Regulatory developments affecting pharmacy

Synopsis

Here is a quick summary of this edition of the Regulatory Update:

Rebate Rule: Congress postponed the effective date for eliminating existing discount safe harbor protection for rebates for Part D plans to Jan. 1, 2026. 

Build Back Better (BBB) Act: The likelihood of the Senate passing the proposed legislation is uncertain after Sen. Manchin announced he would not vote for the bill in its current form. 

Transparency: The federal government announced it will limit enforcement of rules forcing PBMs to disclose proprietary contractual terms. 

Prescription drug reporting for sponsors deferred: The federal government is deferring enforcement of new rules requiring sponsors to report detailed information on prescription drug cost trends, overall spending on health services and prescription drugs. 

States: As State legislative sessions concluded across the United States, governors signed or vetoed legislation impacting PBMs and clients.

Rebate Rule delayed and more

Rebates are a longstanding tool used by PBMs to negotiate with drug manufacturers to achieve lower prescription drug costs for clients.

In November 2020, the Department of Health and Human Services issued a change to an existing rule enabling safe harbor protection for rebates for Medicare Part D plans. This new “Rebate Rule” was scheduled to go into effect Jan. 1, 2023. Opponents of the rule change say that the Rebate Rule would increase premiums for consumers and lead to higher costs for plan sponsors.

On Nov. 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act into law. In addition to funding for roads and bridges, the new law delays the Rebate Rule from Jan. 1, 2023, to Jan. 1, 2026. Note that a full repeal of the Rebate Rule is under consideration as part of the Build Back Better Act passed by the House.

Why this matters: The delay of the Rebate Rule to 2026 is a significant win for Part D plan clients. OptumRx is partnering with PCMA and Coalition for Affordable Prescription Drugs (CAPD) to advocate for a full repeal of the Rebate Rule.

Passage of drug pricing reform legislation uncertain

The Build Back Better Act (BBBA) is a broad package of health, social, and environmental programs supported by President Biden and Congressional Democrats. In order for the Senate to pass legislation under the budget reconciliation process, all 50 Democrats and the Vice President must vote in favor of the legislation. On Dec. 19, 2021, Sen. Joe Manchin (D-WV) announced that he would not support the current version of the BBBA, effectively taking away the 50 votes needed for passage. This followed action by the House of Representatives, which passed the $1.7 trillion BBBA by a vote of 220-213 on Nov. 19, 2021.

The legislation passed by the House proposes several major changes to prescription drug reimbursement and coverage. The changes include mandating government price negotiation for some drugs under Medicare, requiring manufacturers to pay rebates to the Medicare program if drug prices increase faster than inflation, and redesigning the Medicare Part D benefit to include an out-of-pocket spending cap and insulin co-pay caps. The legislation would also repeal the Trump Administration's Medicare Part D prescription drug rebate rule. Please note: the information in this article is based on a review of the legislation passed by the House Nov. 19, 2021 and may no longer be accurate if changes are made to the legislation after that date.

Possible next steps could include moving forward with a vote on the current version of the legislation to force senators to go on the record, modifying the legislation in an attempt to win Senator Manchin’s support, or looking for other avenues to advance certain elements of the package. However, on Jan. 4, 2021, Senator Democratic Whip Sen. Dick Durbin (D-IL) reported that negotiations over the bill are on pause until the Senate deals with voting rights legislation, and it’s not clear when talks will resume.

Why this matters: OptumRx is closely following all reports and providing input to Congress as this legislation continues to be negotiated. OptumRx is actively advocating to prevent certain PBM and drug pricing provisions from being added to the legislation.

Federal pricing transparency enforcement delayed

In November 2020, the Departments of Labor, Health and Human Services, and Treasury (the Departments) issued a Transparency in Coverage final rule. The rule mandated PBMs to report historical net prices of prescription drugs as of Jan. 1, 2022.

On Aug. 12, 2021, the PCMA filed a lawsuit on behalf of member PBMs against the Departments. Specifically, the lawsuit claims that the rule’s pricing transparency mandate for PBMs does not comply with required processes for drafting and finalizing regulations. Further, that the Departments lack authority to mandate disclosure of confidential, proprietary information about drug prices, including net prices.

Following the filing of the lawsuit and after OptumRx participated in several meetings with government agencies, the Departments issued FAQs on Aug. 20, 2021 announcing their intention to exercise enforcement discretion with respect to portions of the Transparency in Coverage final rule and Consolidated Appropriations Act. While the Departments cannot modify the regulation without going through a formal process, this enforcement delay allows the Departments additional time to consider the appropriateness of the requirements.

