Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

The OIG explained that the Anti-Kickback Statute is implicated when co-payment coupons are used for drugs reimbursable by Medicare Part D or another federal health care program. Further, the OIG found that current safeguards are inadequate to prevent such coupons from being used for Medicare Part D drugs. The Special Advisory Bulletin and report were concurrently released in September.

Special Advisory Bulletin

The Special Advisory Bulletin addressed the Anti-Kickback Statute implications of pharmaceutical manufacturer co-payment coupons and the significance of cost-sharing for federal health program drugs. Co-payment coupons are any form of direct support offered by manufacturers to insured patients that reduce or eliminate immediate out-of-pocket costs for specific prescription medication.

The Anti-Kickback Statute is a criminal statute that prohibits the knowing and willful offer, payment, solicitation or receipt of anything of value in order to induce or reward referrals or the generation of business of items or services reimbursable by a federal health care program. Violation is punishable by a fine of up to $25,000, imprisonment for up to five years, or both. In addition, conviction results in automatic exclusion from federal health care programs such as Medicare and Medicaid.

The OIG may also initiate administrative proceedings to exclude persons from federal health care programs or to impose civil monetary penalties for fraud, kickbacks and other prohibited activities. Further, a claim that includes items or services resulting from an Anti-Kickback Statute violation also constitutes a false or fraudulent claim for purposes of the False Claims Act.

Co-payment coupons constitute remuneration offered to consumers to induce the purchase of specific items, the Special Advisory Bulletin explained. Therefore, manufacturers may violate the Anti-Kickback Statute when they offer co-payment coupons for prescriptions reimbursable by a federal health care program.

The Special Advisory Bulletin highlighted two benefits to cost-sharing requirements for federal health care program drugs. First, cost-sharing requirements promote “prudent prescribing and purchasing choices by physicians and patients based on the true costs of the drugs.” Second, cost-sharing requirements promote “price competition in the pharmaceutical market.”

The OIG explained that co-payment coupons may distort these incentives, encouraging the use of expensive brand-name drugs when less expensive generic drugs or other alternatives are available. “When consumers are relieved of co-payment obligations, manufacturers are relieved of a market constraint on drug prices,” the OIG noted. Excessive costs to federal programs are among the harms the Anti-Kickback Statute is intended to prevent.

The Special Advisory Bulletin explained that pharmaceutical manufacturers are ultimately responsible for taking appropriate steps to ensure co-payment coupons do not induce the purchase of federal health care program items or services. “Failure to take such steps may be evidence of intent to induce the purchase of drugs paid for by these programs, in violation of the Anti-Kickback Statute,” the OIG warned.

Report

Co-payment coupons have become increasingly prevalent, the report noted. Based on surveys from outside organizations, the OIG estimated that 2 million Medicare Part D beneficiaries may use co-payment coupons for their Part D prescriptions. Like the Special Advisory Bulletin, the report warned that such coupons could increase expenditures for federal health care programs by encouraging the purchase of brand-name drugs over less expensive alternatives.

The OIG described several reasons that pharmaceutical manufacturers may offer co-payment coupons: (1) to retain market share when generic and other brand-name drugs that treat the same condition become available; (2) to attract new patients who may be using an alternative therapy; (3) to encourage patients to adhere to their prescription drug regimen; and (4) to offset the high cost of specialty and biologic drugs, which may not have generic alternatives. Co-payment coupons are typically available as print or electronic coupons, debit cards, or direct reimbursements.

Other manufacturers use edits that rely on the patient’s date of birth. The report noted that BIN lists may not be accurate or current, and age does not identify all Medicare beneficiaries because individuals under 65 may qualify if they are disabled. These proxies do not replicate actual enrollment data and may not prevent all co-payment coupon use for Part D drugs, the report concluded.

