Key Contracting Considerations for Pre-Commercialization Launch

Posted by PCB Editor on May 17, 2012

By: Matt Weeks, Commercial Contracting
Mattweeks@cis-partners.com

The focus of most ‘emerging’ pharmaceutical companies is usually drug approval and product launch, so the development of robust commercial contracting strategies is often rushed very late in the commercialization process. For most pharmaceutical products contracting decisions are an essential component of a marketing strategy in order to achieve the desired level of patient access. Depending on the product and its competition, a manufacturer may benefit from contracting with Group Purchasing Organizations (GPO), Pharmacy Benefit Managers (PBM) or Government-funded programs such as the Federal Supply Schedule (FSS) and Medicare Part D. Each of these decisions can have significant financial and operational impacts.

From a strategic perspective, manufacturers must evaluate the risk/reward of offering discounts to customers who may not be able to control business as well as not offering a large enough discount to be competitive within the market place. Either scenario has the risk of either losing revenue or margin. The trade-off between sales and gross profit must be constantly analyzed throughout the contracting continuum. Additionally, much of the pricing and contracting strategy implemented at product launch can set the trend of the product in the market, as well as have long-term implications on Government Pricing calculations that can significantly affect product profitability.

Although commercial contracting can produce significant benefits it also generates an increased operational burden. Manufacturers should be aware of and plan for the additional compliance and administrative challenges that different contracting strategies create. To effectively monitor the various transactions that contracting may generate, such as rebates, chargebacks and administrative service fees, it is critical that manufacturers understand the administrative processes that result from each decision.

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“Who Ya’ Gonna Call? (Not Ghost Busters…) v.7: Federal Offset For MMCO Rebates – Potential Impact On The States

Posted by PCB Editor on May 10, 2012

By: Bill Baxter, CIS Strategic Advisor, Government Affairs
billbaxter@cis-partners.com

As awareness of the specifics of the Affordable Care Act (ACA) http://www.healthcare.gov/law/about/index.html increases, often there are more questions than clear cut answers. More specifically, one (well known) aspect of the ACA requires manufacturers to pay rebates for covered drugs dispensed to Medicaid patients by Managed Care Organizations (MCOs). Although the rebates are paid directly to the states, a portion of that revenue must be shared with the federal government. That amount is determined by the ratio of federal funding a state receives for expenditures for Medicaid services.

The federal government’s support is called the “FMAP” (Federal Medical Assistance Percentage), i.e., the federal match for Medicaid expenditures. This FMAP percentage is the ratio of rebate revenues a state must share with the federal government, and can create challenges for state budgets and financial records.

This is particularly complicated when state Medicaid supplemental rebates are calculated using the Guaranteed Net Unit Price (GNUP) method. This is where a combination of price and Medicaid rebate amount are used to determine the level of supplemental rebates required to reach the GNUP. In such cases, what amount does the state retain and what must be shared with CMS?

Important additional questions include:

  • What is the formal CMS policy on collecting the federal offset?
  • What is the timeframe?
  • Where is CMS in the process with individual states?
  • What impact will this have on state budgetary considerations?
  • How will this affect the rebate dispute resolution process?

CMS has been reluctant to discuss this other than with the states. Preliminary insights from state personnel indicate that thus far CMS may have under-collected the federal portion from the states. In such cases, states can anticipate adjustments that could result in further collections. This of course will reduce funds for state utilization, whether specifically for Medicaid expenditures or the general fund. In either case, this will likely motivate the states to look ever more closely at rebate payments, disputes, and ultimately dispute resolution. Even though dispute resolution has never been an easy process, it is unlikely that this issue will simplify negotiations.  

Please let me know if you have obtained information on this topic, and are willing to share. As additional insights are available I’ll be happy to update this blog and provide the information during upcoming CIS GP Forums.

ADDITIONAL NOTE: Please join us for CIS GP Forums, generally held on the 3rd Wednesday of each month from 11:00 Eastern Time – 12:00 Eastern Time. Occasional schedule changes may occur due to conferences and/or late breaking news. If you are not receiving e-invites to these calls, simply let me know and we’ll get you signed up.   

Category Categories: Commercial Compliance, General, Government Programs  |  Comments No Comments »

Lessons Learned? – Colorado Adopts Moderate Approach to Expanding Health Coverage in Wake of 2014 PPACA Mandate

Posted by PCB Editor on May 9, 2012

By: Will VanHook, Government Programs Associate
williamvanhook@cis-partners.com

Kaiser Health News recently reported on the key Medicaid reform the state of Colorado is preparing to implement:  a gradual expansion of its Medicaid program in anticipation of the Affordable Care Act’s 2014 expansion. [1] Based on the premise of Colorado’s plan, it appears that the state has learned valuable lessons from previous state attempts to provide more broad-based health care coverage to the many Americans that have gone without coverage in the past, particularly the example of TennCare of the mid-late 1990’s.

