Regulatory Roundup
Rachel Balick
Surprise! President Trump signed four executive orders aimed at lowering drug prices on Friday, July 24—and one of them includes a rebate reform rule long thought to be dead in the water. It’s a positive step forward, and APhA and other pharmacy advocates are now working on securing a meeting with the U.S. Department of Health and Human Services (HHS) Secretary to ensure it also addresses PBMs’ harmful use of pharmacy direct and indirect remuneration fees (DIR) fees. DIR fees have a negative effect on pharmacy sustainability and patient access to care. Read the executive order at http://apha.us/RebateEO.
PBMs take a hit
“PBMs lost this round. Now, our job is to work with HHS and our pharmacy partners to ensure the agencies implementing the rebate rule also end PBMs’ gaming of a Medicare regulation loophole, inflating patients’ prescription-drug costs and forcing more pharmacies to close due to the egregious DIR fees they impose and collect for their own profit,” said APhA CEO Scott Knoer, MS, PharmD, FASHP.
The unexpected executive order, however, does not specifically mention or end DIR fees altogether. The Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen would eliminate “safe harbor” protections from anti-kickback laws and criminal penalties unless PBMs include pharmacy price concessions—such as the rebates and other discounts the middlemen get through negotiations with drug manufacturers—at point of sale.
Because Medicare Part D patients’ amount of cost-sharing is determined based on formulary list prices—not what PBMs actually pay for the drug—they don’t currently benefit from rebate savings. The rebate reform rule required under the executive order would ensure any savings are enjoyed by the patient at the pharmacy counter.
“We are encouraged by the administration’s attempt to lower patients’ out-of-pocket costs at the pharmacy counter and urge the administration to align these policies with APhA’s long-standing advocacy and House of Delegates policy to eliminate Part D plans’ and PBMs’ harmful use of retroactive DIR fees,” Knoer continued. “Lowering drug costs for patients at the counter cannot come at the cost of PBMs squeezing more out of pharmacies. PBMs’ detrimental antics have to stop.”
DIR fees affect patients
Retroactive DIR fees, which are “clawed back” from pharmacies, do not lower prices for patients—again, because their cost-sharing responsibility is based on formulary list prices. Pharmacies may not realize they have lost money on a prescription until weeks or months after a prescription is filled. This makes it nearly impossible for pharmacies, particularly in the independent space, to judge whether they can make payroll, are in a position to expand, or are even able to keep their doors open.
“Eliminating the retroactive use of DIR fees would show progress, but we must go further to end PBMs’ devastating misuse of DIR fees on pharmacies and patients once and for all,” Knoer said.
It’s hard to say what the executive order will look like in practice, as it must undergo rulemaking by HHS before implementation. The executive order calls for the HHS Secretary to complete the rulemaking process already started with an earlier version of the rebate reform rule.
Additionally, the Secretary of HHS must first publicly confirm that “the action is not projected to increase federal spending, Medicare beneficiary premiums, or patients’ total out-of-pocket costs.” The contention that eliminating DIR fees would increase Medicare Part D premiums is a frequent PBM talking point.
“A potential work-around would be if the HHS Secretary interpreted compliance with this provision of the executive order if projected out-of-pocket cost savings [on the price of prescription drugs] are higher than any increases in beneficiary premiums,” said Ilisa Bernstein, PharmD, JD, APhA senior vice president of pharmacy practice and government affairs.
APhA and its pharmacy partners will meet with HHS staff to discuss the path forward and will identify opportunities to advocate for the eradication of DIR fees during this process. “Without pharmacy DIR fee reform, the impact of implementing a system to pass rebates onto patients at the pharmacy counter may prove disastrous for pharmacies,” a letter from APhA and pharmacy partners to Secretary Azar read.
More executive orders
Trump signed three other executive orders on July 24. One directed implementation of a program for personal importation of medications from outside the United States, which APhA and other pharmacy groups have opposed on the grounds that it puts patient safety at serious risk.
The United States has more rigorous supply chain standards, which imported drugs will not have cleared, and illegitimate online pharmacies that peddle counterfeit and otherwise unsafe medications continue to proliferate. The Canadian government has also opposed this measure, as it puts that country at risk of drug shortages.
Another executive order would allow patients without affordable access to insulin or injectable epinephrine to purchase the products through entities enrolled in the 340B Prescription Drug Program.
The last order aims to establish “favored nation” pricing, which would charge the United States the lowest cost in the world for drugs administered in a physician’s office or hospital. That policy also has opposition on the basis that it constitutes price fixing. It’s also unclear if it would also force pharmacists to dispense medications at lower costs paid in other countries.
The text of the order had not been posted at press time, which many experts hypothesized was done to lure drug manufacturers to the negotiating table ready to make a few price concessions.
The practice of signing an executive order without publishing the text in the Federal Register is highly unorthodox. On July 24, the day the order was signed, Trump said the order would go into effect on August 25 if his administration and manufacturers had not struck a deal by that date. No deals had been struck at press time.
Trump announced a related idea—the “international pricing index” (IPI) in 2018. IPI would “lower costs for physician-administered drugs by resetting Medicare payments based on international prices and introducing competition,” an HHS press release said at the time. The proposal, which the administration projected to save American taxpayers and patients $17.2 billion over 5 years, did not advance.
These three executive orders also must proceed through HHS rulemaking before they can take effect.
Late-breaking news
On the afternoon of August 19, 2020, HHS authorized licensed pharmacists to provide vaccines recommended by CDC’s Advisory Committee on Immunization Practices (ACIP) and approved or licensed by FDA to all children ages 3 to 18 during the COVID-19 pandemic—an order that preempts state laws and regulations.
This action will increase access to lifesaving childhood vaccines and decrease the risk of vaccine-preventable disease outbreaks as children across the United States return to school and daycare.
“This is great news from HHS,” said APhA CEO Knoer. “We have long advocated that pharmacists are uniquely positioned to address this public health emergency, and we worked with HHS to develop this strategy to engage all pharmacists. As Admiral Brett Giroir, the assistant secretary for health, said today, pharmacists have always been a trusted voice in the community, and they’re accessible. We couldn’t agree more.”
Under the August 19 HHS order:
- The vaccine must be FDA-approved or licensed.
- The licensed pharmacist must complete a practical training program of at least 20 hours that is approved by the Accreditation Council for Pharmacy Education (ACPE). ACPE training is also required for licensed or registered pharmacy interns. Pharmacists must also complete a minimum of 2 hours of ACPE-approved, immunization-related continuing pharmacy education during each state licensing period.
- The licensed pharmacist and licensed or registered pharmacy intern must have a current certificate in basic CPR.
- The licensed pharmacist must comply with recordkeeping and reporting requirements of the jurisdiction in which he or she administers vaccines, including:
- Informing the patient’s primary-care provider when available,
- Submitting the required immunization information to the state or local immunization information system (vaccine registry),
- Complying with requirements with respect to reporting adverse events, and
- Complying with requirements whereby the person administering a vaccine must review the vaccine registry or other vaccination records prior to administering a vaccine.
- The licensed pharmacist must inform his or her childhood-vaccination patients and their accompanying adult caregivers of the importance of a well-child visit with a pediatrician or other licensed primary care provider and refer patients as appropriate.
Pharmacists and pharmacy interns may still order or administer vaccines to individuals ages 2 years or younger to the extent authorized under state law to meet a community need.