Why this matters: The FAQ provides more time before certain drug price information and reporting needs to be made available. The delay also provides an opportunity for the Departments to revisit the historical net pricing provision. OptumRx will continue to develop reports and files to assist clients to comply with the rule.

Prescription drug reporting for sponsors deferred

The Consolidated Appropriations Act of 2021 (CAA) passed into law on Dec. 27, 2020. The law requires group health plans and health insurance issuers offering group or individual health insurance coverage to submit information to the Departments of Health and Human Services, Labor, and Treasury on an annual basis. This includes detailed prescription drug cost trends, overall spending on health services and prescription drugs, and information about premiums and the impact of rebates and other remuneration on premiums and out-of-pocket costs. 

On Nov. 23, the Departments issued a rule to implement the new reporting provisions of the CAA and address stakeholder comments. Under the CAA, the required information must be submitted by Dec. 27, 2021 for the 2020 calendar year, and by June 1 of each year thereafter. However, the Departments have announced that they are deferring enforcement for the first year of applicability. Reports that are due on Dec. 27, 2021 and June 1, 2022 will not face enforcement action if they are submitted by Dec. 27, 2022.

This rule provides that plans and issuers generally must submit the required information aggregated at the state/market level, rather than separately for each plan, as prescribed by the Departments. The rule further provides uniform standards and definitions. These include ways to identify prescription drugs regardless of the dosage strength, package size, or mode of delivery. 

Why this matters:This rule allows for more time for plans and issuers to report 2020 information and allows the information to be aggregated at a state/market level. OptumRx will continue to monitor developments in this area and will provide clients with reports and files to assist with their compliance with this law.

PBMs avoid potential new regulations – for now.

State legislative sessions have wrapped up across the United States, many having passed legislation impacting PBMs and clients.  Here are a few examples of enacted and vetoed legislation.

California

The California legislature passed SB 524 specifically targeting PBM “steering” to affiliated pharmacies. As a direct result of successful advocacy efforts, Gov. Gavin Newsom returned the bill to the legislature without his signature on Oct. 8. He cited the lack of clarity in the law as to applicability and defined terms. This action means that the legislation is effectively vetoed and will not become law. We expect to see the bill’s proponents introduce similar legislation in 2022.

Delaware

Delaware’s HB 219 addresses pharmacy reimbursement (including minimum level of reimbursement and reimbursement parity with PBM-affiliated pharmacies), pharmacy accreditation, PBM transparency and prohibits traditional (spread) pricing. Gov. John Carney failed to sign or veto the bill by Oct. 26. As a result, the bill automatically became law and took effect immediately. The legislation will impact new clients and existing clients upon contract renewal.

Michigan

The Michigan legislature  adjourned without passing HB 4348, which covered a wide range of PBM topics such as licensing, pharmacy fees, traditional (spread) pricing, and MAC appeals.  Some of the provisions in the legislation may reappear in new legislation this year as it is a high priority for the House Speaker. 

New York

Despite an aggressive lobbying effort, Gov. Kathy Hochul signed both S3762/A1396 (a PBM registration bill) and S3566/A5854A (an anti-mail bill) into law at the end of 2021. The governor’s office and the legislature agreed to chapter amendments to S3762/A1396 which means there will be changes to that bill before it goes into effect.  The changes had not been released as of January 4, 2021.   

North Carolina

On Sept. 20, Gov. Roy Cooper signed SB 257 into law that sets out PBM licensure requirements, limits copay coupon accumulator programs and contains “any willing pharmacy” provisions. However, the final version of the bill reflects successful advocacy to remove provisions restricting the use of specialty and mail pharmacies and requiring certain pharmacy reimbursement mandates. 

Why this matters: These pieces of legislation have far-reaching impacts on the use of PBM tools by clients. These include eliminating clients’ ability to choose traditional pricing arrangements, restricting how copay cards are utilized and accumulated, and limiting mandatory mail pharmacy and/or Optum Specialty Pharmacy exclusivity. Up-to-date information regarding these laws can be requested through your Account Management team.

STATEMENT REGARDING FINANCIAL INFLUENCE:

This article is directed solely to its intended audience about important developments affecting the pharmacy benefits business. It is not intended to promote the use of any drug mentioned in the article and neither the author nor OptumRx has accepted any form of compensation for the preparation or distribution of this article.