President Obama Signs User Fee Bill

On July 9, President Obama signed S. 3187, the Food and Drug Administration Safety and Innovation Act, which reauthorizes FDA user fees for pharmaceutical products. The legislation is the latest reauthorization of the Prescription Drug User Fee Act (PDUFA), which passed the House and Senate last month. Beyond the user fee provisions, the bill also includes new policies to address drug shortages; increases penalties for counterfeiting drugs; provides a directive to establish interoperability standards for prescription drug monitoring programs; as well as includes additional requirements for studies on hydrocodone scheduling, online pharmacies and combating prescription drug abuse by government agencies.

The final package did not include pedigree or traceability standards for pharmaceuticals.



New CMS Document on the Medicaid Program on Covered Outpatient Drugs

Last Friday evening, CMS released the proposed rule regarding changes to averagemanufacturer price (AMP), which essentially formalizes the changes to AMP that had been previously discussed in the Affordable Care Act (ACA). Recall that the ACA had discussed changes to the methodology by which Federal Upper Limit, or FULs, which are used for the reimbursement of generic drugs under Medicaid, would be calculated relative to the methodology that had been previously proposed under the Deficit ReductionAct of 2005 (DRA). The significant changes in ACA included a shift to a no-less than-175% markup over the weighted average manufacturer price (AMP), whichis the acquisition cost by wholesale distributors for drugs for the retail class oftrade, which compares to the prior proposal of 250% of the lowest AMP underDRA (recall that FULs had previously been calculated based on a discount off AWP). While the new proposed rule has some minor clarifications,we don’t believe these should drive material changes to the new AMP prices.CMS did indicate that it recognizes that if reimbursements are too low, pharmacies may elect not to participate in Medicaid, which could potentially impact beneficiary access to pharmacy services. CMS is soliciting comments onthe proposed rule, which are due by April 2.

Its interesting reading should you want to review the ruling:  http://www.ofr.gov/OFRUpload/OFRData/2012-02014_PI.pdf


Prescription data mining bans struck down by US Supreme Court

Ref: Yahoo, News, CNN Health, MSN Money, Yahoo Finance, The Wall Street Journel

June 23rd, 2011

The US Supreme Court on Thursday struck down a state law that prohibits the use of prescription drug records for marketing purposes. In a 6-3 verdict, Justice Anthony Kennedy said that Vermont’s Pharmaceutical Confidentiality Law violates the speech rights of drugmakers and data mining companies, such as IMS Health, Verispan and Source Healthcare Analytics, that collect and sell such information.

The parties in the case urged the higher court to decide the issue after a federal appeals court struck down Vermont’s law, but a separate appeals court upheld similar laws in two other states. Vermont had argued that its law protected the privacy of doctors, and would help control health-care costs. However, data mining companies said the information about doctors' prescribing patterns can be used to help monitor safety issues for new medicines, to reduce costs, and for research purposes.

In the Supreme Court opinion, Kennedy noted that although Vermont's law grew out of a desire to control health-care costs by increasing the use of generic drugs, "the state cannot engage in content-based discrimination to advance its own side of a debate." He indicated that "speech in aid of pharmaceutical marketing…is a form of expression protected by the Free Speech Clause of the First Amendment."

Currently, Maine, New Hampshire and Vermont are the only states to have enacted laws banning any use or publication of the information for the purpose of marketing brand-name drugs.


Pay to Play Generic Pharmaceuticals Law Suit Declined

The U.S. Supreme Court has put a damper on opposition to "pay-for-delay" patent settlements. The high court refused to hear a challenge to a patent deal between Bayer and Barr Pharmaceuticals covering the German drugmaker's antibiotic Cipro. That deal has been the subject of an intense, closely watched antitrust battle between drug purchasers--who allege such patent deals are anticompetitive, and cost patients and payers big money to boot--and the two companies, who've defended their arrangement.

Back in 1997, Bayer agreed to pay Barr $398 million to wait to sell a copycat version of Cipro until June 2003. That was six months before a key patent expired, PharmaTimes reports. A drug wholesaler and pharmacies sued, saying that the settlement was illegal under antitrust law. The courts ruled that the deal didn't break antitrust rules; Bayer argued that the settlement actually ended up benefiting consumers because Barr's version was launched before Cipro's patent expired.

The Federal Trade Commission has been on a crusade against pay-for-delay deals, and European antitrust regulators have been probing patent settlements in the EU, too. As PharmaTimes notes, President Obama has proposed a ban on these sorts of patent settlements, saying it would save the federal government up to $8.8 billion over 20 years. Both branded drugmakers and generics firms, of course, oppose a ban.



