Tag Archives: Centers for Medicare & Medicaid Services

Hepatitis C and Medicare Part D

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By: Marcus J. Hopkins, Blogger

HEAL Blog has consistently covered the cost of new Direct Acting Agents (DAA) used to treat Hepatitis C (HCV), as well as the impact those prices have had on state Medicaid and AIDS Drug Assistance Programs (ADAPs). What we haven’t really covered is how those costs have impacted Medicare and the Medicare Part D program.

In addition to writing for HEAL Blog, I also serve as the Project Director for the HIV/HCV Co-Infection Watch. Last year, we looked into expanding our reporting of HCV drug coverage to include Medicare Part D markets, and what we found was that it was simply too much data to fit into an already then-76-page report. In June, I went ahead and looked at coverage for the Part D Standalone drug plans, and wound up scouring 923 different plans across the country and in five territories. What I discovered was that 922 plans covered the two most expensive HCV drugs on the market at that time – Sovaldi and Harvoni (Gilead).

That translates into staggering figures for Medicare Part D expenditures, as outline in reports from the Centers for Medicare and Medicaid Services (CMS). In 2014, spending on the three most-prescribed HCV drugs – Sovaldi, Harvoni, and Olysio (Janssen) – totaled $4.665 billion (CMS, 2016). Preliminary data obtained by the Associated Press (AP) from CMS estimate that the cost of HCV drugs to Medicare in 2015 nearly doubled, coming in at roughly $9.2 billion (Alonso-Zaldivar, 2015). This figure comes despite the introduction in 2015 of HCV therapies with lower Wholesale Acquisition Costs (WACs) than the $87,000 Sovaldi or $94,500 Harvoni.

Since the introduction of Sovaldi and Olysio in 2013, HCV drugs have consistently ranked in the top ten drug expenditures for Medicare Part D, as they have for Medicaid and the Veterans Administration (VA). The primary difference is that both Medicaid and the VA pay lower prices for the drugs as a result of state Medicaid negotiating power and the VA’s “Best-Price” rule that requires pharmaceutical companies to provide drugs at the lowest possible price. Medicare, however, is prohibited from negotiating drug prices as a result of the Medicaid Modernization Act (2003) that established Medicare Part D. One of the main provisions of the Act states that, “…in order to promote competition,” the Health and Human Services (HHS) Secretary “…may not interfere with the negotiations between drug manufacturers and pharmacies and prescription drug plans.”

President Donald J. Trump

Photo Source: UPI

Democrats have long attempted to pass legislation that would amend this provision, and may have found a new, not-so-secret weapon – President Donald Trump (Tribble, 2017). He has repeatedly stated that he believes Medicare should have this power, much to the consternation of Tom Price, Trump’s own Secretary of Health and Human Services, and Republicans, who have long held that Medicare negotiating drug prices amounts to Federal tyranny, Big Government, and anti-“Free Market” practices. But, even those Republicans are balking at the high cost of HCV drugs.

HEAL Blog will continue to watch in the coming months how this situation plays out, but we can be certain that, like every Trump initiative, the path will be fraught with confusion, disarray, and uncertainty.

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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Partisan Poison Pills for 2017

By: Marcus J. Hopkins, Blogger

Each year, the House Appropriations Committee – specifically, the Subcommittee for Labor, Health, and Human Services (LHHS) – releases a funding bill for the coming Fiscal Year (FY). In what is very likely highly partisan politics on the part of Congressional Republicans during a highly volatile election year, several hefty cuts and prohibitions were introduced into the spending bill which will likely – and in this writer’s opinion, hopefully – result in a veto from the President.

House Appropriations Chairman, Hal Rogers (R-KY), stated the following:

This is the 12th and final Appropriations bill to be considered by the Committee this year. It follows the responsible lead of the legislation before it –  investing in proven, effective programs, rolling back over‑regulation and overreach by the Administration that kills American jobs, and cutting spending to save hard‑earned taxpayer dollars.

Pill with the words, Poison Pill

Photo Source: Venitism

Anyone familiar with the coded language of politics knows that this is partisan fodder to try and bolster so-called “Conservative” bona fides during an election year, and the Republicans on this subcommittee pulled out all the stops ensuring that American families and individuals pay the price for their political pandering.

