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Unformatted text preview: Chapter 12 References Journal of Geophysical Research: Atmospheres 114(D5). doi:10.1029/2008JD009849. Available at: . (Accessed: February 27, 2018). GCRP 2016. citing Deschênes, O. and M. Greenstone. 2011. Climate change, mortality, and adaptation: Evidence from annual fluctuations in weather in the US. American Economic Journal: Applied Economics 3(4):152-185. doi:10.1257/app.3.4.152. GCRP 2016. citing Dixon, P.G., A.N. McDonald, K.N. Scheitlin, J.E. Stapleton, J.S. Allen, W.M. Carter, M.R. Holley, D.D. Inman, and J.B. Roberts. 2007. Effects of temperature variation on suicide in five U.S. counties, 1991-2001. International Journal of Biometeorology 51(5):395-403. doi:10.1007/s00484006-0081-4. GCRP 2016. citing Fiore, A.M., V. Naik, D.V. Spracklen, A. Steiner, N. Unger, M. Prather, D. Bergmann, P.J. Cameron-Smith, I. Cionni, W.J. Collins, S. Dalsøren, V. Eyring, G.A. Folberth, P. Ginoux, L.W. Horowitz, B. Josse, J.-F. Lamarque, I.A. MacKenzie, T. Nagashima, F.M. O’Connor, M. Righi, S.T. Rumbold, D.T. Shindell, R.B. Skeie, K. Sudo, S. Szopa, T. Takemura, and G. Zeng. 2012. Global air quality and climate. Chemical Society Reviews 41:6663-6683. doi:10.1039/C2CS35095E. GCRP 2016. citing Honda, Y., M. Kondo, G. McGregor, H. Kim, Y.L. Guo, Y. Hijioka, M. Yoshikawa, K. Oka, S. Takano, S. Hales, and R.S. Kovats. 2014. Heat-related mortality risk model for climate change impact projection. Environmental Health and prevenetive Medicine 19(1): 56-63. doi:10.1007/s12199-013-0354-. GCRP 2016. citing IPCC. 2012. Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation. A Special Report of Working Groups I and II of the Intergovernmental Panel on Climate Change. [Field, C.B., V. Barros, T.F. Stocker, D. Qin, D.J. Dokken, K.L. Ebi, M.D. Mastrandrea, K.J. Mach, G.-K. Plattner, S.K. Allen, M. Tignor, and P.M. Midgley (Eds.)] 582 pp. Cambridge University Press: Cambridge, UK and New York, NY. GCRP 2016. citing Mills, L.D., T.J. Mills, M. Macht, R. Levitan, A. De Wulf, and N.S. Afonso. 2012. Posttraumatic stress disorder in an emergency department population one year after Hurricane Katrina. The Journal of Emergency Medicine 43(1): 76-82. doi:10.1016/j.jemermed.2011.06.124. GCRP 2016. citing Osofsky, H.J., J.D. Osofsky, J. Arey, M.E. Kronenberg, T. Hansel, and M. Many. 2011. Hurricane Katrina’s first responders: The struggle to protect and serve in the aftermath of the disaster. Disaster Medicine and Public Health Preparedness 5:S214-S219. doi:10.1001/dmp.2011.53. GCRP 2016. citing Penrod, A., Y. Zhang, K. Wang, S.-Y. Wu, and L.R. Leung. 2014. Impacts of future climate and emission changes on U.S. air quality. Atmospheric Environment 89: 533-547. doi:10.1016/j.atmosenv.2014.01.001. GCRP 2016. citing Preti, A., G. Lentini, and M. Maugeri. 2007. Global warming possibly linked to an enhanced risk of suicide: Data from Italy, 1974–2003. Journal of Affective Disorders 102(1-3):19-25. doi:10.1016/j.jad.2006.12.003. GCRP 2016. citing Qi, X., S. Tong, and W. Hu. 2009. Preliminary spatiotemporal analysis of the association between socio-environmental factors and suicide. Environmental Health 8:46. doi:10.1186/1476-069X-8-46. 12-46 rebate—the share of gross drug sales offset by rebates and other discounts—grew from around 10 percent in 2009 to nearly 60 percent by the second quarter of 2016 (Indianapolis Business Journal 2016). The extent to which rebates and discounts offset price increases varies across manufacturers, driven primarily by the mix of products in their portfolios and the competitive pressures they face (Credit Suisse 2015). Pharmacy networks and postsale fees Plan sponsors try to encourage enrollees to use pharmacies that dispense prescriptions at lower cost. For example, for some non-Medicare employer plans, enrollees are required to fill prescriptions within an exclusive network of retail pharmacies, refill prescriptions by mail rather than through retail pharmacies, and fill prescriptions with a 90-day rather than a 30-day supply. Part D law and CMS guidance limit plan sponsors’ ability to use those approaches. Most notably, plan sponsors must permit within their networks any pharmacy that is willing to accept the sponsors’ terms and conditions; that