Starting in mid-May, Colorado will be expanding Medicaid coverage beyond the standard Medicaid population of indigent children, pregnant women, and the disabled, and begin covering non-disabled indigent adults, with two key stipulations:

  • You must be below 10 percent of the federal poverty line, and
  • Individuals must be chosen in county-by-county lotteries. [2] As Medicaid is a joint state and federal program, for each dollar the state allocates to pay for Medicaid expenditures, the federal government matches those funds based on a federal matching percentage, ranging from 50-74.18% in 2012. [3] In order to generate state funds for federal matching dollars, hospitals within the state agreed to pay a fee to fund the state Medicaid program, which would generate federal matching funds.  Likely, the hospitals realized it may actually be better to pay the fee that would allow for the federal matching funds and subsequent provider reimbursements for the services they provide to the indigent, rather than have to consistently absorb the costs of providing care to uninsured individuals. [4]

As of 2012, the state legislature has determined that with the funds generated by recent legislation, it can only cover approximately 10,000 out of the 144,000 residents below the federal poverty level.[5]  The state expects the new Medicaid enrollees to rack up bills twice as high as the average Medicaid recipient, based on the rationale that most impoverished within the state have not have the adequate health coverage in the past to seek more preventative health measures.

This is a noble attempt by the state of Colorado to extend a hand to those who are in real need of basic primary care.  However, some may argue that this cautious approach by Colorado may not be going far enough.  A quick peek into the history of the TennCare expansion from 1994-2005 may be a lesson Colorado is taking into consideration. 

Overview of TennCare Program

Back in 1993, the state of Tennessee attempted a broad sweeping attempt towards more universal health care within the state.  The premise was to move away from the traditional fee-for-service Medicaid program, to a managed care driven state insurance initiative that would open access to health insurance to more of the uninsured and uninsurable (those with preexisting conditions) residents within the state. To obtain the waiver from the federal Health Care Financing Administration to move from Medicaid to TennCare, the HCFA obligated Tennessee to include all uninsured and uninsurable in addition to those residents currently enrolled in Medicaid at the time in the new program.  Therefore, when the state moved off traditional Medicaid on January 1, 1994, Tennessee obligated itself with an initial 1.1 million enrollees (766,000 Medicaid eligible, as well as an additional 340,000 uninsured and uninsurable).  By 1999, the program had grown to 1.3 million Tennesseans. [6]

The premise of the program according to its founders was two-fold:

  • Provide a comprehensive package of health benefits to individuals who otherwise would not be able to obtain the coverage, and
  • Promote health care cost control, by moving all Medicaid patients from traditional fee-for-service to managed care.

As the state pooled its local and state funds from the fee-for-service model into the managed care model, the state was initially able to leverage more in federal funds to fund the TennCare program. However, the combination of high enrollment from its inception, uninsurable people who led to increased health costs, and a benefits package that may have rivaled private insurers, the state struggled with the high costs of managing the program and more importantly where to cut benefits to obtain its first goal, eventually leading the state into a deficit position fiscally, while most states were enjoying budget surpluses during the late 1990’s. [7]

Furthermore,  in order to contain costs, the state adopted a capitation rate for paying the MCO’s, that resulted in the MCO’s paying reimbursement rates to providers, which according to a 1999 PricewaterhouseCoopers review was at approximately 10% below an “actuarially sound” rate.  By the time the state finally raised the capitation rate to more adequately pay MCO’s for provider reimbursements, many MCO’s had already shut their doors on the program, with the largest participating MCO, Blue Cross Blue Shield, preparing to leave the program in 2000.[8]

What resulted in the subsequent years, were failed attempts to add funding to the TennCare program, which had become overloaded with enrollees and costs, without adequate funding.  The most ambitious move being then-governor Don Sundquist’s failed lobbying for the state to adopt an income tax to help fund the program.[9] Two years after Phil Bredesen took office in 2003, the state cut approximately 200,000 uninsured and uninsurable from the program, began sharp cuts in the state’s pharmacy coverage, and eliminated $1.7 billion in medical services, paving the way for TennCare’s dismantling. [10]

So turning back to Colorado’s expansion in May 2012, an enrollment growth capped at 10,000 will limit enrollees to those residents at 10 percent of the federal poverty line, and 134,000 residents in Colorado may still go without adequate coverage for another two years.[11] However, Colorado has made strides towards moving ahead of many other states in opening up health coverage to those who would otherwise be without coverage.  This is significant during a time of strained state budgets and other states, such as Illinois, who are moving towards reduced health and prescription drug coverage. 