Finally, the OIG found that entities other than manufacturers cannot identify when co-payment coupons are used because coupons are typically processed as secondary insurance claims, after a patient’s primary insurance claim has been processed. “This vulnerability impedes other entities, including Part D plans, other primary insurers, and pharmacies, from preventing the use of coupons for drugs paid for by Part D and oversight entities … from monitoring the use of coupons,” the report concluded.

The OIG recommended that the Centers for Medicare and Medicaid Services (CMS) cooperate with industry stakeholders to improve the reliability of pharmacy claims edits and to make coupons transparent. CMS has concurred with this recommendation.

Miriam Straus, an associate at Kalogredis, Sansweet, Dearden and Burke, contributed to this article.
Vasilios J. Kalogredis is the president and founder of Kalogredis, Sansweet, Dearden and Burke, a health care law firm in Wayne, Pa. He can be reached at 610-687-8314 or at BKalogredis@KSDBHealthlaw.com.

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

The cards came addressed to Resident Code #HB-8315-78923. That’s me in computer-speak worthy of the Enigma Machine, the fabled German encryption device of World War II.

A letter accompanying the cards spoke glowingly of prescription discounts up to 75 percent for anyone without health insurance. Yes, even with ObamaCare, millions remain without prescription drug coverage, particularly “documented and non-documented Americans.”

I am not one of them, thanks to Medicare Part D and a Medicare Advantage Plan from United Health Care. And neither are the people in my neighborhood, all of whom have health insurance.

Nonetheless, the neighborhood telegraph lit up with questions about these prescription savings cards from an unknown vendor. Actually, many of us have heard from American Prescription Discounts, though under other names.

That’s by design. The same organization operates U.S. Prescription Discounts, Help Rx, National Prescription Savings Network, Rx Relief and The Healthcare Alliance. Which card you get depends on how you’ve been identified through marketing wizardry.

The cards come from the most successful marketing outfit you’ve never heard of, Loeb Enterprises. The New York City-based firm is the brains behind Priceline.com, among other ventures. Prescription savings cards are new territory for Loeb, which partnered with pharmacy benefits manager Catamaran Inc. to market the cards.

Now, if you got a savings card from American Prescription Discounts cum Loeb, your first question was: Is this thing real?

Yes, it is. It’s not a scam, though I’d put it into doubtful territory, and so should you. In fact, the Better Business Bureau in New York gives the cards a C rating, describing them as the equivalent of coupons without expiration dates.

The cards are marketing vehicles. They imply savings from 50 percent to 75 percent, but you’re more likely to find a five-pound gold nugget in your backyard than reap a bushel of savings at your neighborhood CVS or Walgreens.

Pharmacies accept the cards in return for a pittance from Loeb Enterprises – your coupon, so to speak – hoping that you will make impulse purchases of other items while in the store.

That’s much the way supermarket cards work. The money comes from buying more than you planned.

Supermarket cards are one of the great feats of marketing. They scoop up reams of information about our buying habits. Notice that the product coupons you get at Harris-Teeter and Food Lion are geared to your consumption.

The millions of prescription savings cards issued under manifold names by Loeb Enterprises do the same thing. And, just like supermarket cards, using them surrenders a measure of your privacy.

The panoply of names associated with the prescription cards includes ScriptRelief, yet another facet of Loeb Enterprises. ScriptRelief is the umbrella name for the various guises of Loeb’s prescription cards.

On its Website, ScriptRelief vows to never sell or trade your personal data to a third party. However, it freely admits to gleaning data, including Internet addresses and Web browsing habits, for its entities.

ScriptRelief claims that 7.5 million Americans have saved more than $750 million with its prescription cards. Maybe so, but that’s an average of only $100 per person, far from what the cards imply.

The cards work, in the sense that something is better than nothing.

Written by | Bob Wilson

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

My Comment:  This is good for payors and long overdue.  In February I published, “Specialty Pharmacy: The Top 10 Trends Payers Should Be Following” which listed pay-for-performance as the # 1 trend to follow.

