Your Medicaid Program Can Save Money Without Hurting Patient Health

Tip of the Month: You Can Cut Medicaid Costs Without Harming Patients - Follow Alabama & Oregon's Lead

Consider using an Average Acquisition Cost (AAC) model for drug
pricing, which uses actual pharmacy invoices in determining average acquisition
costs to pharmacies. This approach enables states to get a better handle on the
"spread" and is more reflective of acquisition and dispensing costs
and also ingredient costs for certain specialty drugs.

Most states still use Average Wholesale Price (AWP) which has been
subject to much gaming by the industry, resulting in many fraud case brought by
state Attorneys General and earning the moniker "Ain't What's Paid."

The Centers for Medicare and Medicaid Services (CMS) is developing
a database of National Average Drug Acquisition Costs and is encouraging states
to adopt an AAC payment methodology based on this resource. CMS plans to
distribute its database at the end of 2011 based on a CMS survey of retail
pharmacies.

Alabama, the first state to
receive CMS approval for using AAC, has projected savings of $30.5 million in
the first year, or 6.1 percent of its current fee-for-service drug expenditures
of $500 million. The new method was announced September 22, 2010 and went into
effect March 23, 2011. Oregon expects
to save $1.6 million, or 1 percent of its $160 million fee-for-service Medicaid
drug expenditures. Idaho,
which is in the process of implementing AAC, expects to save $2 million in
state general funds and $4.6 million in federal funds, for a total of $6.6
million.

Medicaid Pharmacy
Reimbursement Reform:
Trends and
Recommendations

Presentation
Appendices:
Attachment 1 Pembroke
Pharmacy Market Share 2010 E
Attachment 2 updated
State reimbursement
Attachment 3a Kaiser
Medicaid P91
Attachment 3b Kaiser
Medicaid P92
Attachment 4 Takeda
2009

Speakers Mike
Winkelman, Pharmacy Consultant
Nell Geiser,
Change to Win Pharmacy Initiative Coordinator
Mr. Winkelman and Ms. Geiser discuss opportunities for states to
achieve a more transparent and accountable Medicaid pharmacy reimbursement
system that can result in significant savings. As states struggle to cut costs
while maintaining quality healthcare for vulnerable residents, now is the time
for lawmakers and agency officials to advance common-sense reimbursement
reforms.

Despite positive policy changes related to Federal Upper Limits
and Average Whole Price, many states are still losing out and paying
significantly more than other payors for pharmacy services. The result is that
providers sometimes retain unjustifiable profits, and there is no accurate way
to track that spread. In response, some states have successfully implemented
highly effective MAC lists, and others are testing new ground using Actual
Acquisition Cost, but state officials are still grappling with the question of
how best to ensure Medicaid is paying a fair and transparent price for
prescriptions. The presentation includes recommended guidelines for
reimbursement policy reform and estimates of projected savings if new
benchmarks are implemented.

Want to learn more?
Issue brief from Community Catalyst
Policy paper from Kaiser Family Foundation
Information from Alabama's Medicaid Program
Prescription Policy Choices website
NLARx website

Will the Drug Industry Get its Heart's Desire and Soon be Able to Market Off-Label and Every Other Way?

The pharmaceutical industry is getting ready to bootstrap from the Supreme Court's IMS v. Sorrell decision overturning New Hampshire's privacy rules on datamining to get rid of the pesky FDA rules limiting their marketing activities to approved uses of drugs. As the Wall St. Journal reported recently, industry attorneys are gearing up to challenge longstanding FDA regulations that have been the source of dozens of legal settlements and even criminal convictions for deceptive marketing, most recently when Glaxo Smith Kline agreed to pay $3 Billion to the US government earlier this week to settle civil and criminal charges in the marketing of Avandia. Read the Pharmalot post and this article on Par Pharma.

This should be no surprise to anyone participating in the symposium on the Sorrell decision held last month at New Hampshire Law School, co-hosted by the Vermont Law School, where legal scholars and practitioners both supporting and disparaging of the US Supreme Court's decision agreed on its breadth and the potential that further litigation could expand the scope of the First Amendment to limit FDA marketing rules. Law professor Kevin Outterson addresses this issue in his post "The Last Drug Company Settlement for Off-Label Promotion" in his blog The Incidental Economist.

By the way, the industry is not going be content with letting this issue percolate through the courts. Leaked US negotiating textfrom recent TPPA trade negotiations (see more on this below) would require countries to allow drug companies to post "true information" on their websites and link to any other website in existence - including social media where so many problems have already cropped up.

For more information:

Sharon Anglin Treat, NLARx Executive Director

207-622-5597

streat@reducedrugprices.org

See this Story in NLARx's Advertizing & Marketing News

Is anyone listening? Will the Feds Finally Do Something about Antitrust Problems in the PBM Industry?

