Four Ways Trump's Drug Pricing Plan Impacts Pharmacists

June 5, 2018

Article

The speech made headlines for what it means for patients, but what exactly will it mean for pharmacy?

The drug pricing plan released by President Trump takes a robust look at rising prescription drug prices, but several components of the blueprint-and the accompanying request for information (RFI) released by the Department of Health and Human Services several days late-could have a direct impacts on pharmacists.

"We're just very encouraged that the president was recognizing our top issues," said Kala Shankle, director of Regulatory Affairs and Policy at the National Community Pharmacist's Association (NCPA).

The drug pricing plan known as "

American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs

," and the subsequent request for information, both released in May, center around the idea of improving negotiations and lowering patient out-of-pocket drug costs.

"I think really what the administration is trying to do here is find a way to lower drug prices, lower list prices, but also meaningfully lower the patient or beneficiary's expense for pharmaceuticals," says Matt Brow, president of Avalere Health, a healthcare consulting firm.

But patients aren't the only stakeholder who could be impacted by the changes recommended in the plan. As the President takes aim at what he referred to as the "middle men" or pharmacy benefit managers (PBMs), pharmacists could see significant impacts as well.

The most meaningful of these impacts include:

1. Altering Pricing Incentives

The blueprint continues recent momentum to curb drug pricing by altering safe harbor provisions that are currently part of anti-kickback statutes.

FDA commissioner Scott Gottlieb questioned whether there was a need to re-examine the current safe harbor provisions for drug rebates in comments at a Food and Drug Law Institute conference in early May.

One of the proposals outlined in the blueprint furthers this idea by suggesting measures to restrict the use of rebates, including making changes to the safe harbor provisions for drug rebates in the Medicare Part D program.

"The administration has the ability to modify their previous guidance that established that safe harbor, so it think it's a very significant proposal for PBMs just given the ease with which the administration could implement it," says Lindsay Bealor Greenleaf, director at healthcare consulting firm ADVI.

The blueprint identifies this as a "further opportunity," though exactly how the safe harbor provisions could be altered isn't immediately clear. Greenleaf says the most extreme-and less likely-change would be to repeal it outright, eliminating a PBM's power to engage in rebating and discounting in Medicare Part D. A more realistic option, she said, is developing some type of policy that limits excessive rebates or discounts.

"That would have immediate impact on the PBM's business models," she said.

2. Weighing in on DIR fees

For the past two years in a row, retroactive pharmacy DIR fees have been identified as the top legislative and regulatory priority for NCPA members - and it appears Washington is taking notice.

Although there's no specific language about putting the DIR fees at the point of sale, Shankle says the President's blueprint and the RFI released by HHS do include broad language requesting more information about DIR fees in the industry. The request comes at the heels of another request for information issued by CMS as part of its 2019 Medicare Part D rule to examine assessing the fees at the point of sale.

"This administration continues to recognize that the system is broken and we've been saying that for a very long time, so again, it's very encouraging that the President is even requesting more information," Shankle says.

NCPA hopes the administration may even consider eliminating the fees.

"The blueprint and then the accompanying RFI that came out of HHS had some language in there about rebates and what it would look like if rebates were eliminated and no longer part of manufacturer contracts," Shankle says. "We're going to take that a step further and say, what about considering doing that for pharmacy DIR."

Brow said if PBMs were prohibited or limited in how they assessed DIR fees it could have a positive impact on pharmacies.

"That could make it possible potentially for more pharmacists, I think, to participate in-network and make it less meaningful or less of an incentive for the PBM to try to exclude pharmacists from network," he said.

3. Eliminating Pharmacist Gag Clauses

The President also took aim at pharmacist gag clauses. According to Shankle, the term "gag clause" is a bit of a misnomer, but generally refers to confidentiality provisions, non-disparagement clauses, and directives on what pharmacists must charge patients after they present insurance that create an atmosphere where pharmacists can't discuss drug costs with patients.

In his speech at the Rose garden, Trump told attendees these gag clauses were "a total rip-off, and we're ending it."

According to Greenleaf, the administration has already acted on this with Medicare Part D plans by sending out a letter stating that pharmacy gag clauses do not comply with the intent of the program.

"That could have some short-term effects preventing or stopping gag clauses for Medicare Part D beneficiaries," she said. "It remains to be seen what will be done on a broader, all patient, nationwide level."

Brow said eliminating the clauses could make substitution easier for generics or lower cost options and would promote a greater level of transparency with patients.

4. Fiduciary Status for PBMs

PBMs have long been criticized for what some view as their opaque business practices. According to NCPA, the blueprint and RFI consider requiring PBMs to act in the best interest of payers.

"NCPA has long supported requiring more regulation of PBMs including acting as a fiduciary," they wrote in a statement about the pricing plan.

According to Shankle, the blueprint outlined how the lack of a fudiciary relationship could result in PBMs making choices that are not in the best interest of the plan, which in turn may not be in the best interest of the payer or consumer.

"It really just kind of demonstrated that having a middle man in the middle that really isn't beholden to anybody isn't doing any favors for any part of the industry," she said.

Improving transparency and enhancing the negotiating practices with PBMs could help improve rising drug prices.

"One of the things that the administration is trying to set up throughout all of this is the environment that encourages the various players in the system, whether it’s drug manufacturers or PBMs or distributors or others, to come to the table and offer solutions," Brow said.

Those who come to the table voluntarily with ideas of how to lower drug prices, he said, may have less risk of government action.