Roundup of Legislation in the States

Legislatures Consider Variety of Measures Going in Different Directions

MISSOURI PBM BILL FACES STIFF OPPOSITION FROM EXPRESS SCRIPTS AND OTHER PBMS

Pharmacy firms fight proposed legislation

(Fort Scott Tribune, March 6, 2011) "Power politics have come to the foreground in the 96th General Assembly's review of proposed legislation to change the way medications are prescribed and provided." more

Here is a summary and link to the bill:

Missouri Senate Bill 236

[Note - Portions of this act are identical to SB 918 (2010). ] The bill covers several issues including electronic transmission of prescriptions, regulation of pharmacy benefit managers (PBMs) and their relationships with pharmacies, procedures for governing switch communications, informing patients of any cost sharing changes due to proposed switches of medications, and oversight of switch communication by the Department of Insurance, Financial Institutions, and Professional Registration. The act also specifies that a PBM owes a fiduciary duty to a covered entity and shall notify the covered entity in writing of any activity, policy, or practice of the PBM that directly or indirectly presents any conflict of interest. SB 236 also requires PBMs and health carriers to provide a website with a list of medications which require preauthorizations. Portions of this act are identical to SB 918 (2010).

WHILE ON THE OTHER HAND.... MAINE'S GROUNDBREAKING 2003 PBM PRICING DISCLOSURE & CONFLICT OF INTEREST LAW THREATENED WITH REPEAL

Maine's 2003 Pharmacy Benefit Manager law would be repealed if a bill introduced March 15, 2011 is enacted. The legislation,LD 1116, "An Act To Restore Market-based Competition for Pharmacy Benefits Management Services" is sponsored byRepresentative Meredith Strang Burgess and repeals the state's Pharmacy Benefit Manager Transparency Law, 22 MRSA 2699. The law bars conflicts of interest, kickback and self-dealing by PBM drug industry middlemen, and requires the value of rebates to be passed through to ultimately benefit consumers. Te law was amended in 2010 to give the Bureau of Insurance limited oversight authority over PBMs and to require the State Auditor to assist state agencies in contracting with PBMs.

SIX STATES CONSIDER EXTENDING PSYCHOTROPIC PRESCRIBING RIGHTS

Legislators in Arizona, Hawaii, Montana, New Jersey, Oregon and Tennessee are considering bills that would allow psychologists to prescribe psychotropic medications. But the measures are staunchly opposed by the American Medical Association, the American Psychiatric Assn., state physician organizations and others who maintain that the proposals would jeopardize patient safety. more

ON THE OTHER HAND, MAINE CONSIDERS TIGHTENING UP PRESCRIBING OF ANTIPSYCHOTIC MEDS TO KIDS

"An Act To Ensure the Safety of Children in the MaineCare Program Who Are Prescribed Antipsychotic Medications"

has been sponsored by Rep. Joan Welsh. You can read the bill here.

PENNSYLVANIA PHARMACISTS FIGHT MAIL ORDER MANDATES WITH LEGISLATION

WHYY NEWSWORKS, MARCH 7, 2011

"Pharmacists in Pennsylvania are battling against mail-order drug companies this legislative session. They are pushing for a bill in Harrisburg that would prevent insurance companies from requiring patients to get some of their prescription drugs filled via mail order. Pharmacists say customers should have a choice about where they fill their long-term prescriptions, such as medications for high blood pressure." more

NEW YORK PHARMACISTS ALSO TAKE AIM AT MAIL ORDER REQUIREMENTS OF PBMS

Pharmacists Fight the Rise of Mail Order
NY Times, By REED ABELSON and NATASHA SINGER
(March 3, 2011): "A fierce battle is being waged between retail pharmacists and mail-order companies over where people should be able to fill their long-term prescriptions. Community pharmacists in New York are lobbying state lawmakers to pass legislation that would prevent health plans from requiring patients taking medications for chronic ailments to fill their prescriptions through the mail... The proposed legislation, which was introduced in both state chambers in late February, would ban mandatory mail-order programs." more

WHILE BILLS IN MAINE WOULD REPEAL THE STATE'S GIFT DISCLOSURE LAW AND ACADEMIC DETAILING LAWS, OHIO, NEW YORK & ALASKA LEGISLATORS SEEK TO BEEF UP REPORTING BY DRUG COMPANIES

