Lawmakers seek solutions to drug pricing, payer paperwork

February 20, 2019

"In just the first few weeks of the new Congress, several bills have been introduced by legislators on both sides of the aisle addressing the issues of drug pricing and transparency," writes Heather Kazmark of the AACU.

Based on a partnership with Urology Times, articles from the American Association of Clinical Urologists (AACU) provide updates on legislative processes and issues affecting urologists. We welcome your comments and suggestions. Contact the AACU government affairs office at 847-517-1050 or info@aacuweb.org for more information.

The 116th Congress and state legislatures across the U.S. are making strides toward better access and affordability of drugs for patients. In just the first few weeks of the new Congress, several bills have been introduced by legislators on both sides of the aisle addressing the issues of drug pricing and transparency.

Two notable bills are S. 99 and H.R. 275, both entitled the Medicare Prescription Drug Price Negotiation Act of 2019. Supporters of this initiative point out that Medicare is not allowed to manage its Part D drug formulary, making the United States an outlier among other developed nations that control the cost of prescription drugs. Both versions of the proposal call for the U.S. Department of Health and Human Services (HHS) to negotiate with pharmaceutical companies on drug pricing, including discounts, rebates, and any concessions involved for drugs covered under the Medicare prescription drug benefit (Part D).

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The Senate bill, introduced by Sen. Bernie Sanders (D-VT), requires reporting on the cost effectiveness of each Part D drug and calls for HHS to prioritize negotiations with drugs that impose the largest cost burden on Medicare. Part D plans would also have to implement a process by which beneficiaries can request coverage for a drug that's not on the formulary or is subject to prior authorization, step therapy, etc. In short, the legislation allows HHS to negotiate discounts with manufacturers and impose coverage requirements on Medicare prescription drug plans.

Of course, private payers will still exercise discretion over what drugs are on their formularies, which limits any impact the Act might have on overall drug costs in the U.S. What's more, S. 99 provides no guarantee that a manufacturer will offer rebates to low-income individuals who may not be able to afford a prescribed drug without a price reduction. Rather, the measure serves as more of a deterrent to the drug manufacturer by threatening to withhold Part D drug approval if rebates aren’t offered.

Next: States take up prior authorization measuresStates take up prior authorization measures

State policymakers have followed suit by taking up matters in their own legislatures aimed to improve patient access to prescription drugs. Measures introduced include those to control drug pricing and enhance transparency, as well as to minimize the disruption inflicted by utilization management protocols, such as prior authorization and step therapy. Lawmakers are slowly learning how these practices impose administrative burdens on providers and ultimately cost the health care system close to $1 billion annually.

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“Preauthorization has escalated beyond reason,” said AACU President Charles McWilliams, MD. “My staff spends at least 30 to 60 minutes for every medication preauthorization.”

Research has shown that the average physician spends 3 weeks a year handling prior authorization requests and appeals from insurers and plans. Indeed, streamlining utilization management protocols such as prior authorization is an advocacy priority for many physician organizations, and legislators have become mindful of their concerns.

In West Virginia, a prior authorization measure introduced this month requires electronic transmission of prior authorization requests, as well as mandatory disclosure of any step therapy protocols. SB 5 establishes a 24-hour time limit on insurers and plans to respond to all completed prior authorization requests. Of note, it also requires an immediate response in cases where the provider asserts that the time frame for determinations would subject the patient to adverse health consequences.

Compared to legislation in other states, this bill truly protects patients. Often, states that have been successful in passing legislation requiring standardized prior authorization have included longer time durations allotted to insurers and plans and no disclosure provisions regarding utilization management protocols. For instance, Ohio passed a prior authorization measure requiring a 72-hour time limit on responding to urgent prior authorization requests and a 10-day time allowance for non-urgent requests, with no utilization management disclosure by the insurer or plan required. Currently, SB 5 will be reviewed by the Senate Committee on Health and Human Resources and will also need approval from the Committee on Finance before coming for a full vote in the West Virginia Senate.

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The Kentucky legislature will be reviewing a bill addressing the “utilization review process” involving a host of administrative burdens. Like the version in West Virginia, this bill establishes a process for electronic submission of requests, but patients and providers in Kentucky would benefit greatly from the proposed 24-hour response time allotted for urgent requests and 72-hour time allowance for non-urgent requests. Above all, the bill requires insurers that deny step therapy exception requests to give written notice on the scientific and medical reasoning behind such denials.

Next: Bills address PBM concernsBills address PBM concerns

A bill introduced in Florida, HB 271, is a prime example of how legislatures can address the numerous concerns surrounding utilization management and pharmacy benefit managers (PBMs). The bill requires health insurers to offer an online prior authorization process. It also requires published procedures for exemptions for first fail policies. The insurer is required to publish how the patient or provider may request an exemption or appeal and the time frame allotted for a response. Under the bill, the insurer has 72 hours for non-urgent requests and 24 hours for urgent requests. Additionally, any denial must include a detailed, written explanation.

The Florida measure also implements a process for PBM reporting. Provisions include: the requirement for a PBM to report on the aggregate dollar amount of all administrative fees and rebates received that were not passed along to their health plan partner, as well as what percentage of the rebates they retained. By far, Florida HB 271 is the most comprehensive piece of legislation introduced in the states so far this year.

Montana is also addressing the growing problem of PBMs in the pharmaceutical system and lack of transparency this year with the introduction of SB 83. The bill aims to stop anti-competitive and unjust practices from occurring between PBMs and local pharmacies by prohibiting PBMs from imposing secret fees on pharmacies. Hidden fees that are not disclosed during the contracting process are resulting in reduced payments to pharmacies, costing pharmacies thousands of dollars per year.

The bill also prohibits PBMs from charging patients a co-pay for medicine that is greater than the cost of the medicine. In fact, SB 83 has moved quickly since its introduction earlier this month. A hearing was held on the bill this week and passed out of the Senate Business, Labor, and Economic Affairs Committee and is now scheduled for second reading. Given the bill’s trajectory, it is possible that Montana could set a trend in taking up PBM issues that have long gone unaddressed.

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Last year the Trump administration suggested that PBMs should be required to use fixed prices or value-based contracts rather than being allowed to receive undisclosed rebates from manufacturers. However, no federal regulatory action has been taken to date.

A bill introduced in Texas this month would require PBMs and manufacturers to partake in prescription drug rebate reporting. This bill is similar to the Florida bill explained previously, but in Texas, HB 697 requires both manufacturers and PBMs to report detailed information on all prescription drugs available for sale in the state. Every year, a PBM must disclose the total number of rebates negotiated with manufacturers and the amount in rebates they retained from the previous year. Manufacturers must report on the pricing of each drug, the profit derived from each sale, and the costs associated with providing coupons and co-payment assistance to patients for each drug. Under the bill, the data collected by the commissioner would be posted online for the public to view, providing increased drug pricing transparency for patients and providers throughout the state.

Medicare Part D and utilization management protocols are complex issues that impact patient care and practice viability. Much activity on these issues is expected to occur in 2019. The AACU, through membership in the Alliance for Transparent & Affordable Prescriptions (ATAP), and its state advocacy network, plays an active role to reduce paperwork and ensure patient access to effective treatments. It is vital for urologists to engage in advocacy campaigns to advance our patients, practices, and profession.