As a new bill introduced by Sen. Bernie Sanders (I-VT) indicates, Congress is once again looking seriously at tackling drug pricing reform. D.C. insiders say that Democrats could pursue big changes to PBM regulation and Medicare’s ability to negotiate drug prices.

Also, Congress could repeal the Trump administration’s so-called “rebate rule,” which would have removed safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs and Medicare Part D plans.

NOTE: The abstract below is a shortened version of the RADAR on Drug Benefits article “PBM and Part D Reform Could Be on Legislative Agenda.”

By Peter Johnson

As a new bill introduced by Sen. Bernie Sanders (I-VT) indicates, Congress is once again looking seriously at tackling drug pricing reform. D.C. insiders say that Democrats could pursue big changes to PBM regulation and Medicare’s ability to negotiate drug prices.

Also, Congress could repeal the Trump administration’s so-called “rebate rule,” which would have removed safe-harbor protections under the federal anti-kickback statute for rebates paid by drug manufacturers to PBMs and Medicare Part D plans.

Each of H.R. 3 , the new bill from Sanders, and a Senate bill sponsored by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) would implement out-of-pocket spending caps for Part D beneficiaries and considerably change how costs are divided up in the catastrophic phase of coverage. In each bill, Medicare would pay less, enrollees would pay nothing, and manufacturers and plan sponsors would pay more in the catastrophic coverage phase. H.R. 3 also would mandate more drug price transparency from manufacturers, allow HHS to negotiate prices for covered drugs, and set the maximum price for a drug at 120% of the average of prices in Australia, Canada, France, Germany, Japan and the United Kingdom.

Dan Mendelson, founder of Avalere Health, says that lowering drug prices is a popular policy.

“They need to pass something if they do it at all, because next year it’s going to be the run-up to the [2022 midterm] election,” Mendelson observes. “What sits on the other side of that is that these laws are exceedingly difficult to pass. I think there’s…an intensified support for the pharmaceutical industry given their incredible performance in getting these COVID vaccines to market so quickly. And they are a force of nature when it comes to lobbying, so…it’s likely that this stuff will get tempered a lot.”

Further complicating matters is Democrats’ narrow majority in the Senate. A standalone drug reform bill is unlikely to garner support from enough members of the upper chamber.

As the American Rescue Plan was passed through the budget reconciliation process, eliminating the rebate rule is likely to be part of the next package. The rebate rule would be costly but hasn’t actually been implemented, so eliminating it would create a massive savings on paper without the political cost that would come from cutting a real program of similar scale.

Thanks to recent regulatory moves and the increasing prevalence of copay accumulator/maximizer programs, the tactics that payers use to counter drug manufacturer copay assistance continue to be a controversial topic in the health care sector.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies offer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Their close cousin, copay maximizers, take the total amount of a manufacturer’s copay offset program and divide it by 12, and that amount becomes the new monthly copayment for all patients on any given drug over the course of a year.

NOTE: The abstract below is a shortened version of the RADAR on Drug Benefits article “How Will Biden Administration Handle Copay Accumulators?”

By Leslie Small

Thanks to recent regulatory moves and the increasing prevalence of copay accumulator/maximizer programs, the tactics that payers use to counter drug manufacturer copay assistance continue to be a controversial topic in the health care sector.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies offer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Their close cousin, copay maximizers, take the total amount of a manufacturer’s copay offset program and divide it by 12, and that amount becomes the new monthly copayment for all patients on any given drug over the course of a year.

From insurers’ perspective, the goal of copay accumulators/maximizers is to help steer patients toward lower-cost drugs. However, copay accumulator programs have been fiercely criticized by the pharmaceutical industry and patient advocates, who argue that they lead to higher costs for consumers and thus limit access to life-saving medications.

Data collected by AIS Health’s parent company, MMIT, show that copay accumulators and maximizers are gaining steam across the commercial insurance space. Of insurers covering a collective 127.5 million lives, 41% had implemented a copay accumulator program and 32% had implemented a copay maximizer program prior to 2020, and another 26% and 24%, respectively, implemented such programs in 2020.

Recent revisions to federal regulations may be contributing to the increasing prevalence of copay accumulators. In its Notice of Benefit and Payment Parameters (NBPP) for 2021, CMS allowed non-grandfathered group and individual market plans to use copay accumulator policies even when a generic equivalent to a drug isn’t available.

A Feb. 23 analysis from Avalere Health also pointed to a December 2020 rule aimed at facilitating value-based contracts for prescription drugs in Medicaid managed care, which “created new risks for manufacturers when copay accumulator or maximizers are applied to their products.”

“They’ve definitely introduced new uncertainties and complexities into the market,” Mark Gooding, a principal at Avalere and co-author of the report, says of the regulatory developments related to copay accumulators.

Both regulations were finalized under the Trump administration, and therefore could be revised by the Biden administration. According to Gooding, it’s not yet obvious what stance the administration will take. “It’ll be interesting to see; we are still getting a sense of how new leadership at HHS and CMS view the role of accumulators and the risk that they pose to patient access and affordability,” he says.