There's plenty of attention being paid -finally!- to the super-concentration of the pharmacy benefit manager (PBM) marketplace, and the latest merger. The federal Trade Commission (FTC) is in the middle of an investigation of the proposed Express Scripts-Medco merger, which would create the nation's largest administrator of drug benefits if federal regulators sign off. The FTC investigation could last several more months (details are confidential). There are 33 state AG offices led by Pennsylvania that are looking into the merger, and there will be a Senate Judiciary hearing in early December. A House committee held a similar hearing last month and 14 members of Congressrecently signed a letter of concern to the Federal Trade Commission. The powerful industry isn't taking this lying down, and is out lobbying in force on Capitol Hill. Read this article about "dueling lobby days." Consumer groups as well as community pharmacists have led the fight against the merger, with a recent press conference and the formation of a national coalition, not to mention op-ed articles. No wonder Medco is championing robots over pharmacists! NLARx signed a letter with other national consumer groups opposing the merger earlier this year. Want to stay up to date on merger action and reaction? Go to a new website, http://r20.rs6.net/tn.jsp?llr=dxiucccab&et=1108455173285&s=0&e=001dnQC3_70n_JIq3I7-chWAcw7yLzl7QnI77l1TF4MqRSuJGjiikHDWmvfdjXbCYLNFu5lrnI-0VaVSpfYCACd0beHuTVu9Bii.

For more information:

Sharon Anglin Treat, NLARx Executive Director

207-622-5597

streat@reducedrugprices.org

See on Pharmacy Benefit Managers news page

Trans-Pacific Partnership Talks in Lima, Peru Focus Attention on Access to Medicines Issues Disclosed in Leaked Text on Pricing and Patent Policies

NLARx Executive Director Sharon Treat attended the TPPA stakeholder events in Lima, Peru last month and presented on medicines issues at the official forum October 25. The talks include nine Pacific Rim nations, including the US, but could expand to include as many at 22 nations before the ink is dry on a final deal, with Canada, Japan and the Philipines poised to get involved soon, according to US negotiators. Here is a nice roundup on the Peru talksposted by Knowledge Ecology International. While the trade talks haven't received much media attention here in the US, they are a big deal in Peru where health advocates worry that the trade deal will make drugs unaffordable, and in New Zealand, where the national Pharmac program, under which New Zealanders can purchase most drugs for a few dollars a script, is exceedingly popular (see this "Pharmac attack" web posting.) Leaked negotiating text was posted on the Internet during the Lima talks, including texts on healthcare transparency and pricing and intellectual property. The leaked provisions are somewhat similar to the Korea and Australia agreements and raised many concerns among access to medicines groups, state legislators, and even law professors. More For complete leaked text, relevant documents and analysis, we recommend the InfoJustice website as well as Public Citizen's Access to Medicines Campaign. Read Sharon Treat's statement on the leaked text here. NLARx, state legislators and other state officials have raised concerns about both procedural and substantive provisions in the Australia and the Korea FTAs, which include pharmaceutical provisions that could conflict with the effective implementation of Medicaid and reduce access to affordable medicines under 340B and other programs. Although the Australia FTA's pharmaceutical provisions [Annex 2-C] and now the Korea agreement are a done deal, the Trans-Pacific Partnership Agreement is still being negotiated, and thus is still open to change. While state legislators were able to convince the USTR to include a footnote in in the Korea FTA "carving out" Medicaid from its provisions, we continue to have concerns because this carve-out does not include other important programs such as 340B, and because the FTAs would essentially lock the US into the current way of pricing drugs in Medicare Part D and call into question reforms in the Affordable Care Act. From the leaked text, it is impossible to know whether the USTR intends to carve out Medicaid, expand the carve-out to other programs, or delete the carve-out altogether, and the USTR's chief negotiator did not answer a question about the carve-out at the stakeholder briefing in Lima. For more information:Sharon Anglin Treat, NLARx Executive Director207-622-5597streat@reducedrugprices.org

Why is U.S. Trade Policy Reducing Access to Pharmaceuticals?

Pharmaceutical pricing and intellectual property issues have been front-and-center in the debate over the Korea-US free trade agreement under consideration by Congress, as well as in the Trans-Pacific Partnership Agreement (TPPA) still under negotiation. In past years, NLARx and member legislators raised concerns about both the Australia and the Korea trade agreements, which included pharmaceutical provisions that could have conflicted with the effective implementation of Medicaid and reduced access to affordable medicines. In January 2011, NLARx adopted aResolution opposing these provisions in the TPPA.