How will other states react to the impending 2014 Medicaid expansion?  What effects will expansion efforts, such as those undertaken by Colorado (Colorado is the seventh state to take advantage of the ACA provision extending federal matching funds for adults without children),[12] have on the Medicaid liability for manufacturers leading up to and after 2014?  These are questions for manufacturers to start considering, as more states move towards expanding Medicaid coverage.


[1] Eric Whitney, “Poor, Sick, and Expensive: Colorado’s Scaled-Down Medicaid Expansion,” Kaiser Health News 26 April 2012, http://www.kaiserhealthnews.org/Stories/2012/April26/colorado-medicaid-expansion.aspx>.

[2] Whitney 1.

[3]“State Fiscal Conditions and Medicaid,” Kaiser Commission on Medicaid Facts, 2012, Kaiser Family Foundation, 2 May 2012 http://www.kff.org/kcmu>.

[4] Whitney 2.

[5] Whitney 2.

[6] “Lessons from Tennessee’s Failed Health Care Reform,” Research Reports, Merrill Matthews, Heritage Foundation, 2 May 2012 <http://www.heritage.org/research/reports/2000/04/lessons-from-tennessees-failed-health-care-reform>.

[7] Matthews 3-5.

[8] Matthews 5, 10.

[9] Matthews 4.

[10]“The TennCare Cuts: Plunging into the Unknown,” Gordon Bonneyman, 2 May 2012 <http://frank.mtsu.edu/~berc/tnbiz/pdfs/healthcare/bonnyman60906.pdf>.

[11] Whitney 2.

[12] Whitney 2.

Category Categories: General, Government Programs  |  Comments No Comments »

Use Your Time Wisely – 2013 Timeframe for Sunshine Act

Posted by PCB Editor on May 8, 2012

By: Jackie O’Connor, Project Manager
jacquelineoconnor@cis-partners.com

Following up on my previous blog entitled “It’s the ‘Final’ Countdown,” we last left off with the letter sent by Senators Kohl and Grassley to the Centers of Medicare & Medicaid Services (CMS) requesting that the final rule be released no later than June, so that a partial year of data collection would be possible.  Over the past week, there have been some important developments regarding the status of the Physician Payments Sunshine Act. 

On May 3, 2012, CMS responded to the Senators’ letter and posted on their website stating that applicable manufacturers and applicable group purchasing organizations (GPOs) would not be required to start data collection prior to January 1, 2013.  In their statement, the reasoning behind the delay primarily focused on:

  • Addressing the 300+ comments that were submitted during the 60 day comment period
  • Ensure the accuracy of the data being collected
  • Providing time for organizations to establish their data capture process

Grassley and Kohl expressed their disappointment through a press release:

Grassley said, “It’s disappointing that CMS won’t even collect data at all this year.  The process has dragged on long past the statutory deadline for implementation.  Consumers need to know more about the financial relationships between their doctors and drug companies sooner rather than later.   It’s important that CMS get this right in every way, including the usefulness and accuracy of the information.  Given all of the extra time, CMS will have no further excuses for not accomplishing these goals.”

Kohl said, “While I am disappointed by this delay and the timeline, I do look forward to working with CMS to finalize the rules so that data collection can begin in January 2013.”

While it’s safe to assume that applicable manufacturers and applicable GPOs are not sharing the same disappointment, the time has come for those impacted by the Sunshine Act to truly recognize the importance of establishing an efficient data compilations and reporting process.  Transparency obligations impact organizations differently based on size, structure, and activities.  Some key considerations include:

  • Evaluating current activities and data capture processes to identify gaps and remediate issues: this will increase accuracy and completeness of data once the actual collection period begins
  • Identifying process improvements and efficiencies: evaluate current procedures, data capture templates, forms and systems to identify more efficient data compilation techniques 
  • Evaluating 2013 activities:  identify whether any planned 2013 activities are impacted by the transparency obligations and, if so, ensure a data capture process is established (e.g., clinical trials)

For further discussion, register for CIS’ complimentary webinar Federal Sunshine: How to use the Proposed Rule to your Advantage, on Thursday May 10th at 2 PM (EST), which will address actions you can take while waiting for the Final Rule. 

Topics will include:

  • Case studies based on State compliance and reporting efforts
  • Impact Federal reporting may have on existing programs
  • Specific examples of the proposed rule’s potential impact on existing processes and illustrate how to use the components of the proposed rule to evaluate existing compliance programs
  • Identify areas that may give the appearance of impropriety on a State or Federal report
  • Operational considerations

Click here to register and to submit questions in advance.

