Impact of Health Reform on Prescription Drugs

Transcription

1 Impact of Health Reform on Prescription Drugs 1

2 Indirect Effects Increased Rx Volume = More Prescriptions! Page 2

3 Retiree Drug Subsidy (RDS) Before HCR Tax-Free Subsidy RDS as taxdeductible income After HCR Tax-Free Subsidy RDS as taxdeductible income Page 3

4 Medicare Date Jan 1, 2010 Provision $250 rebate to beneficiaries who reach the coverage gap Reduction of coinsurance rate from 100% to 25% in the coverage gap Brand: 50% manufacturers; 25% Govt Generic: 75% Govt 100% of negotiated price will still count toward out-of-pocket threshold used to define coverage gap Payment cuts to Medicare Advantage Plans. July 1, 2013 Eliminates tax deduction for employers who receive Retiree Drug Subsidy (RDS) payments. 31% of large employers in the private sector offer benefits to Medicareeligible retirees in Costs: John Deere ($150 million), Caterpillar ($100), Verizon ($970 million), AT&T ( $1 billion) Page 4

5 Medicare (cont d) Prescription Drug Plans (PDP) and Medicare Advantage Prescription Drug Plans (MA-PD) are now required to consult with pharmacies to reduce wasteful dispensing in long-term care facilities (LTC). Eliminates 30-day fills for Part D enrollees residing in LTC facilities Opts for daily, weekly, or automated dosing Effective on January 1, 2012 Improvement in Part D MTM programs. Annual comprehensive medication review by a licensed pharmacist for targeted beneficiaries Automatic enrollment for beneficiaries with ability to opt out Effective March 23, 2012 Page 5

6 Medicaid Increase in Medicaid drug rebate percentage Brands: 23.1% Clotting factors and drugs approved exclusively for pediatric use: 17.1% All rebate increases will be extended to Medicaid managed care plans Federal Upper Limit (FUL) for generic reimbursement will be calculated using AMP No less than 175 percent of the weighted average of the most recently reported monthly AMP Improves generic drug reimbursement rates for retail pharmacies compared to Deficit Reduction Act of 2005 Page 6

7 Medicaid (cont d) New definition of AMP (Average Manufacturer Price) Only considers: Sales from manufacturers directly to retail pharmacies Sales from wholesalers distributed only to retail community pharmacies Includes all discounts and rebates extended to retail pharmacies Excludes discounts and rebates extended to wholesalers, PBMs, mail order pharmacies, etc. Pharmaceutically and therapeutically equivalent multiple source drug products that are available for purchase by retail community pharmacies on a nationwide basis Effective Date First day of the first calendar year quarter that begins at least 180 days after the date of enactment of this Act Page 7

8 Pharmacy Benefit Managers (PBMs) and Disclosure Disclosure of financial information to: Secretary of HHS if contracted with PDP and MA-PD plans. Health Plan if contracted with a plan in the new state exchanges Information will include: Percentage of Rx s dispensed by retail vs. mail order pharmacies Generic dispensing rate by pharmacy type Aggregate amount of rebates, discounts, and price concessions Amount of rebates/discounts passed to plan sponsor along with total # of Rx s dispensed Regarded as confidential information Page 8

9 PBMs Focus on preventative services and wellness programs Validates clinical programs already provided by PBMs All health entities to disclose financial information and relationships to Congress by April 1st, 2013 Hospitals, physicians, pharmacists, manufacturers, distributors Page 9

10 Pharmaceutical Industry Annual fees totaling $16 billion from Includes pharmaceutical manufacturers and importers $2.8 billion/year after 2019 Fee per entity is dependent on annual sales Orphan drug sales excluded from analyses Excise tax of 2.9% on medical device manufacturers for the sale of any taxable medical device after December 12, 2012 Also includes medical device importers 50% rebate on brand name drugs dispensed to Medicare Part D patients in the coverage gap Possible source of revenue due to increased dispensing of costlier brand name drugs FDA authorized to approve generic versions of biologic drugs 12 years of exclusive use before development of generics Page 10

11 Over-The-Counter Products Annual contributions to flexible spending accounts (FSA) will be limited to $2500/yr 13.3 million taxfilers had FSA(s) in 2003 Non-Physician prescribed OTC products Excluded from HRA and health FSA reimbursements. No longer deemed as qualified medical products for tax-free reimbursements through HSA and Archer Medical Savings Account Increased tax from 10 to 20% for non-qualified medical expenses purchased through HSAs Bottom Line: Decreased $$ for a billion dollar industry Page 11

12 Over-The-Counter Products (cont d) Non- Eligible OTC products Antacids Cough, Cough & Flu medicines Anti-Diarrheals Laxatives Sleep Aids Anti-fungals Non-Steroidal Anti-inflammatory Agents Plus more!! Eligible OTC products Non-Eligible products prescribed by physicians. Insulin Page 12

13 Pharmaceutical Industry (cont d) Better reimbursement rates from new AMP definition Deficit Reduction Act of 2005 called for less reimbursement for Medicaid generic drugs Exempt from Medicare DME accreditation if medical equipment sales are < 5% of average Rx sales over 3yrs Otherwise, should meet accreditation standards by Jan 1st, 2011 Expansion of 340b program Covered entities now allowed to contract with multiple pharmacies to provide pharmacy services. Another source of revenue for pharmacies, particularly independents Decreased profits due to increased dispensing of brand name drugs to Part D enrollees, particularly in coverage gap Page 13

14 Pharmaceutical Industry (cont d) Collaboration with Part D plans in dispensing techniques to reduce waste in long term care facilities starting 2012 Daily or weekly dispensing for Part D members in LTC facilities Use of bingo card and cassette dispensing Negotiations between NCPA and CMS to ensure proper dispensing fees are appropriated according to the frequency of dispensing and costs of specialized packaging Opportunity for independent pharmacies to contract with Part D plans due to decreased competition with mail order and retail pharmacies that cannot supply daily or weekly dosing Page 14

15 Impact of HCR on Prescription Drugs Increased Rx volume Enhancements PBMs are the biggest winners New FDA authorized process for generic availability of biologics Grants for reimbursements for MTM services Federal Upper Limit (FUL) pricing calculated by new Average Manufacturer Price (AMP) Contracts with Long Term Care (LTC) facilities for waste reduction Closing of coverage gap from % Restrictions Retiree Drug Subsidy no longer tax deductible income Annual Fees for Pharma Health FSA cap and reimbursement restrictions on OTC products. Excise taxes on medical device manufacturers and importers Increase in Medicaid drug rebate percentage Payments cuts to Medicare Advantage Plans $250 rebate to Part D enrollees in coverage Decreased bargaining power for pharmacy benefit managers due to transparency requirements? Page 15