FEDS agree to drop AMP provisions for Retail Pharmacy

Dec 14, 2010, Jim Frederick, Drug Store News

ALEXANDRIA, Va. — In a clear victory for retail pharmacy, the National Association of Chain Drug Stores and the National Community Pharmacists Association have agreed with the Centers for Medicare and Medicaid Services on a motion to dismiss the Medicaid average manufacturer price lawsuit. The landmark agreement came after CMS withdrew the last remaining provisions of the AMP rule that had been blocked by a preliminary injunction following litigation by NACDS and NCPA. NACDS and NCPA leaders were jubilant. By agreeing to end the lawsuit, the chain and independent retail pharmacy industries have resolved a long-running and bitter dispute with the federal government over the way pharmacies will be reimbursed for dispensing generic drugs to low-income Americans covered by Medicaid. A dismissal of the lawsuit by a U.S. district court would end a simmering, three-year legal battle — and a three-year court injunction that has blocked CMS from implementing the new AMP guidelines, saving pharmacies billions of dollars, according to pharmacy groups.

NACDS president and CEO Steve Anderson and NCPA EVP and CEO Kathleen Jaeger hailed the agreement. “Today marks a vital triumph for pharmacy and patients,” they said in a jointly worded statement Tuesday afternoon. “The agreement of CMS to stop applying federal upper limits to all B-rated [generic] drugs after Dec. 15 and to refrain from publishing AMPs calculated under the old AMP rule are the final steps that will allow the AMP lawsuit to be dismissed.”

Both leaders also were buoyed by CMS’ agreement to formally withdraw provisions of the AMP rule related to the definitions of both AMP and what constitutes a “multiple-source drug” as specified in the original regulations the agency proposed for Medicaid prescription reimbursements going forward. CMS also dropped its controversial method of calculating the FUL for generic drug reimbursements.

Those agreements represented “another victory for patient care,” Jaeger and Anderson said. “Combined with withdrawal of most of the AMP rule, these victories eliminate the need for the injunction that halted implementation of the AMP rule. Now that all of the issues raised in our AMP lawsuit have been resolved, there is nothing left to challenge at this time, and we are pleased to have reached agreement with CMS on a motion to dismiss the lawsuit.”

The deal lays to rest a long and bitter disagreement between retail pharmacy and federal health officials over Medicaid pharmacy payments, and eliminates one of the industry’s biggest potential threats to profitability. In the three years that the injunction blocking AMP has been in effect, NACDS and NCPA said, it has “prevented devastating reimbursement cuts from being implemented” and bought the industry time to craft an agreement with CMS.

“Each day that the injunction remained in place resulted in the avoidance of crippling cuts in the amount of $5.5 million per day, for a total of approximately $5.75 billion from Jan. 1, 2008, through today,” Jaeger and Anderson said. “These devastating cuts would very likely have created serious impediments for patients in accessing their medications and other pharmacy services.”

The two leaders also noted that, “in addition to the lawsuit, NCPA and NACDS urged policy-makers to recognize the ability of pharmacies and pharmacists to help improve health and reduce healthcare costs, and are gratified that this sense is reflected in the pharmacy provisions of the new healthcare-reform law. The law included provisions to reduce the AMP cuts and to advance medication therapy management. We look forward to continue working with CMS in the implementation of the new AMP provisions,” both leaders added, “and we will continue advocating energetically for sound public policy that provides access to quality pharmacy services for patients, which prevent more costly forms of health care over the long run.”


Medicare Part B Drug Payment in Hospital Outpatient Setting to be ASP+5% in 2011

November 6, 2010 – The Centers for Medicare and Medicaid Services (CMS) has released an advance copy of the final rule outlining changes to the Hospital Outpatient Prospective Payment System (OPPS) for 2011. The final rule  is scheduled to be published in the November 24, 2010 Federal Register.

Changes that will impact Medicare Part B drug coverage in the hospital outpatient setting next year include the following:

·       Increased Payment for Non-Pass-Through Drugs (SCODs). CMS will increase the reimbursement rate for drugs that are not eligible for transitional pass-through payment (also known as Specified Covered Outpatient Drugs, or SCODs) from the current rate of Average Sales Price (ASP) + 4% to ASP + 5% in 2011. The percentage paid above ASP in the outpatient setting is intended to compensate hospitals for associated overhead and related expenses, such as pharmacy services and handling costs.

The final ASP + 5% payment rate is 1% less than the rate originally proposed for 2011 (ASP + 6%), due to updates  in the data used to calculate pharmacy services and overhead costs in the hospital setting that became available to CMS after the proposed rule was issued.

