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This year, constant activity in Washington, D.C. will keep health care needs at bay, and especially as drug manufacturers work to understand and implement provisions of the Inflationary Reduction Act (IRA), which would lower out-of-pocket costs for prescription drugs. Limit the drugs in Medicare and what the government pays for.
On Sept. 7, Avare Health experts will host a one-hour rapid-fire webinar, “Preparing for Legislative Change and Connecting Equity and Outcomes,” to take a closer look at what IRA implementation looks like. The webinar covered other recent actions affecting drug sponsors and healthcare providers, such as the announcement of the Oncology Model (EOM).
IRA Highlights: Changes to Medicare Negotiations, Inflation, Part D Redesign
The IRA, signed Aug. 16, will take effect in 14 months.
“Policymaking will not stop now,” said managing director Matt Kazan, adding, “There are many details in this legislation that have yet to be decided.” And to find that out, CMS and HHS. It’s in court.”
Kazan said CMS and HHS will adopt programmatic guidance — a process that keeps things moving faster and is faster and more difficult than the regular review process, but harder to track. He said staff could shape how the policy works.
Ryan Urgo, managing director of health policy, said the IRA is very specific in some areas but ambiguous in others. Areas requiring Urgo clarification include:
- implementing the Maximum Fair Price (MFP) policy to negotiate drug prices with Medicare;
- what information sharing looks like between HHS and drug manufacturers;
- how zero cost sharing works for patients for vaccines and insulin caps; And the “smoothing” policy in Part D refers to a provision that allows some beneficiaries to pay an even amount over the course of a year instead of paying a higher lump sum for cost-sharing.
Kazan and Urgom talked about the negotiation process introduced in the IRA, which for the first time allowed companies to negotiate drug prices with HHS. Kazan will start negotiations for the first year in 13 months. All companies with negotiable products should think about a contract and recovery strategy with Part D plans, he said.
“The law says that if you’re an elective drug, you have to be covered by a Part D plan. But the law is silent on discount organization, utilization, administrative forums, etc. So thinking about how Part D plans respond to this policy is just as important as thinking about the negotiation process for the manufacturer,” Kazan said.
Urgo pointed to the MFP rebate, which is not included in the Average Manufacturer Price (AMP) calculation but is included in Medicaid’s best price, which would affect Medicaid rebate exposure and changes to the 340B program.
The legislative text seems to suggest that the MFP discount will have a recurring and debilitating effect [average sales price] and ASP calculations. That will require a complete rethinking of how manufacturers of Class B drugs think about their contracting strategies and relationships with suppliers.
Kazan highlighted the late decision by Congress to eliminate the inflation-linked trade rate, which changes the financial obligations of producers and also changes the flexibility of producer thinking about future pricing decisions and valuations. Commercial and Medicare rates as part of the calculation.
Urgo pointed out that the inflation adjustment period begins before the appropriate period. “Manufacturers know what their target price should be, but they don’t have much time before that time starts. So, as long as the pricing strategy and price increases are thought out months in advance, that process is likely to require little disruption.
The Medicare Part D redesign will actually begin in 2025, but some changes will come to the table in 2024, including changes to 5% coverage for beneficiaries and eligibility for low-income subsidies.
“There are going to be a lot of very practical benefits associated with the Part D redesign because of that new out-of-pocket and smoothing policy. So, we can’t lose the affordability benefits to patients. But that will come at a cost to manufacturers in negotiations with plan sponsors,” Urgo said.
Pricing and access groups should work together to start thinking about what real-world evidence exists for negotiable products and what new purchasing agreements are needed to fully retain suppliers, he said. Kazan said business units should keep up with activities and decisions coming out of CMS and HSHS ahead of decisions, and public affairs offices should help interpret stakeholder negotiation information that could impact upcoming decisions.
Preparing to release EOM
The Oncology Care Model (OCM) successor, the EOM, will be released on July 1, 2023. According to Blair Burnett, consultant for Avare Health, this model will be more focused on cancer care but still within the package. Value of care model approach.
One of the biggest changes in this new model is that the types of cancer covered will be reduced, with EOM covering only 7 of the 21 types of cancer that OCM did. Cancers covered include breast, lymphoma, colorectal, prostate and chronic leukemia. “Despite the reduction in the types of cancer involved, the 7 involved in EOM account for about half of those in OCM, about 48%,” Burnett said.
A monthly Enhanced Oncology Service (MEOS) payment designed to support major care change initiatives is being implemented by OCM. Dropped from $160 to $70 per user per month with EOM. However, practices receive $100 per month when they treat patients who are “dual eligible,” meaning they get both Medicare and Medicaid. There are 2 risk models with practice redesign, and electronic patient reported outcomes will be mandatory in year 3.
Maddie Davidson, a consultant at Avalere Health, said that with strategy changes, ongoing efforts, and the overall transition to value-based care and the advent of the model, more participants will be encouraged to switch to EOM. They explained that EOM’s payment strategy has been modified from OCM to make prices more accurate and accessible because prices are set using 7 individual cancer recurrence models compared to only 1 in OCM. Certain diagnosis-related groups were also excluded from the calculations, which may have attracted hospital-based practices.
According to Burnett, Avare is recommending that all life science companies and manufacturers involved in these changes “get in touch with their priority accounts to understand how these important and methodological adjustments are recommended and how they plan to participate and how to support them.” or not and how those practices interact with external stakeholders.
The new E.O.M. In partnership with the Cancer Moonshot Initiative, it provides equitable cancer care to close gaps and address cancer disparities exacerbated by the COVID-19 pandemic. Implementing patient-reported outcomes and health input testing are 2 ways EOM hopes to close health disparities.
Addressing and reducing health care disparities
Companies are beginning to seek to address health care disparities and health equity. But the first step to doing this is often the hardest to start.
Co-principal Brigitte Key-Bafur says all companies need to start with the data. “There are many ways stakeholders can use data to develop solutions to address health equity challenges that impact their unique patient communities and produce positive outcomes,” she said.
Ensuring that algorithms that collect data are not biased and tailoring that data to specific populations of interest is one way companies can begin to address health equity.
Sara Alward, senior vice president of consulting services, agreed that real-world data should always be where companies start, and should be taken in context. She added that patient perspectives are becoming increasingly important in addressing these issues. Patients and caregivers can provide their perspective after the data is collected to better understand patients’ needs and what outcomes they want from their treatments.
Combining patient perspectives with data can help companies understand some actionable next steps and future strategies informed by these perspectives.
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