National Health Policy Conference January 30, 2017 Rhonda Driver, - - PowerPoint PPT Presentation

AcademyHealth

National Health Policy Conference

Rhonda Driver, Pharmacy Program Director OHSU Center for Evidence-based Policy

January 30, 2017

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

Items to Cover

2

• 1. SMART-D Project Overview
• 2. Medicaid Drug Rebate Program: Overview

and Dynamics

• 3. SMART-D Phase 1 Research:
• Financial Analysis
• Alternative Payment Models
• Legal Analysis

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

SMART-D Project Goals

3

The Center for Evidence-based Policy (CEbP) at Oregon Health & Science University has undertaken a three-year, three-phase pilot program funded by the Laura and John Arnold Foundation. The program has the following purposes:

• to strengthen the ability of Medicaid programs to

manage prescription drugs through alternative payment methodologies, and

• to provide Medicaid leaders with opportunities to

shape the national conversation on prescription drug innovation, access and affordability

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D) 4

Summary of Project Phases

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

APM’S USED IN OTHER MARKETS/ COUNTRIES DRUGS IN THE PIPELINE CURRENT MEDICAID PRESCRIPTION DRUG PRACTICES MEDICAID APM LEGAL OPTIONS ALIGN WITH MEDICAID DELIVERY SYSTEMS REFORM INITIATIVES

Medicaid Prescription Drug APMs: Putting the Pieces Together

5 State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

PRESCRIPTION DRUG ALTERNATIVE PAYMENT MECHANISMS

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

SMART-D Website and Phase 1 Reports

6

• See www.smart-d.org
• Research and reports tab:

1. Summary Report 2. Legal Brief 3. Economic Analysis 4. APM Brief 5. MED Policy Report

7

Medicaid Drug Rebate Program: Overview and Dynamics

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

Overview: Medicaid Drug Rebate Program

8

• Congress enacted MDRP in 1990
• MDRP created the construct of a voluntary rebate agreement

between the drug manufacturer and HHS – If manufacturer enters into a rebate agreement, they are assured coverage of their drugs by Medicaid and Medicare

• Rebate agreement also ensures that CMS and the states:

– Receive a rebate on a drug’s price – set in statute – Do not pay more than a brand name drug’s “Best Price” in the U.S. market

• State Medicaid programs are required to collect statutory

rebates from manufacturers -- both Federal and state portion

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

MDRP Overview: Rebates

9

• Feds and states split rebates according to the state’s

federal medical assistance percentage (FMAP), with

• ne exception:

– Congress increased the statutory rebate in the ACA and those increases go entirely to federal government – Under the ACA, brand name rebate ↑ 15.1% to 23.1%

• CPI penalty - manufacturers owe additional rebates if

the average manufacturer price increases faster than CPI

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D) 10

Medicaid Drug Rebate Program Rebate Formulas Drug Type Rebate Formula Innovator drugs (brand name) Greater of: (adjusted by CPI-U)  23.1% of AMP/unit  Diff between AMP and best price/unit Blood clotting factors Greater of: (adjusted by CPI-U)  17.1% of AMP/unit  Diff between AMP and best price/unit Drugs approved exclusively for pediatric indications Greater of: (adjusted by CPI-U)  17.1% of AMP/unit  Diff between AMP and best price/unit

Abbreviations: add’l is additional; AMP is average manufacturer price; CPI-U is consumer price index-urban; diff is

• difference. Adapted from Medicaid.gov (2016)

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

MDRP Dynamics

11

• Medicaid “Best Price” provisions do not necessarily

apply to Medicaid

– Supplemental rebate negotiated by state Medicaid agencies will not trigger “Best Price”

• “Best Price” is a lever in commercial negotiations

12

Financial Analysis

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

Financial Analysis of “High Cost” Drugs

• No common definition of “high-cost” drugs across

federal and state agencies

• SMART-D informed by Medicare, MACPAC, and GAO

definitions

• Adopted a two-part definition that could be aligned with

the available Medicaid data:

A. Reimbursements of more than $600 per prescription; and B. Total Medicaid reimbursements of $72 million per year

• 455 unique drugs

Threshold 1: Drugs reimbursement > $600 per prescription

• 152 unique drugs

Threshold 2: Drugs with annual gross reimbursement > $72 million

• 64 unique drugs

Threshold 1 & 2: Drugs meeting both thresholds

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

64 High-Cost Drugs

• In FY 2015, these 64 drugs accounted for:

– 9.3 million prescriptions or 1.5% of prescriptions reimbursed by Medicaid – $16.9 billion in Medicaid reimbursements before rebates, or 32.6% of Medicaid drug reimbursement dollars

• The estimated $16.9 billion spent on these 64 high-cost

drugs accounted for 3.1% of the total national Medicaid spending for all services.

– In FY 2015, the Medicaid program spent an estimated $538.4 billion (Kaiser, 2015)

16

Alternative Payment Models

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D) 17

• An APM is a contract between a payer and drug

manufacturer that ties payment for a drug or drugs to an agreed-upon measure

• Our research has highlighted two pathways of

APMs in Europe and the U.S.: – Financial-based – Health outcome-based

Alternative Payment Models

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D) 18

Financial-based APMs

• Designed at either patient or population level
• Rely on financial caps or discounts to provide predictability and

limit financial risk

• Financial targets tend to be easier to administer

Health outcome-based APMs

• Payments tied to predetermined clinical outcomes or

measurements

• Sometimes conditional coverage while data is collected regarding

clinical effectiveness

• Can require significant data collection, but have potential to

increase quality, value and efficiency of treatment

APMs

19

Legal Analysis

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

Legal and Compliance Analysis Framework

20

The Center worked with Powers Pyles Sutter & Verville PC to develop a detailed legal analysis for: 1. Understanding the current federal and state legal framework for Medicaid prescription drug coverage and payment through the Medicaid Drug Rebate Program (MDRP) 2. Exploring potential options within and outside MDRP to use APMs to drive the use of clinically valuable drugs and manage prescription drug costs

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

Legal and Compliance Analysis Framework

21

• Accommodate different state Medicaid delivery system

models (fee-for-service or managed care contracting)

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D) 22

State Opportunities: Pathways

• Pathway One:

Supplemental Rebate Arrangements

• Pathway Two:

Managed Care Organization (MCO) Contracting

• Pathway Three: MCO/340B Covered Entity Partnerships
• Pathway Four:

Hospital-Dispensed Covered Outpatient Drugs

• Pathway Five:

Physician-Administered Drugs That Fall Outside “Covered Outpatient Drug Definition

• Pathway Six:

Alternative Benefit Plan

• Pathway Seven: Section 1115 Waiver

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

Phase 2: APM Planning and Technical Assistance

23

• Center’s goal is to support states with technical

assistance resources for development of APM implementation plans

• SMART-D team has identified technical assistance

needs and opportunities in four areas:

1. Legal 2. Economic Analysis 3. APM Development 4. Communication and Engagement

State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D)

Resources & Contact Information

24

SMART-D website: www.smart-d.org Rhonda Driver, Pharmacy Policy Director CEbP E-mail: driverr@ohsu.edu