The final version of the bill, which has yet to go to the full House, contains the following (taken from the Appropriations site):

  • Centers for Disease Control and Prevention (CDC) – $90 million ($20m above 2016) to expand efforts to combat prescription drug abuse (a positive step, in HEAL Blog’s view). The bill also continues the “…longstanding prohibition against using federal funds to advocate or promote gun control,” which essentially forbids the CDC from labeling firearms and gun violence a public health crisis without risking severe cuts;
  • Substance Abuse and Mental Health Services Administration (SAMHSA) – $581 million to address opioid and heroin abuse, including $500m for a first-ever comprehensive state grant program that will address the opioid epidemic nationwide (another positive step), but “…maintains a prohibition on federal funds for the purchase of syringes or sterile needles, but allows communities with rapid increases in cases of HIV and Hepatitis to access federal funds for other activities, including substance use counseling and treatment referrals” (a halfway step that still ignores and fails to fund “proven” and “effective” harm reduction programs);
  • Health Resources and Services Administration (HRSA) – “Saves” taxpayers nearly $300m by eliminating all funding for the “controversial” Family Planning Program, a program that has existed and been funded since 1970 that provides contraceptive care to avert unintended pregnancies, screening for sexually transmitted diseases and infections, HIV testing, and cervical cancer screenings. These programs provide voluntary family planning information and services for their clients based on their ability to pay (on a sliding scale), and the stripping of these funds is likely to have a disproportionate impact upon lower income Americans and minorities;
  • Centers for Medicare and Medicaid Services (CMS) – Strips $576m in funds from FY16, and comes in a $1 billion below the President’s budget request. “The bill does not include additional funding to implement ObamaCare programs, and prohibits funds for the Center for Consumer Information and Insurance Oversight and Navigators programs,” essentially leaving consumers to fly blind in order to appease the anti-Affordable Care Act Republican party platform (which the chairman cannot even call by its proper name).

If it seems like anything is missing, you’ll notice from that there is no new funding for Viral Hepatitis, despite numerous Congressional hearings where representatives bemoaned the high prices of Hepatitis C (HCV) drugs and wrung their hands about the bleak prospect of exponential increases in new Hepatitis B (HBV) and HCV infections, largely related to the very same opioid and heroin abuse they managed to fund.

This bill, should it make it out of the House and Senate, is yet another example of the now-all-too-familiar dance of “Two Steps Forward; Three Steps Back” that has occurred for the past six years of Republican control of Congress. While some improvements are made, the vast majority of proposals tend to result in cuts that are sold as “cost saving” and sacrifice “controversial” programs (controversial only to the 1/3 or less of American constituents) that should leave taxpayers feeling like they’ve be presented with false advertising. Hopefully, some of these…unique proposals will be removed before a final bill is sent to the President for approval, but in an election year – particularly the one of the length and actual controversy we’re currently forced to endure – virtually anything can, and usually does, happen.
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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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Litigation and Legislation May Force Lower Prices

By: Marcus J. Hopkins, Blogger

The past three years have brought many great tidings for those living with Hepatitis C (HCV): a total of seven new HCV-specific Direct Acting Agent (DAA) regimens have been released onto the market, all of which are far more easily tolerated than the ribavirin and Pegylated interferon-based treatments, and all of which sport Sustained Virologic Response (SVR) rates of above 90% in most HCV patients. We’re now looking at the release of at least one more drug from Gilead, this year, that will be pan-genotypic – it can be used in the treatment of any genotype of HCV – as well as the possibility of injectable treatments that can be used on a regular basis, and reduce reliance upon pills.

Image of a stethoscope wrapped around a $20 bill , laying next to an open medication bottle

Affordable Healthcare

But, the reality is that these medical and technological breakthroughs cost money. Lots of money, really; and there seems to be no one willing to accept responsibility for their part in creating a market where a Wholesale Acquisition Cost (WAC) – the “baseline” for a drug’s price, before discounts and rebates – of $54,000 for twelve weeks of treatment is seen as a welcome reprieve.

Since Sovaldi (Gilead) and Olysio (Janssen) hit the market in 2013, virtually every payer and patient in the medical field has had a beef with the cost of the medications. Public and private payers, both, have essentially gone out of their way to restrict access to these medications to only the sickest of the sick, creating moral and legal arguments that may force those payers to pony up, regardless of whether or not they can “afford” the price.