CMS develops ASP-based reimbursement in the hospital setting using a method that relies heavily on claims data submitted by hospitals, which is often incomplete or submitted by the hospitals in formats that CMS cannot use in its drug price and pharmacy overhead estimates. (ASP-based reimbursement for hospitals is derived from a formula that is entirely different from the formula CMS uses to calculate ASP-based drug reimbursement for physicians.) To establish 2011 drug reimbursement rates, CMS used hospital claims data from calendar year 2009. CMS continues to encourage (but does not require) hospitals to report drugs provided in the outpatient setting under Revenue Code 0636, along with specific HCPCS codes and accurate HCPCS billing units. Improved detail and accuracy in hospital claims data, which can only be achieved by hospitals’ voluntary cooperation in using HCPCS in this manner, will assist CMS in compiling better data about hospital drug costs in future years.

·       Transitional Pass-Through Drugs. Pass-through drugs (a relatively small category of newer drugs) will continue to be paid at ASP + 6%, which is unchanged from 2010. The ASP + 6% rate will continue to give pass-through drugs a potential competitive reimbursement advantage over other drugs (the SCODS discussed above), which will be paid at ASP + 5% in 2011.

Drugs approved by CMS for pass-through status are eligible for pass-through payment for two to three years. In 2011, eighteen drugs or biologicals will reach the end of their pass-through period and convert to ASP + 5% reimbursement as SCODs, while 42 drugs will have new or continuing pass-through status and will be reimbursed at ASP + 6%. New drugs that are FDA approved for marketing and complete the CMS pass-through application process may be added to the pass-through list each quarter under timelines established by CMS.

·       Packaged Drug Threshold. In 2011, CMS will package payment for drugs,biologicals and therapeutic radiopharmaceuticals that cost less than $70 per day with payment for other items and services provided on the same day. (The threshold in 2010 is $65.) With certain exceptions, drugs with costs that exceed this threshold are eligible for separate payment.

CMS assessed the applicability of the $70 threshold for each drug using ASP data from the second quarter of 2010 in conjunction with data submitted by hospitals on claims during calendar year 2009.

·       Diagnostic Radiopharmaceuticals and Contrast Agents. Payment for all of these products that are not approved for pass-through will continue to be packaged with payment for the nuclear scan or other associated procedure, even when their cost exceeds the $70-per-day packaging threshold discussed above. (Products approved for pass-through will continue to be eligible for separate payment.)

 In addition, payment for the scan or other procedure will continue to be denied if the radiopharmaceutical or contrast agent is not also reported on the same claim.

CMS recognizes that a problem occurs when a hospital receives a radiopharmaceutical or contrast agent free or at full credit from the manufacturer. Currently, if a hospital does not report the “free” product, payment for the associated scan or other procedure is denied. However, there is not a standard process in place for hospitals to report “free” goods. To overcome this dilemma, CMS will allow hospitals to report the “free” product using modifier –FB (which signifies that an item was provided without cost to the provider) and a charge of less than $1.01. (Modifier –FB is typically used by DME providers, but will also be accepted from hospitals in these circumstances.) The Medicare contractors will be instructed to recognize this modifier/charge combination as an indication of free product and to make payment for the related scan or procedure at a price adjusted to remove payment for the “free” radiopharmaceutical or contrast agent from the packaged rate.

·       Therapeutic Radiopharmaceuticals. These products will continue to be paid at the same rate as other non-pass-through drugs and biologicals (ASP + 6% in 2011) as long as the manufacturer reports ASP data to CMS. If ASP data is not reported, CMS will use hospital mean unit data to derive an allowable.

·       Clotting Factors. Clotting factors will continue to be paid at ASP + 6% plus a furnishing fee of $0.176 per unit.

The final rule contains an extensive discussion of these and other reimbursement issues unrelated to drug payment that will impact hospitals in 2011. Although scheduled for an November 24, 2010 3 publication date, the advance copy can be viewed now at http://www.ofr.gov/inspection.aspx.

CMS is now accepting electronic, mailed, and hand-delivered comments on this final rule. The comment period will close at 5 pm EST on January 3, 2011. ●


U.S. Says Genes Should Not Be Eligible for Patents

 By ANDREW POLLACK Published: October 29, 2010

Reversing a longstanding policy, the federal government said on Friday that human and other genes should not be eligible for patents because they are part of nature.

The new position could have a huge impact on medicine and on the biotechnology industry. The new position was declared in a friend-of-the-court brief filed by the Department of Justice late Friday in a case involving two human genes linked to breast and ovarian cancer.