On September 10 in Chicago, NLARx Executive Director and Maine Representative Sharon Treatpresented on the potential impact of the TPPA on access to affordable medicines in the US. Concerns included conflicts with the usual procedures followed by states and the federal government in Medicaid, 340B and Part B of Medicare, delayed access to generics, conflict with provisions of the Affordable Care Act, and locking the US into high market-based pricing of pharmaceuticals in the future. Similar concerns were raised by Vermont Governor and NLARx co-founder Peter Shumlin in a letter to President Obama. See Pharmalot storyquoting Rep. Treat and Prof. Sean Flynn's analysishere.

In the TPPA, according to an analysis of leaked textand analysis of a rather general public medicines white paper that was issued this week by USTR, the US has proposed provisions that would extend monopoly rights of pharmaceutical companies; would remove safeguards that allow patent applications to be challenged before they are granted; would allow patents to be granted for minor variations to existing drugs; and would provide extra rights for pharmaceutical companies in court.

The pharmaceutical industry is also lobbying for further restrictions on the use of clinical trial data by the manufacturers of generic medicines seeking to register their generic versions - turning to secret trade deals to prop up profits as their blockbuster drugs go off patent. Secret cables leaked by WikiLeaks confirm the industry's hands-on approach to USTR on these issues.

The Center for Policy Analysis on Trade and Health(CPATH) and other public health experts have called on trade officials to reverse course and protect health. CPATH's research established that intellectual property rules in the Central American Free Trade Agreement (CAFTA) raised medicine prices in Guatemala by up to 856%. The Austrialia-U.S. Free Trade Agreement authorized drug company intrusions into Australia's cost-effective drug purchasing system, resulting in increased prices for statins.

The US is also seeking investment provisions in the TPP agreement that would expose governments to legal action by foreign companies if governments introduce policies (including policies to protect public health) that affect these companies' profits. Similar trade provisions are the basis for a legal challenge by Phillip Morris to Uruguay's tobacco packaging warning label rules.

All of this is cause for real concern, and NLARx has called on USTR to act now to safeguard access to affordable medicines. Read more about trade agreements and pharmaceutical policy.

Will Supreme Court Tie States' Hands in Medical Records Privacy Efforts?

Yesterday, the United States Supreme Court struck down a Vermont law that limited the sale of physician-identifiable prescription data for marketing purposes. In a 6-3 decision in Sorrell v. IMS Health, the Court held that the law was a violation of the First Amendment's free speech protections. The decision is a huge disappointment to legislators who have sought to protect the confidentiality of private prescription records, not limited to the states of Vermont, New Hampshire and Maine, that have already adopted such laws, or Massachusetts which has considered adopting protections.

The information Vermont tried to protect comes from private medical records. It is being used to profile doctors to help drug companies in their marketing efforts. These records are not used in speech nor is the data in these records 'speech' as we have come to understand the term. The expansive decision by the U.S. Supreme Court, which extends new protections to commercial speech, should be a concern to anyone interested in keeping private information private.

Sean Fiil-Flynn, Associate Director of the Program on Information Justice and Intellectual Property at the Washington College of Law, served as counsel for amici NLARx and AARP in the case. Prof. Fiil-Flynn stated: "For the first time in the Court's history it has extended heightened First Amendment protection to the commercial trading of information that is neither from the public sphere nor destined for it. Vermont regulated only the commercial trade in prescription records that were purely for the purpose of targeting marketing to doctors to alter prescriptions toward more profitable outcomes." Read Prof. Fiil-Flynn's full statement.

What does this mean for the future of data privacy? This decision raises concerns that extend well beyond medical records. EPIC, the Electronic Privacy Information Center, filed a brief in the case focusing on the vulnerability of patient data to exposure despite the measures taken to de-identity records. The case is getting attention from internet privacy bloggers as well.

All may not be lost, at least with respect to medical records. Boston University law professor Kevin Outterson, who represented medical association amici in Sorrell, says in his blog "the Vermont statute suffered from self-inflicted wounds, namely some incautious comments in the preamble" and that "Vermont can fix the statute quite easily with the guidance given by the Court." He suggests one option would be to make the statute a narrow extension of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), giving the privacy right exclusively to the patient and a confidentiality right directly to the physician. Alternatively, he suggests, "Vermont can ban data mining by contract with participating pharmacies through Green Mountain Care," its newly-enacted single payer health program. Finally, Outterson suggests, Vermont could also clarify that pharmacies collect this information only as a state-mandated record.

Prof. Flynn agrees the Supremes may have left room for states and the federal government to address this issue though more targeted medical records laws, saying "The bright spot in the Court's opinion is its recognition that there is, in fact, an interest of governments in protecting the confidentiality of prescription records," and its reference to HIPAA, "which bans many commercial and other uses of medical records, but does not extend its protection to prescriber-identified prescriptions." His advice is to pass laws that "extend the protections of HIPAA to prescriber identified prescription (and other medical) records."

