All branches and levels of government within the United States are focused on drug pricing issues. U.S. Congressional leaders, for example, have proposed reforms that would allow Medicare to negotiate drug prices and constrain drug price increases. State lawmakers have considered ballot initiatives and legislation to cap the amounts drug manufactures can charge to public payers and require drug manufacturers to provide advance notice and justification of price increases. Federal and state agencies are increasingly bringing enforcement actions where the targeted activity directly or indirectly centers around drug pricing. Private plaintiffs are beginning to incorporate drug pricing decisions into new litigation theories. These developments are having a wide ranging impact on the pharmaceutical and biologic industries. Sidley’s U.S. Life Sciences team has long standing and deep experience with drug pricing issues that enables us to lead our clients through this rapidly changing environment.
Global Drug Pricing
President Biden Signs Executive Order to Support Canadian Drug Import Programs
July 9, 2021
On July 9, 2021, President Joe Biden signed an Executive Order to promote competition in the American economy. The Order "includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy,” including supporting state and tribal initiatives to import drugs from Canada.
OIG posts Advisory Opinion 21-08
July 8, 2021
On July 8, 2021, OIG posted an advisory opinion regarding financial assistance for transportation, lodging, and meals provided by a pharmaceutical manufacturer to certain patients potentially eligible for treatment with the pharmaceutical manufacturer’s drug.
Colorado Enacts Insulin Pricing and Access Law
July 6, 2021
On July 6, 2021, Governor Jared Polis signed H.B. 1307, providing (a) that the current law establishing a $100 cap on a person's 30-day supply of prescription insulin is for the person's entire insulin supply, regardless of the number of prescriptions a person may have; (b) eligible individuals access to one emergency prescription insulin supply within a 12-month period at a cost not to exceed $35 for a 30-day supply. Additionally, the legislation establishes Colorado's insulin affordability program in the division of insurance through which eligible individuals may obtain prescription insulin for 12 months at a cost of not more than $50 for a 30-day supply. Notably, the new law requires manufacturers to develop a process for a pharmacy to submit an electronic claim for reimbursement by January 1, 2022.
U.S. Supreme Court Agrees to Hear AHA Case on 340B Payment Cuts
July 2, 2021
On July 2, 2021, the U.S. Supreme Court agreed to review the D.C. Circuit's reversal of a lower court's finding that the U.S. Department of Health and Human Services exceeded its authority when it cut Medicare reimbursement by nearly 30% for drugs purchased via the 340B discount program.
Senate Introduces DTC Act (S. 2304)
June 24, 2021
On June 24, 2021, U.S. Senator Dick Durbin (D-IL) introduced bipartisan legislation to address the high cost of medicines by requiring price disclosures on advertisements for prescription drugs.
Rush Introduces Insulin for All Act (H.R. 4158)
June 24, 2021
On June 24, 2021, U.S. Representative Bobby L. Rush (D-Ill.) introduced the Insulin Access for All Act of 2021 (H.R. 4158), which is cosponsored by more than three dozen Members of the House Democratic Caucus and would eliminate the cost-sharing requirement — including deductibles, copayments, and coinsurance — for insulin under Medicare and Medicaid.
Wyden Releases Principles For Lowering Drug Prices for Americans
June 22, 2021
On June 22, 2021, Senate Finance Committee Chairman Ron Wyden (D-Ore.) released his priorities for lowering prescription drug prices as Congress continues its legislative work to provide relief from high drug prices to American consumers and taxpayers.
HRSA displays proposed rule: Proposed Rescission of Executive Order 13937, “Executive Order on Access to Affordable Life-saving Medications
June 21, 2021
On June 15, 2021, HRSA displayed its proposal to rescind the final rule titled “Implementation of Executive Order on Access to Affordable Life-Saving Medications,” published in the December 23, 2020, Federal Register, "due to undue administrative costs and burdens that implementation would impose on health centers."
OIG releases report: New Mexico Did Not Bill Manufacturers for Some Rebates for Physician-Administered Drugs Dispensed to Enrollees of Medicaid Managed-Care Organizations
June 21, 2021
On June 2, 2021, OIG released Report A-06-16-00001, recommending that New Mexico (1) bill for and collect manufacturers' rebates for the 44,790 claim lines related to single-source and top-20 multiple-source physician-administered drugs calculated to be at least $1.2 million ($900,971 Federal share) and refund the Federal share of rebates collected; (2) work with CMS to determine whether the 25,341 claim lines related to non-top-20 multiple-source physician-administered drugs calculated to be at least $226,644 ($164,793 Federal share) were eligible for rebates and, if so, determine the rebates due and, upon receipt of the rebates, refund the Federal share of rebates collected; and (3) work with CMS to determine whether the other physician-administered drugs, associated with 183,859 claim lines and rebates of at least $170,674 ($124,097 Federal share), were eligible for rebates and, if so, determine the rebates due and, upon receipt of the rebates, refund the Federal share of the rebates collected.
FTC sends report to Congress on rebate walls
June 21, 2021
On May 28, 2021, the Federal Trade Commission (FTC) sent a report to Congress "about the effects that so-called rebate walls have on competition in markets for pharmaceutical and biopharmaceutical drugs."
HHS withdraws Advisory Opinion 20-06 on Contract Pharmacies Under the 340B Program
June 18, 2021
On June 18, 2021, HHS told federal courts that it has withdrawn its December finding that drug manufacturers can't limit the number of pharmacies eligible to fill government-set, capped-cost prescriptions for eligible organizations.