Category Categories: Commercial Compliance, General  |  Comments No Comments »

FDA Increases Focus on Post-Approval Drug Safety

Posted by PCB Editor on May 2, 2012

By: Kristin Williams, Compliance Consultant
Kristinwilliams@cis-partners.com

The Food and Drug Administration (FDA) issued a safety report this month entitled, “Advances in FDA’s Safety Program for Marketed Drugs,” in order to present recent efforts to give postmarketing safety the same amount of quality attention as it gives premarket safety.1  The FDA scrutinizes pre-marketing safety data from clinical trials.  Unfortunately, clinical trials can provide only limited transparency into the safety of a drug, usually because of stringent inclusion and exclusion criteria to select a patient population.  Often times, the full scope of a drug’s safety comes into view after FDA approval, when patients are using the drug concomitantly with other medications or for uses for which the drug is not approved. 

The FDA has taken several actions in order to increase their ability to detect and evaluate drug safety risks of marketed drugs.  According to the safety report, these efforts have been made in four major areas.   First, the FDA implemented “Safety First,” which includes internal organizational and cultural changes within the Center for Drug Evaluation and Research (CDER).  These changes were implemented in an effort to monitor and respond to postmarketing safety concerns.  It also includes a system to prioritize safety issues based on their risk to patient safety.  The Safety First program was also responsible for implementation of the Food and Drug Administration Amendments Act’s (FDAAA) requirements for postmarketing clinical trials, required labeling changes, Risk Evaluation and Mitigation Strategies (REMS) programs and quarterly online reports.

In addition to Safety First, the FDA also implemented the “Safe Use Initiative” which is a public outreach program to identify and reduce areas of preventable drug harm caused by inappropriate uses.  This program has already made several advancements in postmarketing safety including preventing acetaminophen toxicity by labeling revisions and a “Know Your Dose” campaign.  The FDA has also instituted partnerships with other programs to raise awareness, such as the National Consumers League (NCL), which is working to improve awareness of the importance of medication adherence.

The FDA has also worked diligently to strengthen drug safety science.  These efforts include developing an electronic system for monitoring drug safety as well as enhancing the capabilities of statistical analysis and improved safety surveillance.   One of the accomplishments of this program is the FDA’s addition of the Division of Biometrics VII (DBVII) which focuses on full-cycle drug safety evaluation, including that of registry and health care databases. 

Finally, the FDA has improved drug safety communications to provide earlier and more useful information to patients and health care providers.   The FDA has reduced the different types of formats of drug communications, and now there is only one type, called a Drug Safety Communication (DSC).  According to the FDA, in 2011, the FDA issued 68 drug safety communications, compared to 39 in 2010.1  This statistic alone is proof of the FDA’s successful steps in increasing the oversight of post-approval drug safety.

1Advances in FDA’s Safety Program for Marketed Drugs: Establishing Premarket Safety Review and Marketed Drug Safety as Equal Priorities at FDA’s Center for Drug Evaluation and Research. Center for Drug Evaluation and Research (CDER). April 2012.

Category Categories: Clinical R&D, General  |  Comments No Comments »

Are Pharmaceutical Manufacturers Prepared for their Remaining MMCO Rebate Obligations?

Posted by PCB Editor on May 1, 2012

By:  Tami Stanley, Senior Government and Commercial Programs Associate
tamistanley@cis-partners.com

It has now been over two years since March 23, 2010, the date that the Patient Protection and Affordable Care Act (PPACA) was signed and pharmaceutical manufacturers became obligated to provide rebates to the states on prescription drug utilization covered by Medicaid managed care organizations (MMCOs).  In spite of that, two of the states with the largest MMCO populations have yet to begin invoicing and pharmaceutical manufacturers better be prepared for the day the invoices arrive. 

Even though the majority of states utilizing managed care organizations (MCOs) have submitted their invoices, that doesn’t necessarily mean that the bulk of the rebate dollar obligations have been met.  Nationally MCO’s account for approximately 73% of annual Medicaid expenditures and fee-for-service programs account for about 27%.1 Thirty percent of annual Medicaid expenditures are generated by only six states.  California and Florida are two of those six.  Those two states are among the six states that have not yet submitted their first MMCO rebate invoice.  Other states that have not submitted their invoices are:  Colorado (although none are expected due to the use of 340B pharmacy), Kansas, New Mexico, and Washington.

Pharmaceutical manufacturers are facing mounting financial obligations to the remaining states with each passing quarter.  They should anticipate receiving catch-up invoices back to the first quarter of 2010 from California, Florida, Kansas, New Mexico and Washington.  Therefore, as of April 2012 invoices for nine quarters are anticipated from each of those states.  Granted Q1 2010 is only for the period of March 23 through March 31, it still can be a sizeable invoice from California or Florida. Not to mention, many states are still gathering  J-Code claims from MCOs , even in the states that carve-out and manage all pharmacy claims.  West Virginia is a case in point, sending the first J-Code MCO invoices with the invoices last quarter. The message is clear: manufacturers of pharmaceutical products used by the Medicaid population need to accrue for the remaining MMCO rebate obligations and adjust those accruals quarterly.  Additionally, increased cash reserves may be necessary to prepare for the upcoming MMCO rebate payments.

