CMS’ recent proposal to loosen Medicaid rules to facilitate value-based contracts for drugs could have wide-ranging implications for the 340B program, independent physicians’ Medicare drug reimbursement, and patients’ expenses.
Drugmakers are concerned that CMS’ new rule could lower the price they are allowed to charge hospitals in the 340B drug discount program. The Biotechnology Innovation Organization asked CMS to provide clarity on how part of the rule establishing multiple “best price” points for Medicaid rebates would apply to the 340B program.
“Given the statutory calculation for ceiling price marrying components of the Medicaid rebate statute, the Best Price calculation of any individual product is critical,” BIO wrote in comments on the proposal.
Lower 340B prices could help hospitals, if drugmakers’ worries come true. America’s Essential Hospitals, a trade group for safety-net hospitals that is highly sensitive to 340B reimbursement changes, chose not to comment on the rule.
However, providers who don’t get 340B discounts are concerned that the rule could reduce how much they get paid for administering drugs. Independent oncology groups say that part of CMS’ proposed rule could cause copay coupons to be counted toward Medicaid drug discounts. If that happened, it would lower provider pay for administering drugs, or cause drugmakers to change need-based discount programs for patients.
A similar policy that would have included copay coupons in Average Sales Price calculations was included in a major drug-pricing package crafted by Senate Finance Committee Chair Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.). The package has stalled amid partisan bickering, but the Congressional Budget Office estimated that factoring coupons into ASP calculations would have saved the government $1.8 billion over 10 years.
The Community Oncology Alliance pushed for changes to the Grassley-Wyden policy, including ensuring need-based copay assistance programs were exempted from the calculations.
“We are most afraid of manufacturers being in an artificial situation. Rather than being at a competitive disadvantage with a market-distorted price, they may step back from these need-based assistance programs,” COA Executive Director Ted Okon said.
To avoid having their copay coupons counted toward Medicaid and ASP calculations, drugmakers would have to ensure the entire benefit of the coupons goes to the patient, instead of insurers or pharmacy benefit managers. Lindsay Bealor Greenleaf, vice president of policy at the healthcare consulting group ADVI Health, said that expectation is impractical.
“This proposal would hurt physicians’ bottom lines at a time when many practices are barely surviving during the pandemic,” Greenleaf said.
CMS said that copay coupons to patients are not currently included in Average Sales Price calculations.
West Health Policy Center’s Director of Health Policy Sean Dickson said if CMS’ rule causes copay coupons to be counted toward Medicaid discounts, the implication would likely be much more significant for the 340B drug discount program, as the affected discounts would be averaged with other sales for Medicare Part B payments.
The significance of the impact on Average Sales Price would be determined by how many outpatient drugs are currently used in health plans that limit how copay coupons can be applied to patients’ deductibles.
“It’s a little tenuous to say this is going to have a significant impact on ASP,” Dickson said.
Drugmakers would likely have to redesign their patient assistance programs to comply with the new rule as written. Dickson said drugmakers could likely find a way to accommodate the rules through patient assistance charities or some other structure. But Texas Oncology Executive Vice President Dr. Debra Patt said she is concerned that patients could stop treatment courses if manufacturers choose to change their copay coupon programs and some patients get left behind.
“With many patients, there are tradeoffs they have to weigh that lead to noncompliance,” Patt said.