“We acknowledge that this conclusion is contrary to the longstanding practice of the Patent and Trademark Office, as well as the practice of the National Institutes of Health and other government agencies that have in the past sought and obtained patents for isolated genomic DNA,” the brief said.

It is not clear if the position in the legal brief, which appears to have been the result of discussions among various government agencies, will be put into effect by the Patent Office.

If it were, it is likely to draw protests from some biotechnology companies that say such patents are vital to the development of diagnostic tests, drugs and the emerging field of personalized medicine, in which drugs are tailored for individual patients based on their genes.

“It’s major when the United States, in a filing, reverses decades of policies on an issue that everyone has been focused on for so long,” said Edward Reines, a patent attorney who represents biotechnology companies.

The issue of gene patents has long been a controversial and emotional one. Opponents say that genes are products of nature, not inventions, and should be the common heritage of mankind. They say that locking up basic genetic information in patents actually impedes medical progress. Proponents say genes isolated from the body are chemicals that are different from those found in the body and therefore are eligible for patents.

The Patent and Trademark Office has sided with the proponents and has issued thousands of patents on genes of various organisms, including on an estimated 20 percent of human genes.

But in its brief, the government said it now believed that the mere isolation of a gene, without further alteration or manipulation, does not change its nature.

“The chemical structure of native human genes is a product of nature, and it is no less a product of nature when that structure is ‘isolated’ from its natural environment than are cotton fibers that have been separated from cotton seeds or coal that has been extracted from the earth,” the brief said.

However, the government suggested such a change would have limited impact on the biotechnology industry because man-made manipulations of DNA, like methods to create genetically modified crops or gene therapies, could still be patented. Dr. James P. Evans, a professor of genetics and medicine at the University of North Carolina, who headed a government advisory task force on gene patents, called the government’s brief “a bit of a landmark, kind of a line in the sand.”

He said that although gene patents had been issued for decades, the patentability of genes had never been examined in court.

That changed when the American Civil Liberties Union and the Public Patent Foundation organized various individuals, medical researchers and societies to file a lawsuit challenging patents held by Myriad Genetics and the University of Utah Research Foundation. The patents cover two genes, BRCA1 and BRCA2, and the over $3,000 analysis Myriad performs on the genes to see if women carry mutations that predispose them to breast and ovarian cancers.

In a surprise ruling in March, Judge Robert W. Sweet of the United States District Court in Manhattan ruled the patents invalid. He said that genes were important for the information they convey, and in that sense, an isolated gene was not really different from a gene in the body. The government said that that ruling prompted it to re-evaluate its policy.

Myriad and the University of Utah have appealed.

Saying that the questions in the case were “of great importance to the national economy, to medical science and to the public health,” the Justice Department filed an amicus brief that sided with neither party. While the government took the plaintiffs’ side on the issue of isolated DNA, it sided with Myriad on patentability of manipulated DNA.

Myriad and the plaintiffs did not comment on the government’s brief by deadline for this article.

Mr. Reines, the attorney, who is with the firm of Weil Gotshal & Manges and is not involved in the main part of the Myriad case, said he thought the Patent Office opposed the new position but was overruled by other agencies. A hint is that no lawyer from the Patent Office was listed on the brief.


MGMA, Others Urge Congress to Stop Medicare Cuts

 On December 1, physicians will be facing 23.6% percent Medicare payment cut unless Congress acts. An additional cut is set for January 1, 2011 of 6.5% Medical Group Management Association (MGMA) cited results from a recent survey showing over 65% of practices reporting plans to limit accepting new Medicare patients and over half would suspend plans to purchase new clinical facilities or equipment. MGMA along with many other key stakeholders and organizations are urging practices, once again, to reach out to Congress before lame duck post-election inertia sets in and ask them to act on this concern


NACDS and NCPA Stand Side by Side on Retail Pharmacy Impact of the AMP Rule and Expect CMS to Withdraw Provisions