GAO releases report: Prescription Drugs: Medicare Spending on Drugs with Direct-to-Consumer Advertising
June 17, 2021
On June 17, 2021, GAO released Report GAO-21-380, examining (1) drug manufacturer spending on direct-to-consumer advertising (DTCA); (2) Medicare spending on advertised drugs; and (3) changes in DTCA spending and Medicare use and spending for selected drugs.
Civica announces new partnership with Anthem and Catalent
June 16, 2021
On June 16, 2021, Civica announced partnerships with Anthem, Inc. andCatalent, Inc., a leading global drug development and manufacturing company, to produce essential generic medicines that are widely prescribed for patients. CivicaScript will initially develop and manufacture 6 to 10 common but high-priced generic medicines for which there is currently not enough market competition to drive down price. Using a cost-plus and price transparent model, CivicaScript also plans to innovate and further transform the supply chain to lower the cost of prescription medicines.
MACPAC Releases June 2021 Report to Congress on Medicaid and CHIP
June 15, 2021
On June 15, 2021, the Medicaid and CHIP Payment and Access Commission (MACPAC) released its June 2021 Report to Congress on Medicaid and CHIP, recommending that Congress take measures to address the effect of high-cost specialty drugs on state Medicaid programs and take steps that would improve access to mental health services for adults and children and adolescents enrolled in Medicaid and the State Children’s Health Insurance Program (CHIP). The report also contains additional topics of interest to Congress such promoting integration of physical and behavioral health care through electronic health records (EHRs), the non-emergency transportation (NEMT) benefit in Medicaid, and state strategies for integrating care for people who are dually eligible for Medicaid and Medicare.
OIG releases report: Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2019 Average Sales Prices
June 11, 2021
On June 11, 2021, OIG released Report OEI-03-21-00130, finding that (a) CMS lowered Part B reimbursement for 18 drugs based on 2019 data; (b) CMS's price-substitution policy saved Medicare and its beneficiaries $6.2 million over 1 year; and (c) Medicare and its beneficiaries could have saved up to an additional $11.2 million over 1 year if CMS implemented a more expansive price substitution policy that allowed substitution for drugs that exceeded the 5 percent threshold in a single quarter.
OIG releases report: Comparison of Average Sales Prices and Average Manufacturer Prices: Results for the Fourth Quarter of 2020
May 26, 2021
On May 14, 2021, OIG released Report OEI-03-21-00070, finding that in the fourth quarter of 2020, five drug codes met CMS's price substitution criteria by exceeding the 5 percent threshold for two consecutive quarters or three of the previous four quarters and instructing CMS to review this information to determine whether to pursue price substitutions that would limit excessive payments for Part B drugs.
HRSA determines six pharmaceutical manufacturers are in violation of the 340B statute
May 26, 2021
On May 17, 2021, Health Resources and Services Administration (HRSA) Acting Administrator Diana Espinosa sent letters to AstraZeneca, Eli Lilly, Novartis, Novo Nordisk, Sanofi, and United Therapeutics, stating that HRSA has determined that their policies that place restrictions on 340B Program pricing to covered entities that dispense medications through pharmacies under contract have resulted in overcharges and are in direct violation of the 340B statute.
House Oversight and Reform Committee holds hearing: Unsustainable Drug Prices (Part III)
May 26, 2021
On May 18, 2021, the House Committee on Oversight and Reform held a hybrid hearing to examine the pricing and business practices of AbbVie Inc., which sells the anti-inflammatory drug Humira and the cancer drug Imbruvica.
House Oversight Committee releases report on AbbVie's drug pricing practices
May 26, 2021
On May 18, 2021, the House Committee on Oversight and Reform issued a report describing the actions of AbbVie Inc. in repeatedly raising the prices of two of its blockbuster drugs: Humira (adalimumab) and Imbruvica (ibrutinib).
Multilateral Pharmaceutical Merger Task Force seeks public input
May 26, 2021
On May 11, 2021, staff from the Federal Trade Commission, Canada’s Competition Bureau, the European Commission Directorate General for Competition, the U.K.’s Competition and Markets Authority, the U.S. Department of Justice’s Antitrust Division, and Offices of State Attorneys General issued a notice seeking public comment to inform their review of how to best update their approaches to analyzing the effects of pharmaceutical mergers.
Washington enacts generic drug development legislation
May 26, 2021
On May 12, 2021, Governor Jay Inslee signed legislation (S.B. 5203) authorizing the Health Care Authority to partner with other state agencies and nonprofits to "produce, distribute, or purchase generic prescription drugs and distribute and purchase insulin."
CMS discontinues Part D demo
May 26, 2021
On May 12, 2021, CMS announced that its Part D Payment Modernization Model, which was launched in January 2020 to test how changes to the Part D payment structure would impact overall prescription drug spending and out-of-pocket costs for beneficiaries, is set to conclude at the end of the year due to a lack of plan participation.
Matsui (D-CA) introduces bipartisan legislation to protect 340B drug pricing program
May 26, 2021
On May 13, 2021, Congresswoman Doris Matsui (D-CA) and Reps. Chris Stewart (R-UT), Cindy Axne (D-IA), David McKinley (R-WV), Abigail Spanberger (D-VA), and Dusty Johnson (R-SD) introduced a bill (H.R. 3203) to protect hospitals from losing eligibility for the 340B drug pricing program during the COVID-19 public health emergency.
HHS files opposition brief in re American Hospital Association v. Norris Cochran, 20-1114 (U.S.)
