News & Views: 12/15 - 12/21

December 22, 2020

Retail prescription drug costs were one of the more significant drivers in the increase of personal health care spending, according to the 2019 National Health Expenditures report.

Retail prescription drug spending increased by 5.7% (to $369.7 billion) in 2019 compared to the 3.8%increase in 2018. The increase is due to growth in use or the number of prescriptions dispensed, as CMS cites a 0.4% decrease in prescription drug prices. To review the report, click here.

  • To read the CMS press release, click here.
  • To read a Health Affairs analysis on the report, click here.

CMS approved a rule to encourage value-based drug pricing.

The rule supports “state flexibility to enter value-based purchasing arrangements (VBPs) with drug manufacturers for innovative, and sometimes costly drugs therapies, and to provide manufacturers with regulatory flexibility to enter into VBPs with commercial payers, which will benefit Medicaid programs.” The rule also revised previous regulations, such as how manufacturers calculate the AMP for brand drugs with generic competition. CMS believes this rule will make manufacturers more likely to negotiate with payers, including Medicaid; however, many Medicaid advocacy groups, notably the National Association of Medicaid Directors (NAMD), have voiced their opposition to the rule, while PhRMA has supported it. The rule is set to go into effect January 1, 2022. To review the full rule, click here.

  • To read the CMS fact sheet, click here.
  • To read the comment letters from NAMD and PhRMA, click here and here, respectively.

The American Enterprise Institute (AEI) published a report on the impact that potential Medicare Part D reforms are expected to have.

The conservative-leaning firm reported that the current policies expected to tie Medicare payments for drugs facing limited competition to prices paid in other developed countries will not be effective in lowering the out-of-pocket costs that Medicare beneficiaries are currently paying. They argue that in order to effectively lower costs, the incoming administration must restructure Medicare Part D subsidies, eliminate incentives that promote higher prices for already expensive drugs, and encourage price competition. To read the complete report, click here.

Biogen has agreed to pay $22 million to resolve claims that they violated the False Claims Act liability for paying kickbacks.

The pharmaceutical manufacturer used two foundations to pay the copay for Medicare patients, in an attempt to encourage those patients to choose Biogen’s Avonex and Tysabri. The Acting Assistant Attorney, Jeffrey Bossert Clark of the Department of Justice’s Civil Division stated that this “resolution announced today, like prior settlements concerning similar misconduct, demonstrates the government’s commitment to hold accountable companies that pay kickbacks to undermine important constraints on rising drug costs.” To read the full release, click here.

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