On the legislative front, both California and Ohio are considering similar pieces of legislation that would require all state-run health agencies to purchase drugs at the lowest price paid by the Veteran’s Affairs (VA), which would mean that the “private” contract between manufacturers and the VA would have to become transparent. This could be either a boon or a bust, as VA prices may not be the cheapest of all the prices being paid, or in some cases, could be significantly less than one agency is paying for treating a large swath of people. Essentially, all public payers would have to pay the same price, whether or not the pharmaceutical company likes it, which could mean both a decrease in profits for them, as well as either an increase or decrease in spending for the payers.

These legislative efforts, both of which are sponsored by the AIDS Healthcare Foundation (AHF), are essentially an effort to force pharmaceutical companies to show their hand on pricing. If they’re giving a significantly lower price to one agency over another, they risk their ability to haggle for higher payments from other agencies. It’s an attempt to essentially level the playing field, and to do away with the “trade secret” nonsense that prevents publicly-funded agencies from openly discussing and publishing the exact details of these agreements.

On the litigation front, two new class action lawsuits have been filed in Washington state, aimed at forcing both private and public payers to provide HCV drugs to patients, regardless of the prices set by the manufacturers. Since Sovaldi and Olysio hit the market in 2013, payers have consistently been accused of establishing and maintaining overly and intrusively strict pre-requisites before providing HCV drugs to patients. The restrictions became so rampant that Gilead effectively severed access to its once very generous Support Path Patient Assistance Program (PAP) in response to private and public insurers refusing to pay for the drugs (despite having reached a pricing agreement with Gilead), and instructing patients to “…just go get it for free from Gilead.”

Private insurers have never been the bastion of ethical business practices; it has long been conventional wisdom that insurance companies will do their best to refuse coverage, just to save a buck, all while jacking up premiums, deductibles, and out-of-pocket costs in the process. It, therefore, comes as no surprise that they would refuse to pay for drugs.

State Medicaid programs face a particularly tough road in this legal battle, as the Centers for Medicare and Medicaid Services (CMS) issued guidance in November 2015 specifically stating that Federal law requires them to provide these drugs regardless of the price. This came after several complaints were filed stating the state Medicaid programs were violating the law by refusing to provide access to these medications on the basis of cost, alone. Arizona’s Medicaid program has reportedly stated that they will not be complying with the CMS guidance. While Washington state’s Medicaid program, Apple Care, has not released any similar responses, it’s not unlikely that they are simply refusing (or unable) to act on it.

The reality is that the high cost of these medications honestly restricts payers from providing access to these medications. In the case of Washington state, were the program to cover treatment for every Medicaid patient with HCV, the cost is estimated to be triple the total pharmacy budget for Fiscal Year 2016 ($1 billion). So, while covering the cost of treatment for everyone is the goal, that goal may simply be unfeasible if current pricing structures remain the same.
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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

 

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Trade Secrecy and Public Payers

By: Marcus J. Hopkins, Blogger

This past month, I attended the Hepatitis Appropriates Partnership (HAP) and National Viral Hepatitis Roundtable (NVHR) meeting, as well as the National Alliance of State and Territorial AIDS Directors (NASTAD) Technical Assistance (TA) conference in Washington, D.C. To both of these events, I went as a representative of the Community Access National Network (CANN), but I also went as “myself.”

Going as “myself” is a complicated task, no matter the location, as I have several informational gaps in my knowledge about the finer points of crafting policy, and going to these conferences often leaves me feeling like something of a fraud. I haven’t finished my education (and at this point, don’t really have the time to do so), and even then, I wasn’t going to school to study public policy – I was going for Health Communication in an effort to better increase my ability to adequately assist lower- and middle- income people living in Appalachia to access comprehensive healthcare for HIV.

So, when it comes to these meetings, I often find myself nodding along and saying, “Absolutely,” a lot, even when I have no idea what the heck the person is talking about; in the performing arts world, we call this, “Fake It, Until You Make It.” And so, I often leave sessions and conferences with more questions than when I entered, because in order to keep up, I have to almost immediately figure out what’s going on around me.

Perhaps, that is why I was tapped to serve in my capacity with CANN – I’m not just a very good writer (if I do say so, myself), I am also a patient. As such, I can safely say that, despite being a very knowledgeable and informed patient, I still have several information gaps – like many patients. There are some very basic pieces of information that I, as both a patient and a consumer, feel that I should know – that everyone should know – so that I can better advocate for myself.

