Protect LTC from unintended consequences of drug pricing reform

DATE: May 3, 2019

Published by McKnight’s Long Term Care News

As Congress and the Trump Administration advance sweeping prescription drug price reforms, it is essential to recognize independent long-term care pharmacies — and seniors in skilled nursing and assisted living facilities under their care and clinical guidance — have as much at stake from the unintended consequences of reforms as they do from the actual policy details themselves.

This is because reforms passed to prevent pharmacy benefit managers and prescription drug plans from continuing to drive skyrocketing consumer costs could, without a watchful eye, simply shift new, reform-generated PBM/PDP expenses to LTC pharmacies and others. The net losers would be seniors living in SNFs/ALFs — who take an average 11-13 prescription drugs a day — and the pharmacies that manage their medication regimes and protect against adverse drug reactions that can result in costly rehospitalizations — even death.

In conjunction with the recent Senate Finance Committee prescription drug pricing reform hearing focused on PBM abuses, the Senior Care Pharmacy Coalition detailed four central policy recommendations to minimize the possibility of unwarranted PBM/PDP cost-shifting:

First — Eliminate DIR Fees. Direct and Indirect Remuneration fees have become extortionate payments PDPs/PBMs demand from independent LTC pharmacies simply to participate in Part D networks. There is no benefit to patients — none. Like manufacturer rebates, DIR fees are essentially blunt demands by PBMs/PDPs — except LTC pharmacies cannot increase their prices to offset such payments, yet manufacturers can. The solution is to eliminate DIR fees.

Second — Impose Conditions on PDP/PBM “Quality Payment” Adjustments. PDPs/PBMs increasingly invoke “quality improvement” to justify DIR and other fees to LTC pharmacies. While adjusting payments to drive quality makes sense, the current approach allows insurers to unilaterally select “performance metrics” unrelated to quality — or designed to benefit affiliated corporate pharmacies at the expense of independent pharmacies. Quite simply, this practice fails patients.

By imposing sensible conditions on the development and use of quality metrics, policymakers could improve quality while also reducing the ability of PBM/PDP conglomerates to manipulate Medicare Part D for deception-generated financial gain. SCPC believes truly relevant criteria include metrics that are specific to the LTC patient population; developed through a stakeholder process; independently validated before use; reasonably related to quality outcomes for patients; unrelated to the financial performance of PDPs, PBMs or affiliated pharmacies; and, free from corporate conflicts of interest.

Third — Assure PDP/PBM Fees are Legitimate. If PBMs/PDPs charge independent LTC pharmacies fees in addition to payment adjustments for quality, any fees charged to pharmacies should be for bona fide services, and should be set at fair market value.

Fourth — Assure Pharmacies are Protected. Pharmacies do not drive higher drug prices or higher beneficiary costs, so they should not bear the cost of policy solutions. The pending Office of Inspector General proposal to restructure manufacturer rebates is illustrative: to protect pharmacies, the proposal would obligate manufacturers to assure they give pharmacies chargebacks that reflect price concessions to PDPs/PBMs.

Policymakers should ensure that any approach to restructure manufacturer rebates shares savings with pharmacies and prevents insurers, PBMs or manufacturers from shifting their losses downstream.

In the context of the OIG proposal, a chargeback program should provide: actual payment to pharmacies, not credit against future purchases; complete transparency so pharmacies can see manufacturer rebates and chargeback payments on a per-prescription basis; prompt payment of chargebacks consistent with Medicare prompt payment requirements; and chargebacks and related services without imposing fees on pharmacies.

We commend the Administration and congressional leaders for what is clearly a robust, well-intentioned effort to address the role of PBMs/PDPs in driving drug prices and consumer expenses higher. Yet on a cautionary basis, we must assure all the reform solutions under consideration adequately assess the impact on LTC pharmacies and vulnerable patients under their care. This should be a fundamental prerequisite for Congress and the Administration moving forward.

Alan G. Rosenbloom is President & CEO of the Senior Care Pharmacy Coalition.

Click here to see the original op-ed on the McKnight’s LTC News website.