CAPD Comment Letter on CMS Rule on Drug Utilization Review and Value-Based Purchasing (2482-P)
Monday, July 20, 2020
Seema Verma, Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
P.O. Box 8013
Baltimore, MD 21244-8013
Re: Medicaid Program; Establishing Minimum Standards in Medicaid State Drug Utilization Review (DUR) and Supporting Value-Based Purchasing (VBP) for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third Party Liability (TPL) Requirements (CMS-2482-P)
Dear Administrator Verma,
Thank you for the opportunity to comment on the Medicaid Program; Establishing Minimum Standards in Medicaid State Drug Utilization Review (DUR) and Supporting Value-Based Purchasing (VBP) for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third Party Liability (TPL) Requirements that was published June 19, 2020. The Coalition for Affordable Prescription Drugs (CAPD) represents a diverse group of public and private employers, retirees, unions, and the pharmacy benefit mangers (PBMs) they partner with to provide affordable, sustainable prescription drug coverage to their employees and members.
CAPD’s members support policies that promote affordability for patients while improving their health outcomes. We also support policies that correct marketplace distortions, prevent gamesmanship, and support timely access to biosimilars and generics. Our members applaud CMS for actions in this proposed rule which address these key issues. Specifically, we would like to offer comment on:
- Current Medicaid Drug Rebate Program and Value-Based Purchasing Arrangements (VBP)
- Changes to the Calculation of Average Manufacturer Price (AMP) Regarding Authorized Generic Drugs due to the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019
- Definition of Line Extension, New Formulation, and Oral Solid Dosage Form for Alternative Unit Rebate Amount
- Impact of Certain Manufacturer Sponsored Patient Assistance Programs (“PBM Accumulator Programs”) on Best Price and Average Manufacturer Price (AMP)
Current Medicaid Drug Rebate Program and Value-Based Purchasing Arrangements (VBP)
CAPD members support policies that improve patient outcomes and ensure patients can benefit from the full value of a medication. As the U.S. works to shift towards a system of value-based health care, CMS’s Best Price policy has unintentionally hindered the development of innovative contracts that align medication reimbursement to patient outcomes. We commend CMS’s proposals which will allow expansion of these innovative contracts, providing commercial health insurers with new options to structure agreements with drug manufacturers while preserving the intent of the Best Price policy: ensuring Medicaid always gets the best deal.
The proposed definition of VBP may be too narrow and could exclude certain types of VBP arrangements currently in place or currently in development between payers and manufacturers, such as indication-based contracts, subscription (“Netflix”) models, and multi-drug models. We encourage CMS to revise or restructure the following language to ensure it applies to these types of arrangements:
…an arrangement or agreement intended to align pricing and/or payments to an observed or expected therapeutic or clinical value in a population (that is, outcomes relative to costs) and includes (but is not limited to):
- Evidence-based measures, which substantially link the cost of a drug to existing evidence of the effectiveness or potential value for specific uses of that product, and/or
- Outcomes-based measures, which substantially link payment for the drug to that of the drug’s actual performance in a patient or a population, or a reduction in other medical expenses.
We also encourage CMS against the utilization of the term “substantially” in the definition, as the term is subjective in nature and impossible to quantify. We recommend that word be removed from any final definition.
As CMS considers which patient outcomes measures should be used to track and assess the development and use of quality measures, CAPD encourages CMS to prioritize patient endpoints and direct or indirect surrogate markers, including duration of therapy or discontinuation. Assessing markers like discontinuation will help address the problem of medication non-adherence, which causes billions of dollars in unnecessary medical spending.
We also support CMS’s proposal allowing modifications to be made to Best Price on a product more than three years after its use. This will significantly change which patient outcomes will be tracked and allow patient outcomes such as remissions from cancer or duration of effectiveness to be measured. This will have impacts for patients beyond payment because it will encourage greater collection of real-world data that helps tailor patient care to ensure optimal outcomes.
We encourage CMS to continue to modernize laws and regulations that unintentionally impede the proliferation of VBP especially as it relates to price reporting. We also encourage CMS to support the development of a VBP safe harbor from the anti-kickback statute to increase innovative contracting options.
Changes to the Calculation of Average Manufacturer Price (AMP) Regarding Authorized Generic Drugs due to the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019
CAPD members firmly believe that drug manufacturers must decrease their list prices in order to solve the crisis of high drug prices. While authorized generics (AGs) sometimes provide decreased out-of-pocket costs for patients before generic product is available, these products’ primary effect is to cause marketplace distortions that significantly benefit brand manufacturers and disincentivize meaningful generic competition. CMS must establish new parameters to ensure the introduction of AGs does not unfairly block or disincentivize the affordable generic competition that American patients deserve. As a result, we support CMS’s proposal to clarify how manufacturers calculate the average manufacturer price (AMP) for a covered outpatient drug, for which the manufacturer permits an authorized generic to be sold and redefines the definition of wholesaler. By prohibiting the inclusion of the sales of the AG in the calculation of AMP regardless of the relationship between the brand name manufacturer and the manufacturer of the authorized generic, the proposal successfully addresses one of the ways that AGs create marketplace distortions that hurt patients.
Definition of Line Extension, New Formulation, and Oral Solid Dosage Form for Alternative Unit Rebate Amount
CAPD members applaud CMS’s move to bring clarity to the definition of line extensions. Current ambiguity regarding what products should be defined as line extensions has allowed manufacturers to use “product hopping” strategies to realize financial gains while blocking generic competition. We support the broad definition of new formulations proposed to include changes in dosage, strength, extended release, routes of administration, ingredients, pharmacodynamics, or pharmacokinetic properties, changes in indication, and combination therapies. We hope with the finalization of these rules, one of the distorted product hopping incentives will be discouraged in the marketplace. We believe the FDA should consider similar changes that would allow suitability petitions for products defined as new formulations.
Impact of Certain Manufacturer Sponsored Patient Assistance Programs (“PBM Accumulator Programs”) on Best Price and Average Manufacturer Price (AMP)
CAPD members recognize that copay coupons can provide out-pocket-cost assistance to help patients afford pharmaceutical manufacturers’ high prices. However, the proliferation of copay coupons, their inconsistent offering, and the ability of manufacturers to turn them “on” and “off” at will creates disruptions, unreliable access for patients, and distortions in the marketplace that undermine more affordable generic and biosimilar drugs. We recognize and commend CMS’s efforts to address the problems and wasteful spending created by copay coupons.
We thank you for the opportunity to comment. CAPD’s members support affordability and access as well as creating a marketplace that works and many of the proposals outlined by CMS in this rule, if finalized, would support those goals.
The Coalition for Affordable Prescription Drugs