Generic savings and U.S. health policy: Pulling the federal levers at both ends
Does the Obama administration “get it” when it comes to pharmacy’s vital interests and lowering healthcare costs?
One sometimes wonders. As much as I like the president and many of his ideas and instincts, I’m sometimes stumped by some of the lesser-understood facets of the administration’s health policy, and by the seemingly contradictory sets of priorities promoted by that policy.
Take the fiscal year 2014 federal budget plan released by the White House last week. The president has repeatedly endorsed efforts to cut the nation’s spiraling-out-of-control healthcare costs, and he made those efforts a centerpiece of the Patient Protection and Affordable Care Act health reform law passed in 2010. But that support for smarter, more cost-effective health outlays doesn’t always translate to budgetary planning.
Both the White House and the whip-smart leaders implementing federal health policy through the Dept. of Health and Human Services — including HHS Secretary Kathleen Sebelius; Marilyn Tavenner, acting administrator of the Centers for Medicare and Medicaid Services; and Dr. Margaret Hamburg at the Food and Drug Administration — voice support for raising generic drug dispensing rates as a tool to lower federal and state health expenditures. What’s more, they clearly understand what levers are available to the executive branch through agencies like CMS to help bend the health cost curve. But sometimes it seems that the administration’s healthcare policymakers are pulling on both sides of the levers at once.
To wit: the Obama budget for fiscal 2014 includes a proposal to cut Medicaid spending. Perfectly understandable, given the intractable and unsustainable rise in U.S. entitlement program costs. But White House budget planners would do it by lowering the federal upper limits [FULs] for prescription drug reimbursements and cutting Medicaid payments to pharmacies, the most cost-effective components of the healthcare network.
Those cuts could “reduce access to prescription drugs and pharmacy services for Medicaid patients, resulting in increased overall healthcare expenditures,” said the leaders of the chain and independent pharmacy lobbying groups. What’s more, the reductions would primarily hit generic drugs, as reported by Drug Store News senior editor Antoinette Alexander.
Steve Anderson, president and CEO of the National Association of Chain Drug Stores, and B. Douglas Hoey, CEO of the National Community Pharmacists Association, warned CMS in an open letter that the draft FULs would pay pharmacies below their costs for serving Medicaid patients. That, in turn, could force some pharmacies out of the Medicaid program — not to mention undermine the incentive to dispense cost-saving generic drugs.
Generic drug trade group praises Obama budget, expresses reservations
WASHINGTON — Generic makers heralded the fiscal year 2014 budget proposed last week by the Obama administration for its embrace of generic drugs, but were critical of its provisions on patent settlements and rebates.
The Generic Pharmaceutical Association, a trade group for the generic drug industry, noted that the budget would encourage increased use of generic drugs and savings from biosimilars, while also proposing prohibiting state-level "carve-out" laws that limit dispensing of generics and increasing Medicaid payments to states that use the cheapest drugs available.
At the same time, the group expressed opposition to the budget’s ban on patent settlements between generic and branded drug companies that critics label "pay-for-delay" and allege to cause generic drugs to enter the market later than they otherwise would. But the GPhA said the deals, which involve an agreement in which a generic drug company holds off launching its product in exchange for either a payment from the branded drug company or a promise no to launch the branded drug at a discount as an "authorized generic" in order to compete with the Food and Drug Administration-approved generic, result in drugs getting to consumers months or years ahead of patent expiry anyway, and that the Federal Trade Commission’s long-standing opposition to the settlements stems from a 2002 study that the GPhA called "outdated" and "faulty."
The group also opposed increases or extensions of Medicaid rebates beyond what drug makers currently pay, holding up Medicare Part D as an example of cost efficiency and calling for replicating the latter’s market-based competition. Such changes to the rebate structure, the GPhA said, would "likely have the unintended consequence of shifting costs onto American consumers purchasing their care in the private marketplace."
N.D. governor signs PBM bill into law
ALEXANDRIA, Va. — The governor of North Dakota has signed into law a bill that would require pharmacy benefit managers to inform pharmacies about how reimbursement for generic prescription drugs is calculated under maximum allowable cost benchmarks and provide a more detailed appeals process to pharmacies to contest the MAC reimbursement caps that PBMs set up.
The bill, H.B. 1363, received unanimous support in both houses of the state’s legislature, and Gov. Jack Dalrymple signed it into law Monday.
The bill received praise from a trade group that represents independent retail pharmacies. North Dakota has more than 200 independent pharmacies, according to the trade group, the National Community Pharmacists Association.
"This legislation will help give pharmacists a greater window into a secretive reimbursement process and give pharmacies avenues for redress such as when payments aren’t updated when drug costs rise," NCPA CEO B. Douglas Hoey said.