The following is a statement issued today by National Association of Chain Drug Stores (NACDS) President and CEO Steven C. Anderson, IOM, CAE and National Community Pharmacists Association (NCPA) Acting Executive Vice President and CEO Douglas Hoey, RPh, regarding the proposed rule by the Centers for Medicare & Medicaid Services (CMS) that would withdraw existing provisions of the Medicaid pharmacy reimbursement formula under the average manufacturer price (AMP) model: “We are pleased that the Centers for Medicare & Medicaid Services (CMS) has proposed a rule that would withdraw provisions of what is known as the Medicaid average manufacturer price (AMP) rule. The proposed rule calls for the withdrawal of existing provisions that define AMP, that determine the calculation of federal upper limits (FULs), and that define ‘multiple source drug.’ Put simply, all of these provisions relate to the reimbursement to pharmacies for generic Medicaid prescriptions, and thus impact patients’ access to pharmacies. The move to withdraw these provisions is a victory for patient care as it is delivered in America’s pharmacies every day. “When we filed the lawsuit in 2007 we knew that patient care was at stake. It is important to point out that the withdrawal of these provisions is another step toward reducing what would have been major cuts to pharmacy reimbursement. The end result is not an increase in reimbursement to pharmacy, but rather the lessening of cuts that previously would have involved pharmacies selling most generic drugs at a loss, thereby threatening their long-term ability to provide patient care. “We insisted that this policy was not appropriate. Separately, we also have urged that policymakers should recognize the ability of pharmacies and pharmacists to help improve health and reduce healthcare costs. We are gratified that this sense is reflected in the pharmacy provisions of the new healthcare reform law. The new law contains provisions ranging from dramatically reducing the AMP cuts, to advancing medication therapy management, through which pharmacists can help patients take their medications correctly, which is referred to as ‘medication adherence.’ The costs related to poor medication adherence have been estimated to reach $290 billion annually, or 13 percent of all healthcare expenditures. We urged that patient care should not be jeopardized, but rather that pharmacy be engaged more strategically for the good of patient health and healthcare delivery. “We anticipate issuing formal comments on CMS’ proposed rule to withdraw these provisions of the AMP rule, and we will continue to work with Congress and with CMS to advocate for access to pharmacy services for patients.”


Insurers will be required to Standardize Appeals Procedures


July 27, 2010 – Appeals of denied claims and insurance policy rescissions may soon become easier and more standardized under provisions of the Patient Protection and Affordable Care Act (ACA) that take effect for plan years beginning after September 23, 2010. With one major exception, the new appeals rules apply to all plans uniformly, including self-insured employer plans that fall under the Employee Retirement Income Security Act (ERISA). Previously, ERISA plans were exempt from certain State regulations that applied to other types of insurance plans. This change represents a significant benefit for patients insured under an ERISA plan.

The new regulations give patients in new health plans in every State the right to appeal decisions made by their plan through the plan’s internal process (which is not new). However, for the first time, patients will have the right to appeal decisions made by their health plan to an outside, independent reviewer, no matter what State they live in or what type of health coverage they have. Currently, not all States mandate the use of an outside reviewer, and ERISA plans are often exempt from requirements such as this.

The regulations standardize internal appeals procedures for all new payors. Under the new rules, each plan must have an internal appeals process that, at a minimum:

  • Allows patients to appeal when a health plan denies a claim for a covered service or rescinds coverage;
  • Gives patients detailed reasons why the denial was made;
  • Requires plans to notify patients about their right to appeal and how to begin the appeals process;
  • Ensures a full and fair review of the denial; and
  • Provides patients with an expedited appeals process in urgent cases.

If a patient’s internal appeal is denied, he or she will have the right to appeal to an independent reviewer not employed by the health plan, regardless of the type of health plan. Currently, most States require non-ERISA plans to use an independent reviewer, but rules in the States vary widely. In some States, for example, external review requirements apply only to HMOs. In addition, there are currently five States that do not already require any access to some form of external review (including North and South Dakota, Nebraska, Alabama and Mississippi, according to the Kaiser Family Foundation).

The new regulations will help standardize the process across the States and implement a process in those States where one does not currently exist. For example, all independent reviewers in every State must comply with standards established by the National Association of Insurance Commissioners. If State laws do not meet these standards, patients in those States will be protected by comparable Federal external appeals standards. In addition, people in health plans that are not subject to State law (e.g., ERISA plans) will be protected by the Federal standards. All decisions by the independent reviewer will be binding on the health plan, which is currently not the case in every State.

This regulation applies to new plans and to existing plans that lose their “grandfathered” status under ACA. An existing health plan is considered “grandfathered” until it makes changes in plan structure or benefits, at which point the plan will lose its grandfathered status and be classified as a “new” plan subject to all ACA provisions. Existing plans may lose grandfathered status if, for example, they make major increases in premiums, modest increases in co-payments or significantly cut benefits. The White House estimates that half of all employers, including two-thirds of small employers, could lose their grandfathered status by 2013.

These regulations were jointly issued as an interim final rule with comment period by the Department of the Treasury, the Department of Labor, and the Department of Health and Human Services, the Department of Labor in the July 23, 2010 Federal Register. Comments will be accepted from the public on or before September 21, 2010.