In Maine, pending legislation would repeal that state's current law requiring disclosure of gifts and marketing expenditures by drug companies a time when some Maine legislators are seeking to repeal Maine's gift disclosure law. The bill, LD 719, also repeals funding for academic detailing, reporting on clinical trials, and key price disclosure requirements that have helped the state become a national leader in negotiating steep rebates with the drug manufacturers. It isn't clear if this is simply a pharmaceutical industry bill or if the initiative is supported by the new Republican majority in the Legislature. Governor Lepage's budget also would repeal the groundbreaking MaineRx discount drug program, which PhRMA litigated all the way to the US Supreme Court (and lost).

At the same time, Ohio legislators are looking to beef up reporting in that state. Read more about the Ohio legislation here: Ohio Moves to Make Drug Companies Report Payments to Doctors; ProPublica, by Marian Wang, March 2, 2011: "Health care professionals in Ohio have received more than $13 million in payments from eight drug companies since 2009, according to our database. Now, a bill could require all companies to report these payments directly to the state."

New York also has pending legislation to require pharmaceutical companies that market prescription drugs in the state to report marketing costs annually. Senate Bill 2855 is similar to laws in the District of Columbia (§48-833.01) and the Maine law threatened with repeal (22 §2698-A) and would require the reporting of specified payments in excess of $75.00. In addition, SB 2855 seeks to eliminate the deduction of advertising expenses for purposes of determining "net income" under the New York Franchise Tax law for business corporations. more

Alaska Rep. David Guttenberg, a NLARx member, has introduced a comprehensive package of bills designed to reduce drug costs, including marketing disclosure:

· HB 42 addresses discount regulations by placing requirements on pharmacies and the Department of Health and Social Services.
· HB 43 requires the use of generic drugs when appropriate to lower costs.
· HB 44 establishes a prescription drug card program for discounts and allows the State to negotiate drug prices.
· HB 45 allows for savings through reporting of marketing costs.
· HB 46 establishes an Alaska Prescription Drug Task Force whose mission is to make recommendations on how to lower costs.
· HB 47 allows for public access to a database of clinical trials performed in Alaska. more info

NEW YORK GOVERNOR PROPOSES BIG CUTS IN EPIC, THE STATE PRESCRIPTION DRUG PROGRAM FOR THE ELDERLY

Gov. Cuomo has proposed cuts in EPIC, the New York prescription drug program for people age 65 and over. EPIC would no longer cover anyone who does not also participate in Part D. Of the current 307,700 enrollees, about 52,969 are not in Part D plans - (8/2009 figures) because they are in Medicare Advantage, a retiree plan, or not eligible for Medicare (immigrants without green cards for 5 years). As a result, 17% of current EPIC members would no longer be eligible for EPIC. In addition, EPIC would no longer cover drugs during the annual deductible period (21 out of 33 Part D plans in NYS in 2011 have an annual deductible). EPIC would no longer “wrap around” Part D to help reduce its costs. 52,000 (out of 302,000) enrollees who are not on Medicare or who have Medicare but have been excused from enrolling in Part D because it would jeopardize their retiree coverage, etc. In the end of 2009, out of 254,000 EPIC members with Part D, about 77,800 had “Extra Help” or the Low Income Subsidy, or fewer than one-third of those who have Medicare.

States Respond to Planned Drug Price Database

Secretary Sebelius Outlines Medicaid Pharmacy Options Including National Drug Price Database

At the January NLARx meeting, we heard from Mike Winkelman and Nell Geiser about several options for reducing Medicaid prescription drug prices, including moving to rebates based on aquisition costs rather than the widely used current standard AWP, or Average Wholesale Price. Last week, Health & Human Services Secretary Kathleen Sebelius wrote to the Nation's governors with a variety of Medicaid suggestions, including announcing the development of a national database of data on actual acquisition costs. If done properly, this national database could be a significant help to the states.

As we have pointed out before, an ongoing difficulty for states negotiating and enforcing drug pricing and rebates has been the lack of good information, which has allowed PBMs and drug manufacturers and wholesalers to skirt their "best price" obligations. For example, the Texas Attorney General has settled or won judgments for over $425 million in lawsuits against 13 drug companies for pricing fraud under the current system.