May 26, 2021
On May 13, 2021, the United States filed its brief in opposition to AHA's challenge to CMS's Medicare Part B reimbursement cuts for 340B drugs and pay cuts for outpatient clinic visits at certain off-campus hospital facilities.
House E&C Subcommittee Holds Legislative Hearing on Prescription Drug Prices
May 10, 2021
On May 4, 2021, the Subcommittee on Health of the Committee on Energy and Commerce (E&C) held a legislative hearing via WebEx titled "Negotiating a Better Deal: Legislation to Lower the Cost of Prescription Drugs." The following legislation was discussed: (1) H.R. 3, the "Elijah E. Cummings Lower Drug Costs Now Act"; (2) H.R. 19, the "Lower Costs, More Cures Act of 2021"; (3) H.R. 153, the "Protecting Consumer Access to Generic Drugs Act of 2021"; (4) H.R. 2815, the "Bolstering Innovative Options to Save Immediately on Medicines Act" or the "BIOSIM Act"; (5) H.R. 2831, the "Prompt Approval of Safe Generic Drugs Act"; (6) H.R. 2843, the "Stop The Overuse of Petitions and Get Affordable Medicines to Enter Soon Act of 2021" or the "STOP GAMES Act"; (7) H.R. 2846, to amend title XVIII of the Social Security Act to require PDP sponsors of a prescription drug plan under part D of the Medicare program that use a formulary to include certain generic drugs and biosimilar biological products on such formulary, and for other purposes; and (8) H.R. 2853, the "Bringing Low-cost Options and Competition while Keeping Incentives for New Generics Act of 2021" or the "BLOCKING Act."
GAO Releases Report: Prescription Drugs: U.S. Prices for Selected Brand Drugs Were Higher on Average than Prices in Australia, Canada, and France
May 10, 2021
On April 28, 2021, GAO released Report GAO-21-282 (published on March 29, 2021). The report (1) examines how prices at the retail and manufacturer levels in the U.S. compare to prices in three selected comparison countries—Australia, Canada, and France; and (2) provides information on consumers’ out-of-pocket costs for prescription drugs in those countries.
North Dakota Enact Drug Price Transparency Legislation
May 10, 2021
On April 27, 2021, North Dakota Governor Doug Burgam signed H.B. 1032 into law, establishing the state's Prescription Drug Price Transparency Act. Similar to other drug price transparency laws, H.B. 1032 is composed of three notice requirements: a quarterly WAC report, a price increase notice, and a new drug notice. Assuming the signed legislation is timely filed with the North Dakota Secretary of State, the effective date of this statute will be August 1, 2021.
Colorado Expands Drug Importation Program
May 10, 2021
On April 26, 2021, Colorado Governor Jared Polis signed legislation (S.B. 123), expanding the Canadian prescription drug importation program to include prescription drug suppliers from nations other than Canada upon the enactment of legislation by the United States congress authorizing such practice.
President Biden signs Ensuring Innovation Act (S. 415)
May 10, 2021
On April 23, 2021, President Biden enacted legislation aiming to narrowly define when a new drug is a new chemical entity for purposes of receiving five years of exclusivity.
OIG Updates Work Plan
April 20, 2021
On April 16, 2021, OIG updated its Work Plan to include, among other items, investigations titled: (a) "Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2019 Average Sales Prices"; and (b) "How Part D Plans' Preference for Higher Cost Hepatitis C Drugs Affects Medicare Beneficiaries."
Senate Reintroduces Bipartisan Drug Price Transparency Legislation
April 1, 2021
On March 18, 2021, U.S. Senator Amy Klobuchar (D-MN) introduced the FAIR Drug Pricing Act (S. 833). The bipartisan legislation would require drug manufacturers to notify the U.S. Department of Health and Human Services (HHS) and submit a transparency and justification report 30 days before they increase the price of certain drugs that cost at least $100 by more than 10 percent in one year or 25 percent over three years.
DOJ Antitrust Division Addresses Drug Pricing in Annual Spring Newsletter
April 1, 2021
On March 24, 2021, DOJ's Antitrust Division issued the 2021 edition of its annual Spring Newsletter. The newsletter highlights the division’s recent activities and successes on civil and criminal enforcement, including the investigation that resulted in charges against seven generic pharmaceutical companies and four senior executives for "conspiring to fix prices, rig bids, and allocate customers."
Kaiser Publishes Issue Brief: Moving the Needle on Prescription Drug Costs: Using the Innovation Center and Other Demonstration Authority
April 1, 2021
On March 26, 2021, the Kaiser Family Foundation published an issue brief, focusing on "two pathways through which the Biden Administration could use its executive authority to implement policy changes related to prescription drug costs": (1) the authority provided under the Affordable Care Act (ACA) through the Center for Medicare and Medicaid Innovation (CMMI); and (2) the authority established under Section 402 to implement Medicare demonstrations to test new ways of delivering health care and paying health care providers.
Drug Pricing Lab publishes report: Biosimilars: Market Changes Do Not Equal Policy Success
March 22, 2021
On March 15, 2021, Drug Pricing Lab urged policymakers to "keep sight of the sole objective for creating the biosimilar pathway: to reduce the cost of older biologic drugs for society and taxpayers immediately following a designated period of market exclusivity and monopoly pricing power"; and (b) consider Production Plus Profit Pricing (P-quad) as a means to drive down prices for biologics.