The one thing that stuck out to me more than anything else during these meetings (in the context of “myself”) was that there is virtually no transparency when it comes to the world of pharmaceutical pricing. As an advocate for open governance, I’ve always been a firm believer that if my tax dollars are being used to pay for something, I have a right to know how they’re being used. This is the basic tenet of public governance –“How’s the money being spent, and how much of it is being spent on what?”

This is where things become interesting. As I reported in the last HEAL Blog, “Behind the Scenes at Hepatitis, Inc.,” certain laws prevent the Centers for Medicare and Medicaid Services (CMS) from discovering the actual price being paid by the 59 AIDS Drugs Assistance Program (ADAP) and 56 Medicaid programs for Hepatitis C (HCV) medications. Furthermore, beyond a single Federal statute, each state may or may not have its own statute that prevents those programs from discussing with any other state the price they’re paying for drugs.

Basically, we have a system in which private companies (in this case, pharmaceutical companies) have the right to enter into negotiations with both privately and publicly funded payers and enter into pricing and rebate agreements with them in total secret, and all of this is legally protected as a Trade Secret, making that information not only invisible to the public, but invisible between the states. This is, according to Pratap Khedar, a principal at pharma marketing consultancy ZS Associates, “…a very efficient free market…between the insurance company and the pharma company” (Herper, 2012).

For the private insurance companies, this seems fair – they are two privately held entities who can and should be able to enter into bargaining proceedings as manufacturer and buyer. This is the cornerstone of the free market – “I have a good to sell; let’s negotiate on the price.” These entities absolutely should be allowed to keep the amount that they pay per unit confidential.

It is, however, with the public payer/private manufacturer secrecy that I have a serious problem. With any other government office, whenever a deal is struck between a private company and the government, the amount the government has agreed to pay, as well as a breakdown of that agreement, are generally subject to public records and Freedom of Information Act (FOIA) requests. With pharmaceutical companies, however, this is not the case.

“Congress has created a system so that even the states, which buy tens of millions of dollars worth of these drugs, have no idea what we pay on a per-unit basis,” said the Democratic former Montana Govenor, Brian Schweitzer (Cross, 2011).

“Actually, Schwierzer does know what the state pays – but, before acquiring the information last summer, had to have his chief counsel sign a written agreement not to disclose it publicly,” reported Mike Dennison of the Billings Gazette (Cross).

Schweitzer came across the information in the summer of 2010, when he was attempting to compare what Montana’s Medicaid program was paying for drugs compared to the cost in Canada (Cross), but discovered in the process that, while he, as the governor of the state of Montana, could access that information, he could not share what his state’s Medicaid was paying at a price-per-unit level – he could only give very broad estimates based on Wholesale Acquisition Costs (WACs) or Acquisition Wholesale Prices (AWPs).

For those readers who are unfamiliar with those two measures, either the AWP, the WAC, or occasionally the Direct Price (DIRP) is the price that is published for the public. Whenever someone says, “Sovaldi (Gilead) costs $87,000 for twelve weeks of treatment,” they are quoting one of those numbers.

What most consumers – particularly those with lower incomes, knowledge levels, healthcare knowledge, or interest in the information – don’t know or understand is that those prices are practically meaningless, as virtually no payer (insurers, private or public) actually ever pays those prices. Instead, they negotiate with pharmaceutical companies and drug manufacturers in order to pay a lower, undisclosed amount, achieving those low numbers either by direct pricing agreements, or by entering into rebate programs.

Rebate programs in the pharmaceutical world operate much as they do in the commercial retail world – the payer pays the pharmacy to fill the prescription, the pharmacy fills the prescription and reports back to the payer, the payer submits a rebate form to the manufacturer, the manufacturer receives the rebate forms and cuts a check for an undisclosed dollar amount, and that check is sent back to the payer.

With both the agreements and the rebate programs, the idea is volume – those states/payers who pay to fill more prescriptions than other states/payers are more likely to receive much more generous pricing and rebate arrangements. For national private insurance companies and pharmacies (Wal-Greens and CVS, for example), this is a great deal, as they can pay to fill several thousands or millions of prescriptions each month.

The rub comes with public payer options, like Medicaid and Ryan White, Part B (ADAP). Ostensibly, this type of closed loop free market should benefit them, as well; instead, the states who are in the direst circumstances – primarily those states that are largely rural, an Appalachian state, are in the South, or are lower-income – end up with the worst pricing arrangements.

