I do love a Monday off. It somehow feels like an a double-treat – you get the Monday off and the week flies by. Yes we had to cram more meetings and work into the shorter week but totally worth it.
Caught my Eye
Processed Over. This week the Secretary of Health and Human Services, RFK Jr. announced that the COVID vaccine was no longer recommended for children and pregnant women. The folks over at the CDC did not know (gift link) that it was coming. This was not a decision of the CDC’s Advisory Committee on Immunization Practices (ACIP) — just a political one. From a pharmaceutical perspective, everyone should be a little wary of unilateral decisions based on agendas not science.
Less Math for Them. In their meeting late last week, Colorado’s prescription drug affordability board (PDAB) said that they plan to use the Medicare negotiated price for Enbrel as the upper payment limit. It should be noted that in Medicare negotiation, the pharmaceutical manufacturer is part of the negotiation and is required to provide the negotiated price (also known as the maximum fair price) to those who purchase the medication for distribution (pharmacies, provider offices, etc.). There is no such requirement in PDABs – just the hope that discounts will be provided so that pharmacies can purchase the drug at a price that is less than they will be reimbursed for it. If you love PDABs, I’m working on a paper on upper payment limits that will be coming out this summer.
A Twist. Following on the heels of the Most Favored Nation (MFN) Executive Order is a sneaky little notice appeared in the Federal Register saying that the U.S. Trade Representatives is looking for comments on actions that might force Americans to pay more for drugs in the U.S. than in other countries. And last week the U.S. Customs and Border Protection (CBP) reminded pharmaceutical companies to properly declare the value of their imports and exports. This is more tariff-related, but it could also be tied to MFN.
Speaking of MFN, this piece on RApport was long — like coffee shop on a Saturday trying to catch up on reading — long. But, if you don’t understand the skepticism around MFN or want to think about it in a new way, you really should read it.
Girl, You Know It’s True. Sometimes even things that are obvious need a citation. The New England Journal of Medicine has a study that shows that if low income subsidy Medicare beneficiaries were to lose their extra help it may impede medication access and affect mortality. The effect is amplified for those with cardiovascular disease, chronic lung disease, or human immunodeficiency virus infection.
Speaking of Tradeoffs. Nice piece in Health Affairs Forefront on 340B contract pharmacies and how there are consequences of increased contract pharmacy utilization.
Reviewing the Fundamentals – Direct and Indirect Remuneration (DIR)
Lately I’ve been thinking about pharmacies and how they get reimbursed and how some of the new policy programs (Inflation Reduction Act, Upper Payment limits) really make things harder for them. And that’s after they finally, maybe, got a little bit out of the blast radius of direct and indirect remuneration fees. Direct and Indirect Remuneration (DIR) refers to fees or adjustments to the payment a pharmacy receives for dispensing medication to a patient, particularly within the Medicare Part D program.
DIR started with the implementation of Medicare Part D in 2006. CMS wanted to use DIR to account for manufacturer rebates and other price concessions to lower overall drug costs for Medicare Part D plans, but the concept has evolved. PBMs began to use DIR as an umbrella term encompassing various fees, including network participation fees, price reconciliations, and performance-based adjustments. These fees (called clawbacks because they were retrospective) happened weeks or even months after the prescription was dispensed and were based performance metrics were outside of a pharmacy’s direct control, inconsistently applied, or not clearly defined in their contracts. This led to financial instability for pharmacies including sometimes reimbursement below their acquisition cost.
CMS said that, as of 2024, DIR fees could no longer be retroactive and that all pharmacy price concessions, including DIR fees, be reflected in the price the patient pays at the pharmacy counter at the point of sale. The problem? While the fees are prospective, DIR remains opaque with pharmacies uncertain what reimbursement is and what are fees when they are paid by the PBM.
Add in the IRA Medicare Transaction Facilitator program, vertical integration, upper payment limits – it is a tough time to be a pharmacy.
For the Files
- Predictions on drug negotiations for 2028 and 2029. Yes please.