CMS announces updates to PDM model and application process for CY 2022
March 22, 2021
On March 16, 2021, CMS announced it is not moving forward with two Part D Payment Modernization (PDM) Model design changes launched in January 2021: (1) the Part D Formulary Flexibilities, and (2) removal of downside risk for CY 2022. For CY2022, the PDM Model will continue to test a modernized Part D payment structure in which participating Part D sponsors take two-sided risk for CMS’ federal reinsurance subsidy spending for participating plan benefit packages (PBPs), relative to their Spending Target Benchmark(s). In addition, the Model will continue to extend the Model participants the opportunity to adopt the same categories of programmatic flexibilities that were available in CY 2021.
Court sides with Eli Lilly in challenge to 340B ADR rule
March 22, 2021
On March 16, 2021, the U.S. District Court for the Southern District of Indiana granted Eli Lilly's request for preliminary injunction, enjoining the Department of Health and Human Services (HHS) from implementing its final rule requiring an “administrative dispute resolution” process for 340B pricing disputes between manufacturers and covered entities.
Trade groups urge Congress to block rebate-ban rule
March 22, 2021
On March 16, 2021, the Academy of Managed Care Pharmacies, AHIP, PCMA, and others sent a letter to Leader Schumer, Leader McConnell, Speaker Pelosi, and Leader McCarthy, requesting Congress "swiftly repeal" HHS's rebate rule.
OIG Delays Rebate Rule
March 22, 2021
On March 18, 2021, OIG provided notice of the delay of the remaining amendments to the safe harbors to the Federal anti-kickback statute promulgated in the final rule titled “Fraud And Abuse; Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals And Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on Prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees" published in the Federal Register on November 30, 2020. The new effective date for the entire rule is now January 1, 2023.
HRSA further delays implementation of Executive Order 13937, “Executive Order on Access to Affordable Life-Saving Medications.”
March 22, 2021
On March 18, 2021, HRSA announced a further delay (until July 20, 2021) of the effective date of the rule titled “Implementation of Executive Order on Access to Affordable Lifesaving Medications” published in the Federal Register on December 23, 2020. This rule was scheduled to take effect on March 22, 2021, after a delay from its original effective date of January 22, 2021.
HRSA Proposes Extension of Effective Date for Implementation of Executive Order on Access to Affordable Life-Saving Medications
March 15, 2021
On March 11, 2021, HRSA proposed, following a 5-day public comment period, to further delay until July 20, 2021, the effective date of the rule titled “Implementation of Executive Order on Access to Affordable Life-saving Medications” published in the Federal Register on December 23, 2020. That final rule is currently scheduled to take effect on March 22, 2021, after an initial delay from its original effective date of January 22, 2021.
CRS Issues Report: Off-Label Use of Prescription Drugs
March 9, 2021
On February 24, 2021, CRS released Report R45792, suggesting that Congress ask HHS to (a) study how drug prices and reimbursement influence off-label prescribing and patient safety; and (b) monitor coverage decisions and the effect of reimbursement policies on physicians and patients.
OIG Releases Report: Comparison of Average Sales Prices and Average Manufacturer Prices: Results for the Third Quarter of 2020
February 23, 2021
On February 12, 2021, OIG released Report OEI-03-21-00060. The report to CMS (a) finds that in the third quarter of 2020, seven drug codes met CMS's price substitution criteria by exceeding the 5 percent threshold for two consecutive quarters or three of the previous four quarters; and (b) requires CMS to determine whether to pursue price substitutions that would limit excessive payments for Part B drugs.
Judge Dismisses Hospital Groups' Lawsuit Against HHS Over 340B Drug Feud
February 23, 2021
On February 17, 2021, Federal Judge Yvonne Gonzalez Rogers ruled that hospitals cannot sue individually under federal law for 340B violations to settle feuds with the drugmakers; have to use HRSA's new ADR process instead.
HHS Delays Effective Date of Final Drug Rebate Rule
February 23, 2021
On February 18, 2021, OIG provided notice of the court-ordered delay of the effective date of certain amendments to the safe harbors to the Federal anti-kickback statute that were promulgated in a final rule (“Fraud And Abuse; Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals And Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on Prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees”) published on November 30, 2020. The new effective date for these certain amendments is January 1, 2023.
CBO Releases Report: Average Price of Top-Selling Brand-Name Drugs As a Percentage of Their Average Net Price in Medicare Part D, 2017
February 23, 2021
On February 18, 2021, the Congressional Budget Office (CBO) published a report describing how the prices of brand-name prescription drugs are determined in different federal programs and comparing drug prices among those programs in 2017. The main analysis focuses on the prices (net of applicable rebates and discounts) of 176 top--selling brand-name drugs in Medicare Part D. CBO computed the average price of those drugs per standardized prescription—a measure that roughly corresponds to a 30-day supply of medication.
OIG Delays Effective Date of PBM Rebate Rule
February 2, 2021
On January 29, 2021, OIG announced that the effective date for the final rule titled "Removal of Safe Harbor Protection for Rebates Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection for Certain Point-of-Sale Reductions in Price on Prescription Pharmaceuticals and Certain Pharmacy Benefit Manager Service Fees" is delayed until March 22, 2021.
HRSA delays effectiveness of final rule: Implementation of Executive Order 13937, “Executive Order on Access to Affordable Life-Saving Medications.”
January 26, 2021
On January 21, 2021, HRSA announced the temporary delay, until March 22, 2021, of the effective date of the final rule titled “Implementation of Executive Order on Access to Affordable Life-saving Medications.”