Another thing to consider is the sheer volume of invoices that could be generated by the remaining states.  If a state decides to combine claims from all of their MCOs on one invoice then there may be only one additional invoice for that state for each catch-up quarter.  However, a state may invoice separately for each MCO as is the case with Nevada, Mississippi, and South Carolina, which could result in a significant number of additional invoices for one state.  Manufacturers that process their own Medicaid rebates may need additional human resources for the larger task.

Looking ahead, the number of lives covered by Medicaid is expected to increase substantially beginning in 2014 when Medicaid is expanded under PPACA to include millions of non-Medicare eligible individuals under age 65 (children, pregnant women, parents, and adults without dependent children) with incomes up to 133% of the federal poverty level based on modified adjusted gross income.2,3,4   Manufacturers also need to take Medicaid expansion into consideration when accruing for 2014 Medicaid rebates.

For more information on MMCO requirements, please listen to the CIS-Partners Webinar MMCO State Medicaid Program Requirements which can be accessed on the CIS-Partners website at:  http://www.cis-partners.com/resources/webinars.html

References:

1.  http://www.cis-partners.com/resources/webinars.html, CIS MMCO State Medicaid Program Requirements presented February 9, 2012

2.  http://www.kff.org/medicaid/upload/7235-04.pdf

3.  http://www.scribd.com/doc/38931498/Kaiser-Family-Foundation-PPACA-Implementation-Timeline

4.  http://www.kff.org/medicaid/upload/8046-02.pdf

Category Categories: General, Government Programs  |  Comments No Comments »

Retrospective TRICARE Rebates – The 2008 Q1 Due Date is Published!

Posted by PCB Editor on April 30, 2012

By: Carmela Crimeni, Senior Associate and Tammy Meadows, Senior Associate
Carmelacrimeni@cis-partners.com
tammymeadows@cis-partners.com

For many manufacturers, TRICARE rebate estimates for liabilities in periods prior to 2009Q2/2009Q3 have become a normal placeholder in quarterly accrual reporting. The estimates are memorialized in accounting records and department managers have been tasked with fielding questions from CFOs and others interested in knowing why these liabilities are expected, but not paid. Now, it seems, at least one quarterly due date has been published!

For this blog, we’ll take a look at TRICARE background information, waiver and compromise requests, dispute resolution, and operational issues related to TRICARE rebate processing and we will suggest factors manufacturers should consider when determining how to respond to the TMA’s recent request for 2008Q1 payments.

CURRENT STATUS:

  • On April 17, 2012, TMA announced the re-issuance of 2008Q1 utilization data. Furthermore TMA stated June 26, 2012, as the payment due date.
  • TMA has not announced due dates for periods 2008Q2 – 2009Q1.
  • On October 25, 2011, the U.S. District Court, District of Columbia, upheld the DoD’s 2010 final TRICARE rule
    • This ruling is currently being appealed by The Coalition for Government Procurement (the Coalition)

BACKGROUND:

  • In 2004, the VA issued a “Dear Manufacturer” letter asserting that pharmaceutical manufacturers were required to pay FCP-based rebates for TRICARE retail utilization
    • The Coalition challenged this assertion and the U.S. Court of Appeals for the Federal Circuit held that the letter constituted a substantive rule that was not validly promulgated (Coalition for Common Sense in Government Procurement v. Secretary of Veterans Affairs, 464 F.3d 1306 (Fed. Cir. 2006))
  • Prompted by the Court’s decision on January 28, 2008, Congress enacted Section 703 of the National Defense Authorization Act for Fiscal Year 2008
    • Section 703 of the NDAA-08 provides that, for any prescriptions filled on or after the date of enactment, the TRICARE retail pharmacy network shall be treated as an element of the DoD such that drugs dispensed by the TRICARE retail pharmacy program (TRRx) to eligible covered beneficiaries are subject to 38 U.S.C. § 8126, which imposes Federal Ceiling Price (FCP) limitations on drugs approved under NDAs
  • Following the enactment of the NDAA-08, the DoD issued its own “Dear Manufacturer” letter announcing that it would use its own pre-existing “voluntary” rebate program mechanism to implement the NDAA-08 (DoD February 1, 2008 Dear Manufacturer Letter)
    • Industry again challenged this letter on the ground that it purported to implement the NDAA-08 without proper notice-and-comment rulemaking
  • The DoD then proposed regulations on July 25, 2008 (73 Fed. Reg. 43394), and after an unsuccessful attempt by the Coalition to seek an injunction (Coal. for Common Sense in Gov’t Procurement v. United States, 576 F. Supp. 2d 162, 168-69 (D.D.C. 2008)), the DoD issued a final rule on March 17, 2009, implementing section 703 of the NDAA-08 (74 Fed. Reg. 11279)
  • The Coalition challenged the final rule and in particular DoD’s statutory authority to implement the rebate program (Coal. for Common Sense in Gov’t Procurement v. United States, Civil Action No. 08-996 (JDB))
    • The Court remanded the case to allow the DoD to decide if it wished to implement the regulatory scheme as an exercise of its discretion or instead to promulgate a different rule
  • As a result of the Court’s remand of the case, the DoD released a second final rule on October 15, 2010 (75 Fed. Reg. 63,383)
  • The Coalition again challenged the rule (by amending its compliant in the first challenge of the 2009 rule) on the grounds that the DoD lacked the authority under NDAA-08 to require refunds from manufacturers that had not voluntarily agreed to them and the DoD did not have the authority to require refunds on transactions occurring before the promulgation of the rule  (Coal. for Common Sense in Gov’t Procurement v. United States, Civil Action No. 08-996 (JDB)
  • On October 25, 2011, the Court issued a ruling on the Coalition’s appeal requesting that the Court find that the DoD surpassed its authority by passing the 2010 rule 
    • The Court found:
      • The DoD had the statutory authority to require pharmaceutical manufacturers to refund amounts they received in excess of the Federal Ceiling Prices for drugs paid for by the DoD in a retail pharmacy program, including the amounts on those transactions occurring before the final rule was promulgated. 
    • The Court also held that Congress gave the DoD the express authority to promulgate regulations carrying out the statute’s goals
      • The Court points out that Congress did not grant this authority with the intention of restricting  “the Department’s choice in how to subject pharmaceuticals to FCPs”  
    • Under section 4(B) of the opinion, the court states, “[s]imply put, it was the passing of the statute, not the promulgation of a regulation, that determined when prescriptions became subject to FCPs. On January 28, 2008, all parties…were on notice that TRICARE prescriptions would be subject to FCPs. That it took the [DoD] more than two years to successfully promulgate regulations implementing that requirement is irrelevant.”
    • On December 27, 2011, the Coalition filed an appeal to the October 25, 2011 ruling (Coalition for Common Sense in Gov’t Procurement v. United States, Case 11-5350 (U.S. Court of Appeals, D.C. Circuit))
      • The Coalition’s appeal of the Oct. 25th ruling sets out two issues – 1) can section 703 of the NDAA-08 impose drug ceiling prices on pharmaceutical manufacturers for drugs dispensed by retail pharmacies absent an agreement by the manufacturers to charge those prices, and 2) assuming section 703 can impose FCP pricing, does it authorize the DoD to retroactively require manufacturers to pay refunds for drug purchases that occurred before the effective date of DoD’s 2010 final rule.
      • The Coalition is scheduled to submit its brief on the merits on May 2, 2012 and the U.S. is scheduled to submit its brief on June 1, 2012
  • MANUFACTURER CONSIDERATIONS
    • Although an appeal to the October 25, 2011 ruling has been filed, the October 25th ruling remains in effect (the ruling was not stayed) until a decision is made on the appeal

PENDING WAIVER AND COMPROMISE REQUESTS:

  • To the best of CIS’s knowledge, the DoD has not issued any decisions on manufacturers’ waiver/compromise requests
  • The 2010 final TRICARE rule states, “A manufacturer may under section 199.11 of this part request a waiver or compromise of a refund amount due under 10 U.S.C. 1074g(f) and this paragraph (q) (32 C.F.R. 199.21(q)(3)(iii)(A))
    • The final rule also states that a refund due under the new rule will be treated as an “erroneous” payment which subjects it to 32 C.F.R.199.11
  • In order to have a compromise request granted, the manufacturer must meet the standards set forth in part 199.11
  • 199.11(g)(4) provides the relevant bases for a compromise:
    • (ii) The debtor refuses to pay the claim in full and the government is unable to enforce collection of the full amount within a reasonable time by enforced collection proceedings;
    • (iii) There is real doubt concerning the government’s ability to prove its case in court for the full amount claimed either because of the legal issues involved or a bona fide dispute as to the facts; or
    • (iv) The cost of collecting the claim does not justify enforced collection of the full amount
      • Manufacturers should also note that in the comments to the March 2009 final rule, DoD stated, “…DoD agrees there may be merit to some of the other concerns that in particular circumstances concerning stale utilization data, prior incentive pricing agreements between DoD and drug manufacturers, and other situations, there may be a reasonable basis to waive or compromise a refund for prescriptions filled between January 28, 2008 and the effective date of the final rule.” (74 Fed. Reg. at 11, 285)
  • MANUFACTURER CONSIDERATIONS
    • Is the TMA’s email request for payment for 2008Q1 authoritative agency guidance requiring manufacturers to meet the June 26, 2012 payment deadline?
    • Should manufacturers who have outstanding waiver/compromise requests wait until a decision is made on those requests before paying 2008Q1 refunds?

