and stand-alone prescription drug plans)…and private payors use programs that synchronize pharmacy dispensing so that individuals may receive multiple prescriptions on the same day to facilitate comprehensive counseling and promote medication adherence.” As described in the Act, the report must analyze:
  • The extent to which pharmacies have adopted such programs;
  • Common program characteristics, including how pharmacies structure counseling sessions and the types of payment and other arrangements that Medicare prescription drug plans and private payors employ to support the efforts of pharmacies;
  • What is known about how synchronization programs affect patient medication adherence and overall patient health outcomes, including if adherence and outcomes vary by patient subpopulations, such as disease state and socioeconomic status;
  • What is known about overall patient satisfaction with such programs and satisfaction with such programs, including within patient subpopulations, such as disease state and socioeconomic status;
  • The extent to which laws and regulations of the Medicare program support such programs; and
  • Barriers to the use of medication synchronization programs by Medicare prescription drug plans.
• “[T]he use of prescription drugs to manage the weight of obese patients and the impact of coverage of such drugs on patient health and on health care spending.” The study will specifically examine “the use and impact of obesity drugs in the non-Medicare population and for Medicare beneficiaries who have such drugs covered through an MA–PD plan as a supplemental health care benefit.” The report commissioned under the Act needs to analyze:
  • The prevalence of obesity in the Medicare and non-Medicare population;
  • The utilization of obesity drugs;
  • The distribution of Body Mass Index by individuals taking obesity drugs, to the extent practicable;
  • What is known about the use of obesity drugs in conjunction with the receipt of other items or services, such as behavioral counseling, and how these compare to items and services received by obese individuals who do not take obesity drugs;
  • Physician considerations and attitudes related to prescribing obesity drugs;
  • The extent to which coverage policies cease or limit coverage for individuals who fail to receive clinical benefit;
  • What is known about the extent to which individuals who take obesity drugs adhere to the prescribed regimen;
  • What is known about the extent to which individuals who take obesity drugs maintain weight loss over time;
  • What is known about the subsequent impact such drugs have on medical services that are directly related to obesity, including with respect to subpopulations determined based on the extent of obesity; and
  • What is known about the spending associated with the care of individuals who take obesity drugs, compared to the spending associated with the care of individuals who do not take such drugs.

Although not imposing any new requirements on pharmacies, payors, manufacturers, or MA-PDPs, the commission of the GAO reports as provided in the Act may signal that the Department of Health and Human Services is contemplating a policy change or shift, as well as highlighting issues related to care coordination and the impact that the obesity epidemic is having on federal health care programs.