Senate introduces bill requiring health plan reporting of drug prices
December 22, 2020
On December 3, 2020, Senator Mike Braun (R-IN) introduced S. 4959, "a bill to increase transparency and access to group health plan and health insurance issuer reporting, and for other purposes."
GAO releases report: DRUG PRICING PROGRAM: HHS Uses Multiple Mechanisms to Help Ensure Compliance with 340B Requirements
December 22, 2020
On December 14, 2020, GAO released a report describing (1) the audit findings that HRSA issued to address covered entity noncompliance with 340B Program requirements; and (2) other efforts HRSA uses to help ensure that covered entities comply with 340B Program requirements.
California AG Becerra leads bipartisan coalition on 340B drug pricing program requirements
December 22, 2020
On December 14, 2020, California Attorney General Xavier Becerra joined Connecticut Attorney General William Tong, Kansas Attorney General Derek Schmidt, and Nebraska Attorney General Doug Peterson in leading a bipartisan coalition of attorneys general urging the U.S. Department of Health and Human Services (HHS) to hold accountable drug manufacturers that are unlawfully refusing to provide discounts to federally qualified health centers, hospitals, and other providers that serve vulnerable patient populations through the 340B Drug Pricing Program.
CMS releases final rule: Establishing Minimum Standards in Medicaid State DUR and Supporting VBP for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and TPL Requirements
December 22, 2020
On December 21, 2020, CMS released a final rule to support state flexibility to enter into innovative value-based purchasing arrangements (VBPs) with manufacturers, and to provide manufacturers with regulatory support to enter into VBPs with payers, including Medicaid.
OMB Receives Draft Final Medicaid Proposal
December 7, 2020
OMB received CMS’s draft final rule addressing numerous issues under the Medicaid Drug Rebate Program (MDRP), including the impact of pharmacy benefit manager accumulator programs, value-based purchasing arrangements, and authorized generics.
BIO Sues CMS Over MFN Demo
December 4, 2020
The Biotechnology Innovation Organization (BIO), the California Life Sciences Association (CLSA), and BIOCOM California filed suit in federal court in northern California against the Trump administration’s demonstration that ties Medicare doctor reimbursement to foreign drug prices.
PhRMA Sues CMS Over MFN Demo
December 4, 2020
Pharmaceutical Research and Manufacturers of America (PhRMA) and three groups representing doctors and patients filed suit against the Trump administration’s demonstration that ties Medicare doctor reimbursement to foreign drug prices.
OMB Receives OIG’s Draft Final Rebate Rule
November 18, 2020
On November 13, 2020, OMB received OIG’s draft final rule amending the safe harbor regulation concerning discounts to explicitly exclude from the definition of a discount eligible for safe harbor protection certain reductions in price or other remuneration from a manufacturer of prescription pharmaceutical products to plan sponsors under Medicare Part D, Medicaid managed care organizations as defined under section 1903(m) of the Act, or PBMs under contract with them.
All Copays Count Coalition urges House leaders to support the Preserving Patient Savings on Drug Costs Act (H.R. 7647)
November 18, 2020
The All Copays Count Coalition, a group of patient and provider lobby groups, sent a letter to House Speaker Nancy Pelosi (D-CA) and House Minority Leader Kevin McCarthy (R-CA) to include the Preserving Patient Savings on Drug Costs Act (H.R. 7647) in pandemic relief legislation. The bill delays until the first calendar year that is 12 months after the end of the COVID-19 public health emergency the application of the Centers for Medicare & Medicaid Services (CMS) rule dated May 14, 2020, allowing private health insurance plans to decide whether support provided by a prescription drug manufacturer to cover a patient's costs for a drug counts toward the patient's annual out-of-pocket limit.
Sheldon et al v. Forest Laboratories, LLC, et al.
November 11, 2020
On November 5, 2020, the United States District Court for the District of Maryland dismissed a federal False Claims Act (“FCA”) qui tam lawsuit, in which the Department of Justice and numerous state attorneys general had declined to intervene, alleging that Forest Laboratories, LLC (“Forest”) knowingly reported inflated Best Prices (“BPs”) under the Medicaid Drug Rebate Program (“MDRP”), resulting in underpayment of Medicaid rebates to the States. Specifically at issue in this case was whether discounts provided to different customers in the supply chain on a single unit of drug must be aggregated – or “stacked” – when determining Best Price.
California Attempts to Boost Supplemental Rebates by Broadening Medi-Cal “Best Price” Definition
October 29, 2020
On June 29, 2020, California Governor Gavin Newsom approved legislation (A.B. 80) to revise the definition of “best price” used by the California Department of Health Care Services (the Department) for purposes of entering into supplemental rebate agreements (SRAs) with drug manufacturers under the Medi-Cal program.
CMS Issues MDRP Release 114 for Manufacturers
September 25, 2020
On September 25, 2020, CMS issued Medicaid Drug Rebate Program (MDRP) Release No. 114 for Participating Drug Manufacturers. The release addresses manufacturer obligations under the MDRP with respect to multi-market approved (MMA) products as defined in the final guidance titled “Importation of Certain FDA-Approved Human Prescription Drugs, Including Biological Products, and Combination Products under Section 801(d)(1)(B) of the Federal Food, Drug, and Cosmetic Act” released by the FDA on September 24, 2020.
CMS Issues MDRP Release 187 for State Medicaid Programs
September 25, 2020
On September 25, 2020, CMS issued Medicaid Drug Rebate Program (MDRP) Release No. 187 for State Medicaid Programs. The release addresses implications of FDA's final rule implementing section 804(b) through (h) of the Federal Food, Drug, and Cosmetic Act (FFDCA) to allow importation of certain “eligible prescription drugs” shipped from Canada into the United States to MDRP coverage and reimbursement.