DISPUTE RESOLUTION:

  • Section 199.21(q)(3)(iv) states that if disputes based on the accuracy of TMA’s utilization data are not resolved within 60 days, the Director, TMA will issue an initial administrative decision and provide the manufacturer with opportunity to request reconsideration or appeal consistent with the procedures under section 199.10
    • It has been CIS’ experience that TMA is not adhering to the 60 day timeframe, and based on conversations with TMA, it is not assessing interest charges at this time
  • TMA said that it will come out with an updated dispute resolution guide and instructions, but did not give a date (hopefully, it will be issued later this year)

OPERATIONAL INSIGHT

  • Manufacturer data is readily available on the TRICARE website for periods 2010Q2 and forward.
  • Utilization data not already obtained for periods prior to 2010Q2 historically required manufacturers to setup a password for their secure ftp and download/decrypt data.
  • TMA is publishing the historical utilization data (2008Q1 – 2009Q1) on the site in sequence with publishing quarterly payment due dates for these same periods.
  • TRICARE communicates updates to manufacturers through the TRICARE Pharmaceutical Manufacturer homepage at: http://www.tricare.mil/tma/pharmacy/pharmmfg/default.aspx
    • Manufacturers should watch the “Quick Links” section and are encouraged to subscribe to the  “pharmaceutical manufacturer updates”  for e-mail receipt of updates

At this point, manufacturers have much to consider. For example, manufacturers should review waiver and compromise requests previously submitted, determine pay status for historical periods, review product listings for prior periods, isolate NFAMP and FCP values for prior period RPU calculations, evaluate internal workload for processing the historical periods and make an assessment of accruals for truing up these payments and liabilities.

Category Categories: Commercial Compliance, General, Government Programs  |  Comments No Comments »

Understand the Impact Your Commercial Contracting Strategies Have on Government Programs

Posted by PCB Editor on April 25, 2012

By: Matt Weeks, Commercial Contracting
Mattweeks@cis-partners.com

Does your organization regularly analyze the impact your contracting decisions will have on the various government programs you participate in?  Many companies make these decisions that can have significant implications on government pricing without proper analysis and a full understanding of the financial risks.  CIS’ commercial contracting and government program experts will address this issue at CBI’s 5th Annual Bio/Pharmaceutical Summit on Managed Care Marketing being held in Philadelphia June 19th and 20th.  

CIS subject matter experts Amy VanDeCar, VP Government Consulting, and Chris Boneham, Sr. Director Commercial Contracting Consulting, will be co-presenting “The Impact of Managed Market Contracting Strategies on Government Programs – Integrating Government Payers into your Pricing & Reimbursement Decisions.”  Attendees will be introduced to the basics of how discounts, fees, and other incentives included in commercial contracts can impact government pricing calculations.  Through a case study, CIS experts will show how creative contract terms can reset a product’s ‘Best Price’ calculation and have unintended financial impacts on this often very significant customer segment. 

The presenters will be available after the presentation and at the CIS booth to help you with any questions you may have.

Category Categories: Commercial Compliance, General, Government Programs  |  Comments No Comments »

Big Four Pricing Boot Camp: May 15th-16th

Posted by PCB Editor on April 24, 2012

One upcoming opportunity to gain training in pricing methodologies, contracting strategies, and operational best practices for the Department of Veterans Affairs (VA), Department of Defense (DoD), and Public Health Services (PHS) is ACI’s “Big Four” Pharmaceutical Pricing Boot Camp. CIS will be sponsoring the Boot Camp again this year, being held May 15th– 16th in New York City. The Boot Camp provides an advanced forum with speakers that will include Federal government authorities and expert pricing practitioners from the industry. Attendees can expect to learn how to navigate the intricacies of the jurisdiction, functions, and operations of the VA, negotiate FSS contract pricing, calculate non-FAMP and FCP, correct pricing anomalies, and comply with OIG and agency regulations.