The National Association of Medicaid Directors has written a White Paper on drug pricing and the proposed shift from AWP to WAC. The medicaid directors have also emphasized the critical importance of pricing data that does not depend on self-reported information from the industry, as well as the continued potential for gaming of the system. They state:

"Wholesale Acquisition Cost" prices are currently available for many, but not all drugs. WAC may be susceptible to the same concerns that rendered AWP ineffective: it is a manufacturer-reported value not readily amenable to audit, and there is no reason for confidence that it could not ultimately be inflated well beyond any actual market price. Particularly since it has been defined in federal law as an "undiscounted list price" WAC would require continuous adjustments (markups or markdowns) by states based on acquisition cost surveys." [p.3, Executive Summary]

Secretary Sibelius notes that Alabama expects to save $30 million in one year by changing to a wholesale acquisition cost (WAC) baseline. Other states are starting to follow suit. Legislation, LD 346, was introduced in Maine this week to move to WAC pricing, and other states are expected to follow suit.

Excerpt from Secretary Sebelius' letter to Governors:

"Purchasing Drugs More Efficiently. In 2009, States spent $7 billion to help Medicaid beneficiaries afford prescription drugs. States have broad flexibility to set their pharmacy pricing. We are committed to working with States to ensure they have accurate information about drug costs in order to make prudent purchasing decisions. As recommended by States, the Department is undertaking a first-ever national survey to create a database of actual acquisition costs that States may use as a basis for determining State-specific rates, with results available later this year. Alabama, the first State to adopt use of actual acquisition costs as the benchmark for drug reimbursement, expects to save six percent ($30 million) of its pharmacy costs in the first year of implementation. We will also share additional approaches that States have used to drive down costs, such as relying more on generic drugs, mail order, management relating to over-prescribed high cost drugs, and use of health information technology to encourage appropriate prescribing and avoidance of expensive adverse events."

Free Trade Shouldn't Increase the Cost of Medicine

The National Legislative Association on Prescription Drug Prices (NLARx) endorsed a resolution calling on the U.S. to halt the use of trade agreements to enact international disciplines on pharmaceutical pricing programs. The resolution was passed at the Association's winter meeting in Washington, D.C.

NLARx is a nonpartisan, nonprofit organization of state legislators who work on health issues, with a particular focus on prescription drug pricing and access to medicines.

The resolution specifically targets the ongoing negotiation of the Trans-Pacific Partnership (TPP), a plurilateral trade agreement among eight nations. To date, no negotiating text has been publicly released. But the branded drug lobby has requested the inclusion of a chapter in the agreement that would require countries to "appropriately recognize the value of patented medicines" in public drug reimbursement programs and provide appeals for drug manufactures to challenge listing and reimbursement decisions of public health authorities.

As explained in the resolution, public health programs run by states, including the administration of Medicaid drug benefits for over 40 million Americans, use the same types of price restraining preferred reimbursement formularies (known as preferred drug lists, or PDLs) as foreign governments. Many federal programs, including drug programs for Medicare and veterans hospitals, achieve reductions on drug prices through similar preferred reimbursement programs.

"It is not in the best interest of the United States to promote limitations on the types of evidence-based drug pricing used by private companies, U.S. state governments, the U.S. Department of Veterans affairs - and by foreign governments - to control runaway pharmaceutical prices. At a time when health budgets everywhere are strapped, the federal government should not be promoting a new global regulatory agenda that would attack the most effective tools we have to combat excessive medicine prices in our health programs," said Sharon Treat, NLARx Executive Director.

The resolution recounts that these effective programs would be threatened by the kind of new international restraints on pharmaceutical pricing programs that the drug industry seeks:

"Trade Agreements are reciprocal by nature, and state government policies that violate the terms may lead to foreign government retaliation. The federal government may preempt state law thorough international agreements. And proposals to limit the operation of foreign reimbursement programs are likely to lead to increased foreign pressure to limit similarly operating programs in the U.S."