Hospital Groups Petition for Rehearing on 340B Payment Reductions
September 22, 2020
On September 14, 2020, the American Hospital Association asked the full D.C. Circuit to reconsider a panel ruling that the U.S. Department of Health and Human Services lawfully made billions of dollars in reimbursement cuts for drugs purchased through a special discount program for hospitals in low-income areas.
President Trump Issues Executive Order On Lowering Drug Prices By Putting America First
September 14, 2020
On September 13, 2020, President Trump released an executive order instructing the Secretary of Health and Human Services to implement rulemaking to test payment models whereby Medicare would pay no more than the “most-favored nation price” for certain high-cost prescription drugs and biologic products covered by Medicare Parts B and D (“the Executive Order”). Under the Executive Order, “most-favored-nation price” is defined as “the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.”
OIG Releases Report: Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2018 Average Sales Prices
September 2, 2020
On August 12, 2020, OIG released Report OEI-03-20-00130, quantifying the savings to Medicare and its beneficiaries that are a direct result of CMS’s price substitution policy based on 2018 average sales prices and providing support for a previous OIG recommendation for achieving additional savings.
D.C. Circuit Reverses Lower Court Decision in re American Hospital Association v. Azar
August 17, 2020
On July 31, 2020, the D.C. Circuit reversed a lower court decision enjoining the Centers for Medicare and Medicaid Services (“CMS”) from cutting Medicare Part B drug payments to hospitals that purchase drugs under the 340B Drug Discount Program. The decision comes after two years of litigation initiated by hospitals following a CMS final rule issued in November 2017 that reduced most hospitals’ reimbursement for certain 340B-purchased drugs under the Medicare hospital outpatient prospective payment system (“OPPS”) from the drug’s average sales price (“ASP”) plus 6% to ASP minus 22.5% starting January 1, 2018. A federal district court ruled in December 2018 that CMS’s reimbursement reduction was unlawful but did not vacate the rule. Instead, the court enjoined CMS’s prospective implementation of the reduction pending expedited review of the decision.
Federal Court Invalidates CMS Rule to Require Disclosure of Drug List Prices in DTC Ads
July 22, 2019
On July 8, 2019, the United States District Court for the District of Columbia invalidated the final rule issued by the Centers for Medicare and Medicaid Services (CMS) that would have required pharmaceutical manufacturers to disclose the list price of certain drug products in direct-to-consumer (DTC) television advertisements beginning on July 9, 2019 (Final Rule). Had the Final Rule gone into effect, pharmaceutical manufacturers would have been required to disclose in their DTC television advertisements the advertised product’s list price, defined as the wholesale acquisition cost, if the product was a prescription drug or biological product priced at $35 or more for a typical 30-day supply or course of treatment and directly or indirectly payable by Medicare or Medicaid.
CMS to Mandate Disclosure of Drug Prices in Direct-to-Consumer Television Ads
May 9, 2019
On May 8, 2019, the Centers for Medicare and Medicaid Services (CMS) released a final rule to require direct-to-consumer television advertisements for prescription drug and biological products distributed in the United States and covered by Medicare or Medicaid to include the list price of the product if the price is $35 or more based on a one-month supply or the usual course of therapy. The final rule, which is scheduled to become effective on July 9, 2019, was finalized largely as proposed with only minor modifications and technical changes.
President Signs “Right Rebate” Act Penalizing Misclassification of Drugs
April 18, 2019
On April 18, 2019, the President signed into law H.R. 1839. Section 6 of H.R. 1839 is referred to as the “Right Rebate Act” (the “Act”) and imposes new penalties on drug manufacturers that knowingly misclassify a covered outpatient drug under the Medicaid Drug Rebate Program (“MDRP”).
CMS Issues Rules Aligning Regulatory Text on Line Extensions with Statute and Existing Guidance
April 1, 2019
On March 28, 2019, the Centers for Medicare and Medicaid Services (“CMS”) released an advance print copy of a final rule and interim final rule with comment period that addresses the definition and identification of line extension drugs and the rebate calculation for line extension drugs under the Medicaid Drug Rebate Program (“MDRP”). The final rule and interim final rule with comment period were published in the Federal Register on April 1, 2019. Comments on the interim final rule are due on May 31, 2019.
House Oversight Committee Announces Investigation of Pharmaceutical Company Drug-Pricing Methods
January 16, 2019
On January 14, the House Committee on Oversight and Reform (the “Committee”) announced its investigation into the price-setting methods of twelve major pharmaceutical companies. Considering the scope of the information requested from the companies, discussed below, this development represents an important step in what is expected to be a broad inquiry by the Committee into pharmaceutical drug pricing. A hearing—the first in a series on the issue—is scheduled for January 29. The witness list has not yet been released; however, the Committee noted in its press release that it would seek testimony from experts and patients affected by rising drug prices.
Grassley, Wyden Introduce Bill to Address “Misclassified” Drugs in the Medicaid Drug Rebate Program
December 7, 2018
On December 4, the incoming Senate Finance Committee Chair, Senator Chuck Grassley (R-Iowa), and the Committee’s Ranking Member, Senator Ron Wyden (D-Or.), introduced a bipartisan bill, titled the “Right Rebate Act of 2018,” which focuses on the lawmakers’ concerns about “misclassified” drugs under the Medicaid drug rebate program (MDRP).