Dave Rice, CIS’ Director of FSS Contracting and Pricing, will be co-presenting with Marci Anderson, OIG Senior Auditor, on May 15 at 11:15am on “Determining Whether to Employ Single Pricing or Dual Pricing.”  Some of the key points from this presentation will include:

  • Determining whether to adopt a single or dual pricing model
  • Understanding single vs. dual pricing and the implications of each
  • Making the move from single pricing to dual pricing
  • Which agencies are really eligible for which pricing?
  • Executing a dual pricing scheme
  • Utilizing dual pricing to maximize the rate at which FCP can grow
  • Examining the benefits and detriments of each type of pricing

Attending the Big Four Pricing Boot Camp can help you make sense of complicated terminology and pricing calculations and teach you how to navigate the complexities of working with the “Big Four” agencies. By providing solutions for the calculation, contracting and operational challenges many manufacturers face as a result of federal pricing, this conference will allow you to work more effectively with the “Big Four” agencies. This unique opportunity to have your questions answered directly by the government agencies administering federal payor programs will prove invaluable when trying to improve and streamline practices.

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Now Trending: #Healthcare and Social Media

Posted by PCB Editor on April 23, 2012

By: Kaelyn DeConti, Senior Associate

KaelynDeConti@cis-partners.com

Retweet. Like. Follow. Share. We’ve all heard these popular terms as they are all associated with social media. The joke these days with many young adults is that information is not ‘official’ if it’s not on Facebook or hasn’t yet gone viral. The power of social media is changing the nature of how organizations and consumers interact. Ok healthcare industry, it’s now your turn to jump on the bandwagon!

A survey of 1,060 U.S. adults, released last week by PricewaterhouseCoopers (PwC), found that one-third of consumers now use social media sites such as Facebook, Twitter, YouTube and online forums for health-related matters. These online forums include seeking medical information, tracking and sharing symptoms, and broadcasting how they feel about doctors, drugs, treatments, medical devices and health plans.

The report, entitled “Social Media ‘likes’ Healthcare: From Marketing to Social Business” found that social media by hospitals, health insurers, and pharmaceutical companies is dwarfed by consumer activity. Although eight in ten companies evaluated by PwC’s Health Research Institute (HRI) have some presence on various social media websites, the volume of the companies is in the hundreds versus the thousands of posts, comments, and overall activity observed in community sites in a week’s snapshot analysis.

Highlights from the survey include:

  • 42% of consumers have used social media to access health-related consumer reviews (examples of treatments or physicians)
  • Nearly 30% have supported a health cause, 25% have posted about their health experience and 20% have joined a health forum or community
  • Sixty-one percent of consumers are likely to trust information posted by providers and 41% are likely to share with providers via social media; compared to 37% trusting information posted by a drug company
  • Young adults are influencing healthcare and social media. More than 80% of individuals ages 18-24 would be likely to share health information through social media, while nearly 90% of individuals would engage in health activities or trust information found via social media
  • Social Media is influencing decisions to seek care.  45% of consumers said social media would affect their decision to get a second opinion, 41% said it would affect their choice of a specific doctor, hospital or medical facility, 34% said it would affect their decision about taking a certain medication and 32% said it would affect their choice of a health insurance plan

Slowly, Healthcare companies have started to listen and embrace social media, however one in two eHealth Initiative (eHI) members surveyed worry about how to integrate social media data into their businesses and how to connect social media efforts to a return on investment. The majority of the HRI interviewees and members (82%) from eHI reported that their social media efforts were decentralized and managed by their marketing and communication departments.

“The power of social media for health organizations is in listening and engaging with consumers on their terms.  Social media has created a new customer service access point where consumers expect an immediate response,” said Kelly Barnes, US Health Industries leader, PwC.  “Health organizations have an opportunity to use social media as a way to better listen, participate in discussions and engage with consumers in ways that extend their interaction beyond a clinical encounter.”

So what does this mean for the health industry? According to the report, business strategies that include social media can help health industry companies take a more active role in managing individual’s health. Social marketing can evolve into social business with the right leadership and investment of resources. PwC stated that organizations should coordinate internally to effectively integrate information from the social media space and connect with their customers in a more meaningful way. This would provide value and increased trust. Insights from social media can also offer instant feedback on products or services, along with new ideas for innovation, that can help meet the needs of today’s consumers.

In addition, markets can shift quickly and social media enables organizations to gauge the pulse of the public to diffuse a problem or tap into new opportunities, through what PwC calls ‘Listen, Participate and Engage through External Forums.’

  • Listen – Actively monitor and capture conversations to analyze and understand the meaning of what is being said, the sentiment of the discussion and what influences it has over audiences
  • Participate – Proactively post and publish content on social media-enabled platforms to communicate a message to an audience, but not necessarily engage them in a conversation
  • Engage – Actively interact in one-to-one, one-to-many and many-to-many conversations within social media in order to freely exchange information and advance a discussion

As the future of healthcare and social media continues to gain attention, the importance of a social media business strategy should be on the agenda of organizations and industry executives.  The ultimate goal in the healthcare industry is to improve care and to positively impact a patient’s life. In order to gain more knowledge of what is happening in a patient’s life, the healthcare industry needs to tap into the social media world, because much of that information is being shared right now in the patient’s own social space.

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