Fireside Chat:
Government Pricing Proposed Rules and Industry Evaluation
Felecia Manning, Melody Hamel
Felecia Manning, Senior Director, Managed Markets Contracts and Government Pricing at United Therapeutics Corporation, and Melody Hamel, Senior Life Sciences Counsel and Legal Business Partner at Viatris, had a fireside chat at the Medicaid Drug Rebate Program (MDRP) Summit in September 2023 in Chicago, IL.
Manning is an experienced pharmaceutical professional, specializing in pricing and contracting of government programs specific to life sciences, as well as market access. Hamel, a senior operations counsel, works closely with Viatris’ government reporting team.
The fireside chat focused on key topics related to government regulations and their impact on the pharmaceutical industry. The Centers for Medicare and Medicaid Services (CMS) and pharmacy benefit managers (PBM) proposed reforms challenge the current methods of operations enforced by various entities such as manufacturers. Manning and Hamel sought to clarify these proposed reinterpretations during the discussion, exploring their practicality and identifying disparities from the current statutes.
The session began with a breakdown of the proposed reforms to best price stacking, which Manning and Hamel said contradicted the current statute. 42 CFR § 447.505 defines best price as “the lowest price available to any entity to an authorized generic drug.”
The speakers explained that litigation from Sheldon v. Allergan Sales showed that the CMS has not “warned away” manufacturers from the interpretation that best price stacking is limited to discounts available to the same customer. The new proposal by the CMS does provide caution, which states that “cumulative discounts, rebates, or other arrangements must be stacked to determine a final price realized by the manufacturer for a covered outpatient drug.” Both speakers agreed that this is inconsistent with the current statute.
Manufacturer Challenges
Manning and Hamel criticized CMS reforms, emphasizing that this is the biggest change to the best price stacking definition in 30 years. While changes have been framed as a clarification, they actually represent a deviation from the statutory text. Manning said, specifically for manufacturers, it can be “operationally challenging and burdensome” to implement and reproduce new legislation within such a short timeframe.
Manufacturers are said to be largely affected by the reforms, according to Manning and Hamel. Not only has the CMS proposed changes to best price stacking, but it may also result in statutory changes to the Medicaid Services Investment and Accountability Act (MSIAA), they noted. The reforms are related to identification of misclassifications, correction of misclassifications, and the timeline for correction/rebate resolution. The CMS suggests a 30-day notice period for correction and 60 days to repay any rebates that were missed due to a misclassification. Manning said that this is an “aggressive timeline,” and it would be “challenging” for manufacturers to comply.
Currently, the MSIAA definition of misclassification solely references drug category or drug product information that is not supported by the statute. However, the new CMS proposals intend to broaden the definition of drug product information inclusive of items that have no financial impact on MDRP, a factor that MSIAA is historically not concerned with.
The speakers also shared how the redefinition of terms, such as internal investigation, market date, vaccine, and others, may not account for manufacturer considerations and/or challenges. Nonetheless, the speakers agreed that some provisions could make a positive impact on the pharmaceutical industry.
Also addressed was the current state of reform proposals concerning pharmacy benefit managers (PBM). As of June 2023, several provisions have been introduced by 15 states, including PBM transparency, reducing beneficiary costs, and banning spread pricing. Both speakers said it was promising to see entities beyond manufacturers, such as PBM and hospitals, are being scrutinized and analyzed with a “magnifying glass.”
Overall, the conversation helped build an understanding of the current changes to the Medicaid Drug Rebate Program, as well as providing an expert insight into how these changes could potentially affect the wider industry.