The bill would give the Department of Health and Human Services (HHS) new authority to address situations where a manufacturer “misclassifies” a drug in the MDRP, “such as by knowingly submitting incorrect drug category information” when completing MDRP reporting. Specifically, the bill would allow HHS to “correct” the classification of a drug, to impose civil money penalties on pharmaceutical manufacturers that are determined to have knowingly misclassified a drug, and to recoup lost Medicaid rebates as a result of the “misclassification” of a drug by a manufacturer. The bill would also add a new provision that specifically lists knowingly misclassifying a covered outpatient drug as conduct that is subject to the HHS Office of Inspector General’s (OIG’s) permissive exclusion authority. This new authority, if enacted, would be an addition to HHS’s existing ability to terminate a manufacturer’s rebate agreement for noncompliance.
HRSA Finalizes Jan. 1, 2019 Effective Date 340B Ceiling Price and CMP Rule
November 29, 2018
On November 29, 2018, the Health Resources and Services Administration (HRSA) released an advance print copy of a final rule that changes the effective date of the 340B Ceiling Price and Civil Monetary Penalties Final Rule (“Final Rule”) to January 1, 2019. Previously, the Final Rule was scheduled to take effect July 1, 2019, after being released in January 2017 and being delayed 5 times.
The advance print copy of today’s effective date change final rule is available here.
HRSA Proposed Rule Would Make 340B Ceiling Price and CMP Rule Effective Jan. 1, 2019 Not July 1, 2019
November 9, 2018
On October 31, the Health Resources and Services Administration (HRSA) released an advance print copy of a proposed rule that would move up (to an earlier date) the effective date of the 340B Ceiling Price and Civil Monetary Penalties Final Rule (“Final Rule”). Specifically, the proposed rule, if finalized, would move the effective date to January 1, 2019, instead of the currently scheduled effective date of July 1, 2019. The Final Rule was released in January 2016, but the effective date has been delayed 5 times to date. The proposed rule was published in the Federal Register on November 2 and has a short, 21-day comment period. The proposal seeks comments specifically regarding the impact of ceasing any further delay of the final rule, as well as any potential disruptions to implementation.
Trump and HHS Announce New Drug Pricing Reforms
October 29, 2018
On October 25, 2018, President Trump announced new efforts to reduce prescription drug prices under Medicare. In particular, President Trump discussed two primary reforms:
- Permitting the Department of Health and Human Services (HHS) to allow Medicare to set the reimbursement amount for prescription drugs based on prices paid in other countries. President Trump referred to these as “favored nations clauses”.
- Reimbursing providers a flat rate for certain prescription drugs, regardless of the cost of the prescription drug, to encourage the use of lower cost prescription drugs.
Manufacturers Face Increased Congressional Scrutiny in the Government’s Ongoing Focus on Drug Pricing
October 26, 2018
Pressure from the Trump Administration and Congress on drug pricing issues continues to mount. Through requests for information, guidance statements, rulemaking activities, and legislative bills and enactments, among other activities, policy officials and lawmakers have expressed a clear focus on efforts to reduce prices for drugs and biologicals, to lower out-of-pocket costs for consumers, and to decrease spending on drugs by government programs. On both the regulatory and legislative fronts, a number of initiatives and proposals have highlighted transparency in various forms as a key mechanism to facilitate reform. (Please see our recent Sidley Update: HHS Secretary Azar Announces DTC Drug Price Transparency Proposal, Foreshadows Additional Regulatory Action to Address Drug Prices)
HHS Secretary Azar Announces DTC Drug Price Transparency Proposal, Foreshadows Additional Regulatory Action to Address Drug Prices
October 16, 2018
On October 15, 2018, Secretary of Health and Human Services (HHS) Alex Azar delivered remarks at a National Academy of Medicine event in which he provided an update on the Trump Administration’s implementation of the American Patients First Blueprint to reduce drug prices and out-of-pocket costs. Secretary Azar summarized a number of recent Administration policy changes, including proposed expanded reductions in Medicare reimbursement under the 340B drug discount program, allowing Medicare Advantage plans to incorporate step therapy for Part B drugs, and allowing Part D plans to begin implementing indication-based formulary designs, among others.
340B Drug Discount Updates: Contract Pharmacies and Congressional Activity
July 20, 2018
The past few weeks have seen significant activity regarding the 340B Drug Discount Program (the “340B Program”), suggesting that the government may be contemplating certain reforms. First, on June 28, the Government Accountability Office (GAO) released a report on the 340B Program titled “Federal Oversight of Compliance at 340B Contract Pharmacies Needs Improvement.” The report (available here) found that Health Resources and Services Administration’s (HRSA’s) oversight of the 340B Program is insufficient, specifically noting deficiencies in HRSA’s ability to ensure compliance with the prohibition on duplicate discounts, to require that covered entities assess the full extent of noncompliance during an audit, and to require that covered entities provide evidence regarding corrective actions before closing an audit. The report states that “[g]iven these weaknesses, HRSA does not have a reasonable assurance that covered entities have adequately identified and addressed noncompliance with 340B Program requirements.”
CMS Approves Amendment to Oklahoma Medicaid State Plan to Authorize Value-Based Supplemental Rebate Agreements
July 2, 2018
On June 27, 2018, the Centers for Medicare and Medicaid Services (CMS) approved Oklahoma State Plan Amendment 18-0008 (OK SPA 18-0008), an amendment to Oklahoma’s Medicaid state plan that authorizes Oklahoma to negotiate value-based supplemental rebate agreements with drug manufacturers for the purchase of pharmaceuticals. Specifically, OK SPA 18-0008 permits Oklahoma to “enter into value-based contracts with manufacturers on a voluntary basis” when negotiating supplemental drug rebate agreements.