The first trade agreement to include a pharmaceutical pricing provision was the Australia-US FTA. That program required pharmaceutical company participation and appeal opportunities that state officials warned would cripple Medicaid if applied to states. More

The issue came to the fore again with the Korea - US FTA negotiation, during which the U.S. proposed language in the agreement that would prohibit Korea's "positive list" drug formulary. NLARx opposed that language, warning that such proposals would threaten Medicaid programs that use similar preferential purchasing lists to restrain drug prices. More

The USTR has not thus far backed down from its agenda to craft new international restraints on effective drug price controls. In a public statement in late September 2009, for example, Ambassador Kirk expressed his "support" for broadening the discussion of a proposal by Pfizer to promote new international rules that "discipline" pharmaceutical reimbursement programs in the U.S. and abroad.

The NLARX resolution will be transmitted to the USTR and to members of Congress. NLARx officials will meet with the USTR on January 31 to discuss TPP and drug pricing issues further.

For more on this issue, see the Forum on Democracy & Trade and PIJIP.

Drug Makers Continue to Flout "Best Price" Law, and Predictions are Compliance is About to Get Worse
By Sharon Treat, NLARx Executive Director

Yesterday New York Times reporter Robert Pear reported on drug makers' noncompliance with the federal law that requires reporting of pricing data and giving medicaid programs the "best price." the story, "Drug makers accused of ignoring price law," is here. Pear stated: "Drug manufacturers often flout a federal law that requires them to provide the government with pricing data needed to calculate discounts on medications prescribed for poor people under Medicaid, federal investigators say in a new report. The information is not submitted at all, is filed late or is incomplete, the investigators said, and as a result Medicaid overpays for prescription drugs." Pear noted that the problem, according to federal investigators, "could become more significant under President Obama’s new health care law, which increases the amount of the discounts and promises to add millions of people to the Medicaid rolls."

A new initiative is intended to force compliance. Daniel R. Levinson, the inspector general at the Department of Health and Human Services, who led the investigation, said he would impose civil fines on drug manufacturers that fail to meet their price-reporting obligations. Under federal law, the government can impose penalties of $10,000 a day on a drug manufacturer that fails to provide the information “on a timely basis.” The government has had this authority since 1990 but has not used it, the inspector general said.

We have previously discussed this issue and the problems raised by drug makers failing to provide data. We are aware of 3 states that have laws or rules requiring that these companies directly report this pricing data to their Medicaid programs - Maine, Texas and Vermont. We strongly urge all states to adopt enabling legislation that will give them direct access to this data - and the authority to penalize and bring enforcement actions - so that they can accurately determine whether the drug makers are sending back to them the full value of the rebates they owe the states. A model bill is posted on our website.

At our summer NLARx meeting in Portland, Maine, Jude Walsh, formerly pharmaceutical policy advisor to Maine Governor Baldacci and now with Goold Health Systems, presented in detail the issues facing states and the potential that they will lose significant medicaid funding due to lack of compliance and access to data.

According to the Pear article, Medicaid officials contend that “they do not currently have the resources” to identify all the manufacturers that fail to submit the data. This is all the more reason for states to act. We are talking about really significant cost increases, at a time when states cannot afford even to pay the costs they currently incur. For example, according to Ms. Walsh's presentation, the State of Maine gets back about 50% of the cost of its medicaid drug purchasing through aggressively negotiating supplemental rebates. Luckily, Maine already has a law giving it authority to collect pricing data and bring enforcement actions for failure to comply. What about YOUR state?

Sharon Treat
www.reducedrugprices.org
207.622-5597

· Payment for Biosimilar Biological Products -- Effective today a provision from the Affordable Care Act, Section 3139, allowing a Medicare Part B biosimilar product that has been approved by the Food and Drug Administration (FDA) to be reimbursed at the average sales price (ASP) of the biosimilar plus 6% of the ASP of the reference product (the licensed biological product that is referred to in the application for the biosimilar product).

A biosimilar, often called a “follow-on” biologic, is similar to a brand-name biologic while a generic drug is the same as a brand-name chemical drug. A biologic is a preparation, such as a drug or a vaccine, that is made from living organisms. Most biologics are complex proteins that require special handling (such as refrigeration) and are usually administered to patients via injection or infused directly into the bloodstream. In many cases, current technology will not allow complete characterization of biological products. CBO has estimated savings from this provision to be approximately $100 million for FY2010-FY2014 and $7.1 billion for FY2010-FY2019.

