MANAGED CARE NEWSSTAND

Energy and Commerce Committee Advances Healthcare Legislation Related to Competition, Transparency, and Access to Care

The Energy and Commerce Committee recently advanced legislation focused on competition, transparency, and access to care in the healthcare industry. These include the following:

HR 2666: Medicaid VBPs for Patients (MVP) Act. Would amend Title XIX of the Social Security Act to codify value-based purchasing (VBP) agreements under the Medicaid program and legislate reforms related to price reporting under such arrangements.

HR 3284: Providers and Payers COMPETE Act. Would require the Department of Health and Human Services (HHS) Secretary to submit an annual report on the impact of certain Medicare regulations on provider and payer consolidation.

HR 3290: Fairness for Patient Medication Act. Would amend Title III of the Public Health Service Act to ensure transparency and oversight of the 340B Drug Discount Program.

HR 3561: Promoting Access to Treatments and Increasing Extremely Needed Transparency (PATIENT) Act of 2023. Was considered in the markup as a package of bipartisan bills that would increase price and ownership transparency for hospitals, laboratories, and insurers; reduce healthcare costs; and strengthen the health workforce. Relevant provisions include:

• Price transparency requirements, including for pharmacy benefit managers (PBMs). Specifically, the act incorporates a variation of the deferred prescription drug reporting requirements from the Transparency in Coverage regulations. Issuers would be required to report the average amount paid to each participating pharmacy for each National Drug Code (NDC), net of rebates, discounts, and price concessions. These changes would help to prevent tacit collusion, a practice whereby pharmacies and pharmaceutical companies could see each other’s prices and therefore feel free not to offer price concessions less than their competitors, increasing prices over time.

• Mandatory reporting with respect to certain health-related ownership information under Medicare Part C and Part D. This would require new reporting from Medicare (MA) plans on utilization, payment amounts to providers, diagnoses for risk adjustment, and other data, separated by whether the MA plan has a common ownership interest with the provider. It would also require Part D plans to report on payment rates and DIR to pharmacies, separated by whether the plan has a common ownership with the pharmacy. PBMs in a common ownership arrangement with a Part D plan would have separate reporting requirements regarding rebates, fees, and administrative costs for that plan and other Part D clients. This would also include certain public disclosure requirements related to reported data and additional requirements regarding Medicare-reported encounter data.

• Oversight of PBM services by plans through certain required disclosures and audit rights. The act incorporates the PBM Accountability Act, which requires PBMs and issuers to report substantial information to plan sponsors on prescription drug use, pricing, and rebates in the commercial market. Specifically, four reports are required:

1. Summary report of gross spending on prescription drugs, total rebates and renumeration, total net spending on prescription drugs, amounts paid to brokers, and gross manufacturer copayment assistance for all beneficiaries in the plan.

2. A report for every individual drug, at the NDC level, of utilization (by beneficiary, fill, and unit count), dispensing channel, unit cost, and beneficiary out-of-pocket spending.

3. For drugs with gross spending above $10,000, a list of all other drugs in the same therapeutic class, and the rationale for formulary placement of the drug.

4. A report for each therapeutic class detailing gross spending, utilization, formulary management, and outof-pocket spending, with additional reporting for therapeutic classes with three or more drugs, including total rebates and other remuneration in the class and net spending in the class.

• Cost-sharing limits on highly rebated drugs. Incorporated by amendment and slightly modified from prior versions, this requires that for all drugs with annual rebates greater than 50% of annual gross spending in the prior year across all plans (as reported under RxDC), plans are prohibited from charging cost-sharing, including deductible payments, that exceed the previous annual net price after rebates for that specific plan, adjusted by the volume dispensed. For highly rebated drugs (across all plans) that were not covered by a particular plan’s formulary in the previous year (excluded), the plan may not negotiate any rebate from the manufacturer unless the rebate is reflected at the point of sale.

• Increased transparency in generic drug applications.

• Measures to improve transparency through requiring pass-through and to prohibit spread-pricing for payment arrangements with PBMs in Medicaid.

CMS Proposes Medicaid Prescription Drug Transparency Rule

On May 23, CMS released a proposed rule, “Medicaid Program: Misclassification of Drugs, Program Administration, and Program Integrity Updates Under the Medicaid Drug Rebate Program.” The proposed regulation would give CMS and states additional tools, such as drug price verification surveys, that would result in greater transparency into manufacturers’ drug prices. CMS also proposes to ban spread pricing by requiring that contracts between states, Medicaid managed care plans, and third-party contractors such as PBMs reflect transparent reporting of drug payment information among third-party contractors.

According to CMS, this proposal will help ensure that taxpayer dollars are actually paying for drugs and not increased profits. The proposed rule includes provisions to ensure that states would receive the rebates to which they are entitled, since states receive a higher percentage of rebate dollars for brand-name drugs compared to generics. CMS proposes steps to further drive down prescription drug costs in Medicaid and build on the Medicare drug price negotiation provisions in the Inflation Reduction Act of 2022 and President Biden’s executive order to lower prescription drug costs for Americans.

FTC Expands Investigations of PBMs

On June 8, the Federal Trade Commission announced as part of its ongoing study on PBMs and their impact on prescription drug prices and access that it had issued a compulsory order to a third group purchasing organization (GPO) that negotiates drug rebates on behalf of PBMs. To date, the agency has sent orders to three GPOs: Emisar Pharma Services, Zinc Health Services, and Ascent Health Services, requiring them to provide information and records pertaining to their business practices.