HHS Secretary Azar Details Drug Pricing Actions, Encourages Industry Feedback in New RFI
May 15, 2018
This week, Health and Human Services (HHS) Secretary Alex Azar provided a more detailed assessment of HHS’s approach to advancing the “American Patients First” blueprint (Blueprint) released on Friday, May 11. Secretary Azar’s speech preceded the release of a request for information (RFI) to be published in the Federal Register on May 16. The Blueprint and RFI (together, the Proposals) summarize the Administration’s actions to address drug pricing to date, outline near-term policy changes, and solicit stakeholder feedback on a range of proposals HHS is actively considering. The RFI comment period will remain open for 60 days.
Connecticut Poised to Pass Drug Price Transparency Law
May 11, 2018
On May 8, 2018, the Connecticut Senate passed House Bill 5384 (HB 5384), concerning prescription drug price transparency. HB 5384 awaits the Governor’s signature, which is expected to be duly provided. Thus, Connecticut appears poised to join the growing number of states with a prescription drug price transparency law.
Trump Administration Releases Blueprint to Lower Drug Prices
May 11, 2018
On May 11, the Trump Administration released the “American Patients First” proposal, a “Blueprint” containing a number of regulatory and legislative changes aimed at reducing prescription drug prices. President Trump and Health and Human Services (HHS) Secretary Alex Azar emphasized that all stakeholders would experience changes as a result of the Administration’s proposed immediate actions. Furthermore, the Blueprint solicits stakeholder feedback on a number of issues that could result in additional policy changes moving forward. Secretary Azar is expected to provide more detailed implementation guidance in the coming days through meetings with Members of Congress and a formal announcement at HHS headquarters next week.
Nevada Legislative Commission Announces Early Review of Drug Price Transparency Regulation, Likely Speeding Adoption
May 10, 2018
The Nevada Legislative Commission (Commission) recently announced that it will hold an “early review” meeting to consider regulations the Department of Health & Human Services (DHHS) has proposed to implement SB 539, the state’s price transparency law governing prescription drugs considered “essential” to the treatment of diabetes.
HRSA Again Proposes To Delay 340B Rule Effective Date
May 7, 2018
On Friday, May 4, 2018, the Health Resources and Services Administration (HRSA) once more proposed to delay the effective date of an Obama-era 340B final rule that set forth regulations for the calculation of 340B ceiling prices and the implementation of civil monetary penalties (CMPs) for manufacturers that knowingly and intentionally charge more than the 340B ceiling price for covered outpatient drugs purchased by 340B participating entities. The final rule, which was published in the Federal Register in January 2017, has already been delayed multiple times. Currently, the final rule is scheduled to take effect July 1, 2018. In the new proposed rule, HRSA proposes to delay the effective date until July 1, 2019, “to allow a more deliberate process of considering alternative and supplemental regulatory provisions and to allow for sufficient time for additional rulemaking.” HRSA further notes that HHS is “in the process of developing new comprehensive policies to address the rising costs of prescription drugs,” including policies affecting Medicare, Medicaid, and the 340B program. HRSA does not provide a time frame for these additional regulations and policies. The proposed rule provides a short, 15-day comment period for stakeholders to provide feedback on the proposal to delay the January 2017 final rule’s effective date for an additional year, to July 1, 2019. The proposed rule is available here.
Nevada Announces Public Hearing on Proposed SB 539 Diabetes Drug Pricing Regulations
May 1, 2018
Nevada’s Department of Health & Human Services (NV DHHS) recently announced a public hearing on regulations it is proposing for the implementation of SB 539, a drug price transparency law that requires manufacturers to report detailed information about drugs NV DHHS determines are essential to the treatment of diabetes.
HHS Secretary Announces New “Drug Czar”
March 29, 2018
On Thursday, March 29, 2018, U.S. Department of Health and Human Services Secretary Alex Azar announced that Daniel Best would be the new “drug czar.” His specific title is Senior Advisor to the Secretary for Drug Pricing Reform and he is tasked with leading the initiative to lower the high price of prescription drugs. Best previously worked at CVS Caremark as corporate vice president of industry relations for the company’s Medicare Part D business. Prior to his work at CVS Caremark and affiliated companies, he worked at Pfizer for twelve years as Director of Business Development. Secretary Azar touted Best’s experience in the industry, stating “[h]e has the deep experience necessary to design and enact reforms to lower the price of medicines that help Americans live healthier and longer lives.” For more information on the U.S. Department of Health and Human Services website, please click here.
U.S. Senator Releases Report on Prescription Drug Prices Increases
March 26, 2018
On March 26, 2018, at the request of ranking member U.S. Senator Claire McCaskill, the minority staff of the Committee on Homeland Security and Governmental Affairs released a report examining the history of drug prices for the brand-name drugs most commonly prescribed for seniors. The report found that the prices for each of the top 20 most-prescribed brand-name drugs in the Medicare Part D program increased over the last five years. Specifically, the report found that, on average, the prices for these drugs increased 12% every year for the last five years; twelve of these drugs had increased their prices over 50% in the five-year period; and six of these drugs had prices increase over 100%. The report does not examine the benefits and value these drugs offer seniors or the research and development cost needed to find the next generation of breakthrough drugs. To view the report, please click here.