Take the example of Stribild (Gilead):

When I lived in California, my ADAP coverage lapse, and there was a period of time where I had to wait for my application to be approved for the new year, during which I ran out of medications. I asked my AIDS Healthcare Foundation (AHF) pharmacy if I could purchase the pills from them, individually, out of pocket, and they agreed to do so at the price of $68 per pill.

So, I did the math:

  • $68/pill x 30 pills/bottle = $2,040/bottle
  • $2,040/bottle x 12 months/year = $24, 480/year

When I first moved to West Virginia, I had to apply for ADAP in my new state. In the application process, they inquire as to how much my current prescriptions cost, which led me to ask the pharmacy for the cost of my prescriptions. After needling them for over an hour, they finally gave me an estimated price of $37,000/year.

Again, I did the math:

  • $37,000/year / 12 months/year = $3,083.33/bottle
  • $3,083.33/bottle / 30 pills/bottle = $102.78/pill.

Did you catch that trick?

The state of California, whose economy is comparable to that of the entire nation of Brazil, pays $68 per unit, while West Virginia, whose economy is comparable to that of the landlocked Eastern European nation of Belarus (best known for its Stalinist architecture and the KGB Headquarters overlooking Independence Square), pays an estimated $102.78/pill (Tippett, 2015).

“But, this,” one might say, “is the nature of business. States who don’t purchase as much of any good will ultimately end up paying more that those states who do.”

This argument does and should hold true for private payers; for public payers, however – particularly Federally-funded public payers – this should never be the case.

Yet again, we are faced with the dual realities of an insurance-based healthcare market and Federally-funded, but state-administered public health programs. The richest states are more likely to benefit, while the poorest states end up paying a higher price for access to treatments than those who live in more urban areas. In a nation where all citizens in all fifty states and the outlying territories are supposed to have equal access and opportunity, there is little parity.

So, what does this mean for poor states’ Medicaid and ADAP budgets? Basically, they get screwed, because, even though they ostensibly have fewer overall clients to serve, they end up paying more for medications than their richer counterparts.

Why I bring up the public payer issue relates to a recent initiative sponsored by AHF in the state of Ohio that would require Ohio agencies and publicly-funded entities from buying prescription drugs at higher prices than what the U.S. Department of Veterans Affairs pays (Associated Press, 2015).

The way this legislation is worded leads voters to think, “Well, the VA must be getting a great price on these drugs! We wouldn’t skimp on healthcare for our nation’s veterans! THIS IS AMERICA!”

As such, it is likely to achieve the adequate number of signatures to force a vote in the Ohio legislature, and potentially go directly to voters if the legislative body fails to act within four months.

The reality, however, is that, because payers cannot legally reveal, either to the public or to each other, how much they actually pay for medications, certain entities may, in fact, pay less than the VA through their own negotiations. This means that the initiative could, in effect, mean that Medicaid and OhDAP could be paying more, if they’re forced to pay the VA price.

The sponsors of the initiative, AHF and its president Michael Weinstein, fully know that this is the case, which makes this proposal a rather open attempt to force a single pharmaceutical company – Gilead – to reduce its drug prices, as well as to enter into pricing negotiations with ADAP programs.

Gilead, the maker of the popular drugs Stribild (HIV), Truvada (HIV, PrEP), Sovaldi, and Harvoni, have weathered a fair amount of criticism in the last few years, mostly in relation to its drug pricing practices. While they have, in the past, attempted to allay the fears of lower-income patients who were denied coverage, the company went forward with a plan to strictly tighten the qualifying requirements for their HCV Patient Assistance Program (PAP), Support Path, in July of this year. This was largely in response to the continued, yet unofficial, practice by insurance companies of sending their client to Support Path to get their medications for free, straight from Gilead, after agreeing to reduced prices and rebates.

What frustrates me the most about this entire situation is my belief that every publicly-funded entity should be held accountable for how our money is spent, up to and including the specific prices these organizations pay for goods and services. Instead, pharmaceutical companies with virtually limitless resources, all but write Federal and state Trade Secrets statutes themselves; they should just start sending their bought and paid-for elected officials out onto the floor wearing their company logos on their backs. As a result, it’s very unlikely that we’ll see any forward momentum on this issue.

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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