Hospitals are most concerned with the blueprint’s proposals for the 340B discount drug program.
Members of Congress next week will press the federal government’s healthcare leader on the Trump administration’s new initiative to control drug costs.
U.S. Department of Health and Human Services (HHS) Secretary Alex Azar II told Congress this week that “prescription drug costs in our country are too high. List prices are too high. Seniors and government payers are overpaying due to a lack of negotiating tools.”
Azar highlighted recent letters the administration sent to pharmacy benefit managers asking them to drop so-called gag rules, which bar pharmacists from discussing lower-cost drug options with insured customers.
Azar said the administration aims to reduce drug list prices because “every incentive in the system is based on a percentage of the list price.”
“We want Congress to reverse those incentives, to make sure when they increase list prices, it hurts, not helps,” Azar said.
Azar urged eliminating the 100 percent cap on rebates in Medicaid.
“That would bring in money, save money for the program, and dramatically change the incentives for the pharma companies,” Azar said.
Hospitals will be watching closely to see whether Azar addresses the 340B drug discount program, which also was a part of the president’s blueprint.
The 340B policy changes raised in the blueprint included:
- Changing the definition of patient
- Changing the requirements governing covered entities that contract with pharmacies or allowing off-site outpatient facilities to be registered
- Revisiting current mechanisms for identifying and preventing duplicate discounts
- Bolstering oversight or claims standards to prevent duplicate discounts in Medicaid and other programs
“We also urge the Administration and the Congress to oppose any efforts to scale back the 340B drug savings program, which for over 25 years has been critical in helping hospitals stretch scarce federal resources to expand access to healthcare services in communities with a significant number of vulnerable patients,” Rick Pollack, president and CEO of the American Hospital Association (AHA), said about the blueprint. “340B is a critical tool in the toolbox that provides drugs at lower prices to those on the front lines of patient care.”
Since the blueprint was released, Standard & Poor's Global Ratings issued an analysis that concluded that recent payment cuts to not-for-profit hospitals under the 340B program "will likely weaken their operating performance at a time of already tightening margins."
The report noted that the cuts "could lead to negative rating actions if hospital-specific funding reductions were material and not offset by other management actions.”
Hospitals have mounted a legal challenge to the nearly 30 percent cut to Medicare Part B payments for 340B hospitals that went into effect in January 2018. Affected hospitals have projected that the cut will cost them $1.6 billion annually.
A federal appeals court recently heard oral arguments in the case, which was brought by AHA and others, and the parties hope for a ruling sometime this summer.
Azar also recently hailed two guidance documents issued by the Food and Drug Administration (FDA) that aim to help generic drugmakers get their products through the development and approval processes efficiently while maintaining safety controls.
“The FDA’s announcement will help generic drug manufacturers bring low-cost competition to market faster and discourage brand-name companies’ misuse of laws meant to protect public health,” Azar said in a written statement. “Greater competition in drug markets is one of the key pieces of our plan to bring down drug prices. HHS will continue taking action to promote competition, building on accomplishments like the record number of generic drugs the FDA has approved under President Trump.”
Azar’s deep dive into the administration’s blueprint will follow a recent report by the HHS Office of Inspector General that found total Medicare Part D payments for brand-name prescription drugs increased by 77 percent from 2011 to 2015.
The increase was nearly six times faster than inflation, despite a 17 percent decrease in the number of prescriptions.
Other findings included that the share of beneficiaries who spent at least $2,000 out-of-pocket per year for brand-name drugs nearly doubled in that period, to 7.3 percent. Also, after accounting for manufacturer rebates, payments for brand-name drugs in Part D still increased by 62 percent from 2011 to 2015.
“These trends are consistent with those described in the previous OIG report, which found increases in the number of beneficiaries who reached the catastrophic-coverage phase of their Part D benefits,” the OIG wrote.
Monday, June 11
Webinar by the Advisory Board titled “5 Things You Need to Know about Specialty Pharmacy Strategy.” Learn more.
Meeting of the Second Annual Healthcare Blockchain Summit (through June 12). Learn more.
Tuesday, June 12
Webinar by HFMA titled “A Denial-Free Future: Optimizing Middle Revenue Cycle for Improved Financial Performance.” Learn more.
Webinar by the Centers for Medicare & Medicaid Services titled “ MIPS Promoting Interoperability Performance Category.” Learn more.
Webinar by America’s Health Insurance Plans (AHIP) titled "Uncovering Insight Within Data." Learn more.
Wednesday, June 13
Webinar by HFMA titled “Modern Healthcare Reporting: Best Practices and Time-Saving Techniques.” Learn more.
Webinar by CMS titled “CMS Quality Measures: Development, Implementation, and You” (through June 14). Learn more.
Webinar by the Centers for Disease Control and Prevention titled “Accountable Care Organizations: 6 Years in Review.” Learn more.
Webinar by AHIP titled "Top 10 'Must Haves' For Payer Account Reporting.” Learn more.
Webinar by AHA titled “Innovations in Hospital and Community Health Partnerships.” Learn more.
Thursday, June 14
Webinar by HFMA titled “How to Enter and Succeed in the Medicare Advantage Market.” Learn more.
Webinar by CMS titled “2018 QCDR Measures Workgroup.” Learn more.
Webinar by HRSA titled “FY 2018 Capital Assistance for Hurricane Response and Recovery Efforts.” Learn more.
Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare