Featured Health Business Daily Story, March 28, 2011

CMS Proposes Treating Generic Samples Similar to OTC Drugs

Reprinted from MEDICARE PART D NEWS, monthly business, compliance and management news and strategies to help Part D plans increase enrollment, boost revenues and minimize their risks of CMS fines, penalties and repayments.

By Barbra Golub, Editor
April 2011Volume 6Issue 4

After maximizing traditional pharmaceutical cost-management approaches, Part D sponsors need new tools to improve drug utilization management and reduce costs. CMS has proposed aiding that effort by adopting a practice common in the commercial market: use of generic samples. CMS said in the 2012 draft Call Letter that Part D sponsors could count as administrative costs expenses related to generic samples provided in physicians’ offices if their use was consistent with a cost-effective drug utilization management program.

In the draft Call Letter, the agency clarified that drug samples are not considered covered Part D drugs because they are not dispensed at network pharmacies and aren’t consistent with out-of-network pharmacy coverage requirements (they do not meet the definition of emergency drugs). Thus, Part D sponsors cannot include the provision of such samples as part of their plans’ benefit structure. Moreover, these samples cannot be placed on formularies, and they cannot be provided to beneficiaries with any cost sharing.

CMS has now proposed treating generic drug samples similar to how over-the-counter (OTC) drugs are handled under Part D. The agency suggested that effective immediately, a sponsor may incur expenses related to the distribution of generic drug samples provided to members within a physician’s office, under the plan’s administrative cost structure. The agency defined drug samples as units of prescription drugs intended not to be sold but to promote the sale of the drugs.

According to the agency, generic drug samples may be an effective utilization management tool used to promote compliance with a new drug therapy. CMS encouraged sponsors to account for such costs in developing their 2012 bids, due June 4, but also to contract for such services this year if it would offset prescription drug costs. Costs should be included in the administrative portion of the sponsor’s bid and, thus, ultimately reflected in premiums.

CMS said sponsors can contract with vendors immediately to provide access to and reporting on generic drug samples as part of drug utilization management programs. This should be accomplished through business associate agreements with vendors that include provisions requiring beneficiaries’ protected health information to be used only for transactions directly related to providing the generic samples and reporting the receipt of these samples to sponsors.

The consumer medication management and delivery company MedVantx, Inc. sees this as a good step toward deeper generic penetration in the industry, which requires a model with physicians at the point of care. MedVantx provides free samples of generic medications in physician offices for consumers through its automated ATM-like prescription management system, MedStart. “As the US prescription drug marketplace continues its rapid shift to low cost generics and consumerism, the ability to capture claims data on generic sample utilization at the point of care will help insure the clinical integrity of a Part D plan sponsor’s pharmacy database,” said Susan Hogue, director of managed networks and clinical services at MedVantx.

Generics Versus Brands

The treatment of generic samples does differ from the treatment of OTC drugs in one manner. According to CMS, generic samples may not be incorporated into step-therapy protocols because all enrollees would not have access to such samples. The agency specifically stated in the draft Call Letter, “sponsors may not require beneficiaries to use generic samples under any conditions.”

The agency also differentiates between generic and brand-name samples, and specifically says that CMS “has no plans to require reporting on generic samples provided to Part D beneficiaries through PDE [Prescription Drug Event] reporting, or otherwise.” CMS contended that brand samples would not be an appropriate use of administrative costs and would not be consistent with the requirements of drug utilization management, which includes incentives to reduce costs if medically appropriate.

The Academy of Managed Care Pharmacy commented to CMS that this recognition of generic drug samples will enhance enrollees’ experiences in Part D by reducing current and future cost-sharing expenses due to increased access to trial supplies of less costly generic versions of Part D drugs. Highlighting that generic samples have been used successfully for many years in the management of commercial pharmacy benefits, the academy said it strongly supports this change.

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