The Affordable Care Act also amends the Public Health Service Act (PHS Act) in Section 7002 to create an abbreviated approval pathway for biological products that are demonstrated to be “highly similar” (biosimilar) to or “interchangeable” with an FDA-approved biological product. The FDA has formed a Biosimilar Implementation Committee (BIC) and two review committees have been chartered to ensure the process of review and evaluation will be implemented in a sound manor. Reference or branded products will retain 12 years of data exclusivity in which time generic companies are prohibited from using to data to gain approval for a biosimilar.

Thanks to the National Conference of State Legislatures for this information!

States Need to Get Ready for Rebate Changes Now

By Sharon Treat

Health care reform brings with it both opportunities and challenges for the states. One of the challenges is how to address major changes in the way Medicaid prescription drug rebates are calculated, as well as changes to the formula controlling how much of supplemental rebates stay with states to offset Medicaid costs and how much goes to the federal government.

These changes, some of which are retroactive to January 1 of this year, will cost many states millions of dollars, and unless states act swiftly to directly collect drug pricing information and to modify their Preferred Drug Lists (PDLs), the financial hit will continue into the future. While over time, state Medicaid programs stand to benefit financially with greater federal cost sharing under the Affordable Care Act, and on balance will come out ahead financially, the retroactivity of the drug rebate changes means that states will have to quickly come up to speed and make immediate changes to avoid negative impacts on this year's budget.

Drug rebates are how states "negotiate" drug prices with the manufacturers. A state that has been really aggressive about securing both federal "best price" rebates and state "supplemental" rebates could be receiving 40-50% of its Medicaid prescription drug spend back in the form of rebates from drug manufacturers. New rules in the Affordable Care Act, though, increase the federal share of some supplemental rebates retroactively - money some states have collected in the past and are relying on to balance this year's budgets.

Specifically, states that already receive supplemental rebates greater than 15.1% of "Average Manufacturer Price" (AMP) will have to pay over to the federal government the value of rebates between 15.1% and 23.1% of AMP. Potentially offsetting this impact for some states, another provision will allow states for the first time to collect rebates for prescription drugs purchased through Medicaid managed care.

Changes to allowable state rebates for "line extensions" - newer versions and different dosages of existing drugs - also complicate this picture. Under the law CMS will keep all new rebates due to line extension changes, a policy change that will require states to change their PDLs promptly to incorporate equivalent drugs that provide greater rebates - or pay more than they have budgeted in their Medicaid budgets. These PDL choices must also be examined in light of state laws that grandfather particular drugs, for example in mental health services.

Congress has also changed the base price from which rebates are calculated. The problem for states is that drug manufacturers report data on this base price to CMS - NOT to the states. Unfortunately, CMS is currently barred by court order from sharing data with the states on the "Average Manufacturer Price" (AMP) and federal "Best Price," even though states must have this data in order to negotiate rebates with the industry and calculate the federal share. This information is also necessary for states to take advantage of new rebate opportunities under the managed care provisions in the Affordable Care Act.

The only states that have accurate data from which to negotiate rebates with the drug companies, and to accurately calculate what they owe the federal government, are states that have already passed their own laws requiring the drug companies to report AMP and "Best Price" directly to them.

Very few states have such laws; we know only of laws in Vermont and Maine. This is an emergency issue for State Medicaid directors and State Legislatures. States need to immediately review their PDLs and make changes as appropriate from a clinical perspective to reflect retroactive changes in rebate policies that will affect their budgets this year, and to pass a state drug price reporting law. NLARx has drafted a model AMP/best price bill to address the data reporting issue.

What can you do?

· Introduce the Model AMP/Best Price Act. Contact Sharon Treat if you are interested.

· Attend the NLARx summer meeting August 18th in Portland, Maine. The entire meeting is devoted to prescription drug policy changes that affect the states which result from the Affordable Care Act. We will have policy experts Robin Lunge, Esq. of the Vermont Legislative Council and Jude Neveux of Goold Health Systems present in detail on the rebate issue, and will also hear about Medicare Part D, and new federal advertising and marketing disclosure rules from several other speakers. Check out our website for more information and to register. Space is limited, so don't delay!

· Read up on these issues on the website of the National Association of State Medicaid Directors, which has written to CMS with many questions about the rebate changes, and has posted white papers and other materials of interest.

For more information, contact:

Maine Rep. Sharon Treat, NLARx Executive Director

207-622-5597

info@reducedrugprices.org