Managed Care Newsstand

FDA Proposes Rule to Allow Importation of Prescription Drugs

The U.S. Food and Drug Administration (FDA) issued a proposed rule in December seeking comments on a proposal to amend Section 804 of the Food, Drug, and Cosmetic Act that would allow the importation of prescription drugs from Canada. President Trump has expressed support for the notion as a way to reduce drug costs. States including Florida, Colorado, Maine, and Vermont have expressed interest in the proposal. PhRMA, the trade association representing the drugmanufacturing industry, has expressed concern, calling the proposal a political move rather than a pragmatic policy solution. There are no estimates as to the possible savings under the rule, since it is unclear how many states might participate. The FDA framed it as a proof-in-concept proposal that could be expanded if successful. The rule-making process is expected to take some time.

House of Representatives Passes Legislation to Require Government Negotiations of High-Cost Drugs

The U.S. House of Representatives passed legislation in December that would require the federal government to negotiate payment rates for up to 250 of the highest-priced drugs in the U.S. that face little or no competition. Negotiations would be based on an international pricing index that averaged the prices of drugs from six developed countries (France, Canada, Germany, UK, Japan, and Australia), with prices capped at 120% of the international

In February, the Centers for Medicare & Medicaid Services issued its proposed rule and Advance Notice Part II for changes to the Medicare Advantage and Part D programs.

pricing index. The Congressional Budget Office (CBO) estimated that the bill would save more than $450 billion over 10 years. The bill, HR3, passed 230- 192 with two Republicans in support and no Democrats in opposition. The White House stated it would veto the bill if it reached the president’s desk. The Senate majority leader stated that the bill would not be brought up in the Senate. Senate leaders continue to push for their own drug-pricing legislation. The Senate Finance Committee passed drug-pricing legislation in July that would limit Medicare drug-price increases to the inflation rate; CBO estimated 10- year savings at $100 billion. However, the bill has yet to reach the Senate floor. Many Republican senators oppose the bill, calling it government interference in the marketplace. Senate majority leader Mitch McConnell stated in February that the bill faced “internal divisions” among Republicans and would not likely move to a floor vote until those divisions could be overcome. The committee bill passed 19-9 with all Democrats voting in favor of the bill and nine Republicans on the Republican-led committee voting against it.

CMS Releases Advance Notice and Proposed Rule for Medicare Advantage and Part D Programs

In February, the Centers for Medicare & Medicaid Services (CMS) issued its proposed rule and Advance Notice Part II for changes to the Medicare Advantage (MA) and Part D programs. The proposed changes are expected to increase payments in the MA program by 0.93% and in the Part D program by 2.85%. The proposed rule intends to do the following:

• Codify the SUPPORT Act, a recent law dealing with opioids that requires Part D plans to implement drugmanagement programs by 2022. • Amend network adequacy requirements. • Prevent contracting with look-alike

Dual-Eligible Special Needs Plans. • Allow individuals with end-stage renal disease to enroll in MA plans beginning in 2021, removing the prohibition that has been in place before the passage of the 21st

Century Cures Act. • Allow for a second “preferred” specialty tier with lower cost-sharing obligations. • Call for real-time drug-pricing cost comparisons beginning in 2022.

CREATES Act Included in Final End-of-Year Spending Bill Passed by Congress

President Trump reached an agreement with Congress in December on an end-ofyear spending bill for 2020. The federal government had been operating on a temporary spending bill since Oct. 1, the

start of the federal fiscal year. Included in the package of tax and spending bills was legislation titled the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act of 2019. This bill, first introduced in 2016, prevents brandname drug manufacturers from refusing to sell samples to generic manufacturers in order to block the introduction of generic alternatives and allows generic companies to sue drug manufacturers for access to these samples. The legislation will help speed the introduction of generic drugs to the marketplace and carries estimated savings of $3.8 billion to Medicare and Medicaid programs over 10 years.

FCC Approves 988 as Future Suicide Prevention Hotline Number

In December, the Federal Communications Commission (FCC) unanimously approved the creation of a three-digit suicideprevention hotline — 988 — similar to the current 911 emergency call system. Congress passed legislation in 2018 directing the FCC to examine the feasibility of establishing a nationwide hotline similar to 911. The FCC approval begins the process to establish the hotline, which will take an estimated 18 months. It will cost approximately $500 million in the first year of operation, with costs dropping to under $200 million in year two. Approximately 2.2 million people called the current 10-digit suicide prevention lifeline in 2018. Approximately 47,000 people died of suicide in 2017, an increase of over 33% since 1999. Suicide rates have increased from 10.5 per 100,000 to 14 per 100,000 over the past two decades.

CMS Allows for States to Shift to Block Grant Funding for Medicaid

In late January, the CMS announced optional demonstration authority for states to shift their Medicaid program to a block grant financing model, which the CMS referred to as the Healthy Adult Opportunity (HAO) program. While the CMS cannot impose block grants on states, it invites states to opt into a block grant or per capita cap funding model as a demonstration project, also known as a waiver under Section 1115 of the Social Security Act. The demonstration would provide states with unprecedented flexibility to tailor their state Medicaid programs. Under the guidance, states could pursue an aggregate cap or a per capita cap financing model for populations not eligible under their state plan. Under both financing approaches, states could design benefit packages (including drug formularies), cost-sharing requirements, and delivery care models within broad parameters. As part of the program, and to ensure accountability, the CMS would impose various monitoring, evaluation, and reporting requirements on states. At this point, it is not clear if any state will pursue block grant demonstration with the federal government.

Language to Ban Spread Pricing in PBM Contracts Included in Surprise Medical Billing Legislation

In December, committee leaders in the Senate HELP Committee and House Energy and Commerce Committee announced an agreement on surprise medical billing legislation that would limit costs to consumers who seek care at an in-network facility but are charged out-of-network costs by providers who are not in-network within that facility. The legislation includes provisions that would: • Ban spread pricing, or the shifting of the variability of risk from plans to pharmacy benefit managers (PBMs), in both commercial and government markets, and instead require that all contracts have passthrough pricing, meaning risk is borne by the plan sponsor and not the PBM. • Require that all rebates and discounts be passed through to plan sponsors. • Require regular reporting to plan sponsors of all costs, fees, discounts, and rebates associated with PBM contracts. The House Ways and Means Committee marked up surprise medical billing legislation in February that differs significantly from the other committees’ bills. Given that the significant policy discrepancies reflect the differences in insurers’ and hospital and provider groups’ views on how to address surprise medical billing, it is not clear if the legislation will pass this year.

SCOTUS to Hear PBM/ERISA Case: Rutledge v. PCMA

On Jan. 10, 2020, the U.S. Supreme Court announced that it will hear Rutledge v. Pharmaceutical Care Management Association (PCMA). In 2015, Arkansas enacted a MAC Transparency law that imposed new regulations on PBMs and their relationships with pharmacies. The PCMA filed suit challenging the Arkansas statute preempted by the Employee Retirement Income Security Act of 1974 (ERISA) and Medicare Part D plans. The Supreme Court will hear the case in April; a decision is expected by the end of June. ERISA has long enabled employers to provide consistent, nationwide healthcare benefits due to its preemption of state laws.