The effort is part of a growing push for so-called pay-for-performance deals amid complaints about the rising price of medications, some of which cost more than $100,000 per patient a year.

Some insurers and prescription-benefit managers are pushing back by arguing that they should pay less when drugs don’t work well in certain patients. Drug companies are countering with pricing models of their own, such as offering free doses during a trial period.

Express Scripts this month told clients it is seeking deals with drug makers for differentiated pricing for certain cancer drugs based on how well they work against different types of tumors, Express Scripts Chief Medical Officer Steve Miller said in an interview. Currently, Express Scripts and most insurers pay the same per-unit rate for a cancer drug regardless of the type of cancer it is being used to treat.

Dr. Miller pointed to Tarceva, a drug co-marketed by Roche Holding AG and Astellas Pharma Inc., which has shown a smaller benefit in pancreatic cancer than in lung cancer. In one clinical trial, Tarceva extended the median survival of pancreatic cancer patients by less than two weeks versus placebo. In a separate trial, it prolonged survival among lung cancer patients by about 3 ½ months versus chemotherapy.

In an “indication-specific pricing” model, the per-pill cost of Tarceva would be lower for pancreatic-cancer patients than for lung-cancer patients, given the reduced efficacy, Dr. Miller said. Tarceva currently costs about $6,850 a month per patient, according to GoodRx, a website that tracks drug prices.

“One of the big frustrations has always been people paying top dollar for drugs that aren’t always giving them the best response,” Dr. Miller said. “If pharma is truly sincere about wanting value-based reimbursement, we now have the sophistication to do that.”

Although Dr. Miller used Tarceva as an example, he wouldn’t identify the drugs for which Express Scripts is seeking indication-specific pricing. The company has begun approaching drug makers about arranging such deals, which could go into effect for 2016, he said.

My Comment:  How much of the savings are going to be passed back to clients?  Those self-funded payors which assume 100% pass back are incorrect unless they have a fiduciary contract.  PBMs are rewarded when they’ve won your business and not for doing their job lest you’ve established some very specific performance bonuses.

A spokeswoman for Roche’s Genentech unit said that when Tarceva was approved to treat pancreatic cancer in 2005, it was the first medicine approved for the disease in more than a decade. She said the drug is now rarely used to treat pancreatic cancer because other drugs have since been approved for the disease. She said Genentech would welcome a system of pricing a medicine based on how it performs in different indications—and has one in place in Italy—but there are challenges to doing so in the U.S., including fragmented patient-record systems.

Express Scripts has in recent years been a vocal critic of high drug prices, which the company has used to promote its services to potential customers as it competes against CVS Health Corp. and others to administer drug benefits for health insurers and large employers. Pharmacy-benefit managers also sometimes keep a portion of the rebates and discounts they negotiate from pharmaceutical companies.

Express Scripts’ approach would be similar to that proposed by Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center.

In an article published last year in the Journal of the American Medical Association, he suggested that in an indication-specific arrangement, the monthly price for Eli Lilly & Co.’s cancer drug Erbitux would plummet from $10,320 a patient to about $470 a patient for its least effective use, treating recurrent or metastatic head and neck cancer. The drug also is used to treat locally advanced head and neck cancer, as well as colorectal cancer.

A Lilly spokeswoman said Lilly supports efforts to make cancer drug reimbursement “better reflect treatment value for different patient populations,” and it is “exploring alternative options to accurately represent the value our medicines offer across multiple indications.”

Drug pricing has been “very hard for the payers to do anything about,” said Steven Pearson, president of the Institute for Clinical and Economic Review, a Boston nonprofit that evaluates cost-effectiveness in medicine. “Now they’re starting to think very hard about it, to look for practical ways to have more of an influence on pricing.”

It can be difficult for drug companies and payers to agree on terms of alternative payment deals—and to actually administer the deals.

To read more click here.

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Do you want to eliminate overpayments to PBMs now? The fastest path to pharmacy benefits cost containment starts here.