Interestingly, states already are going down this path as they look to implement electronic medical records. New Hampshire law says medical records are deemed the property of patient (§332-I:1) and Maine just enacted Public Law 2011, chapter 347, which gives patients the right to opt out of its electronic health records system. Both of these laws would need amendment to eliminate the loopholes that infect HIPPA, but they show states are already thinking about patient-centered control of medical records.

For more information on Sorrell v. IMS, including Supreme Court Briefs and the full text of the decision, please go here.

"Marketing Juggernaut" Collides with Children's Safety

"Marketing Juggernaut" Collides with Concerns About Safety and Appropriate Treatment as Legislators in Several States Review Policies Governing Children and Psych Drugs

Monday May 23rd, 2011

Sharon Treat, Executive Director, National Legislative Association on Prescription Drug Prices

At a time when sales and marketing of these drugs is growing exponentially, there is an increasing interest in reviewing the appropriateness of standards for prescribing antipsychotic drugs to children. As the N.Y. Times reports, "Even the most reluctant prescribers encounter a marketing juggernaut that has made antipsychotics the nation's top-selling class of drugs by revenue, $14.6 billion last year, with prominent promotions aimed at treating children." According to the Times, In the last few years, doctors' concerns have led Florida and California to put in place restrictions on doctors who want to prescribe antipsychotics for young children, requiring a second opinion or prior approval, especially for those on Medicaid.

Questionable practices in Texas led to a psychiatric preferred drug program for children being suspended in 2008. The issue has gotten the attention of state Medicaid medical directors, who released a study in July 2010 recommending that more states require second opinions, outside consultation or other methods to assure proper prescriptions. The report found a rapid increase in prescribing of these medications to children or adolescents over the past several years, and that children in foster care (12.4% percent) were prescribed AP medications at much higher rates than those not in foster care (1.4 percent).

The issue has gotten the attention of investigative reporters and doctors alike. See this Frontline Report and the article in the Journal of the American Medical Association on May 19, 2010, which reported children covered by Medicaid are far more likely to be prescribed antipsychotic drugs than children covered by private insurance, and Medicaid-covered kids have a higher likelihood of being prescribed antipsychotics even if they have no psychotic symptoms. Read more.

In Florida, as Pharmalot reports, the state’s Department of Juvenile Justice has ordered a review because of concerns about improper marketing and conflicts of interest leading to over-prescribing. “The questions recently brought to our attention are serious, and deserve answers based on a careful, thorough and independent review of the facts,” DJJ Secretary Wansley Walters tells the paper, which ran a two-part series about the problem (read here and here).

This year Maine Representative Joan Welsh sponsored LD 646," An Act to Ensure the Safety of Children in the MaineCare Program who are Prescribed Antipsychotic Medications." At the public hearing, a young women who had been prescribed multiple medications during many years in foster care gave wrenching testimony about her experiences. Testifying in support, Ann Woloson of Prescription Policy Choices noted that prescribing of psychiatric medications to children in the U.S. has increased dramatically compared to other countries: "In less than a ten-year period the use of potent psychotropic medication in children and adolescents grew by five-fold in the US, nearly double the rate than children living the Netherlands, Germany and other European nations. Some children as young as just one year-old, are being prescribed these medications at increasing rates. Behaviors once considered “normal”, a baby not sleeping through the night or a toddler going the terrible twos are now being diagnosed and medicated as “sleep resistant” or “oppositional-defiant, with mood swings”.

Read the LD 646 Testimony here:

PPC LD 646 Testimony(44 KB PDF)

April 25 Psych testimony foster kid(41 KB PDF)

Representative Welsh's testimony(44 KB PDF)

As amended, the LD 646 establishes a work group to consider the current case management and coordination of care for children in the MaineCare (Medicaid) program who are prescribed antipsychotic medications and to make recommendations for improvement. A positive vote out of committee is anticipated.

Georgia is also launching review of foster kids' psych drugs, after Representative Mary Oliver introduced legislation, House Bill 23, to require the Department of Human Services to establish regulations governing the use of psychotropic medications for foster children in state custody. House Bill 23 was put on hold until next year after the Casey Family Programs stepped forward with $75,000 to develop a pilot program to figure out the best way to conduct an independent clinic exam of children taking mind-altering drugs. According to an article in the Atlanta Journal-Constitution, Georgia spends $7.87 million a year on psychotropic medications. More than a third of foster children are prescribed the drugs, compared with about 4 percent of the general youth population."You are going to save money, and you're going to provide good medical care," said bill sponsor Rep. Oliver.