is, plan sponsors cannot use exclusive pharmacy contracts.20 Plan sponsors must also demonstrate that their network of pharmacies meets access standards. Sponsors can, however, designate a subset of network pharmacies that offer preferred (lower) cost sharing. The strategy of designating certain “preferred cost-sharing pharmacies” has the potential to lower costs for Medicare and enrollees if it encourages enrollees to fill prescriptions at more efficient pharmacies. Differences between cost sharing at preferred pharmacies and other network pharmacies can vary substantially among plans (Medicare Payment Advisory Commission 2016b). In 2019, about 88 percent of beneficiaries enrolled in PDPs are in plans with preferred cost-sharing pharmacies, down from over 99 percent of plans in 2018 (Fein 2019). Tiered networks as a management tool have been controversial because of past concerns that some enrollees do not have adequate access to preferred pharmacies with lower cost sharing. In addition, if LIS enrollees have less opportunity to use preferred pharmacy networks, the tiered network strategy could lead to higher Medicare spending because Medicare pays for most or all of LIS enrollees’ cost sharing. Out of these concerns, CMS guidance permits plans to offer lower cost sharing at preferred pharmacies only if the approach does not raise Medicare payments (Centers for Medicare & Medicaid Services 2015a, Centers for Medicare & Medicaid Services 2014b). Although Part D plan sponsors cannot set up exclusive pharmacy networks, they can include other network contract terms that try to achieve the same aims— terms that have largely led to postsale payments from pharmacies to plans. The terms can include amounts that are a condition for participating as a preferred cost-sharing pharmacy, periodic payment reconciliations related to drug reimbursement rates, or performance-based fees that are assessed on quality measures (Fein 2016).21 For some pharmacies, postsale fees have made participation in plan sponsors’ networks much less desirable because the pharmacies have not been able to predict their ultimate amount of reimbursement from plans. Plan sponsors must report postsale pharmacy fees to CMS in the same way they report manufacturers’ rebates. According to CMS, pharmacy price concessions and fees grew dramatically between 2013 and 2017, from $229 million to $4 billion (Centers for Medicare & Medicaid Services 2018l). Critics point out that when Part D enrollees pay cost sharing in the deductible phase or based on a percentage coinsurance at the pharmacy before such fees are assessed, those cost-sharing amounts are too high. Specialty pharmacies Commercial plan sponsors often try to dispense high-cost specialty drugs through an exclusive network of specialty pharmacies. Many of the largest insurers and PBMs own specialty pharmacies, and some encourage their clients to dispense exclusively through that company. In Part D, plan sponsors cannot set up a narrower network of specialty pharmacies. With a few exceptions, Part D’s convenient access standards apply to the dispensing of all types of drugs, including specialty drugs.22 As with general retail pharmacies, some Part D plan sponsors include terms in their contracts with specialty pharmacies that include postsale price concessions and fees. Most specialty pharmacies fill prescriptions through home delivery or deliveries to a convenient location. Specialty pharmacies can help ensure that patients meet specific clinical criteria through plans’ prior authorization processes before dispensing prescriptions. They can also reduce waste by, for example, initially dispensing a 7- or 14-day supply and observing the patient for side effects, treatment effectiveness, and adherence before providing Report to the Congress: Medicare Payment Policy  |  March 2019 403 Chapter 12 References GCRP 2016. citing Ruuhela, R., L. Hiltunen, A. Venäläinen, P. Pirinen, and T. Partonen. 2009. Climate impact on suicide rates in Finland from 1971 to 2003. International Journal of Biometeorology 53(2):167-175. doi:10.1007/s00484-008- 0200-5. GCRP 2016. citing Schulte, P.A., A. Bhattacharya, C.R. Butler, H.K. Chun, B. Jacklitsch, T. Jacobs, M. Kiefer, J. Lincoln, S. Pedergrass, J. Shire, J. Watson, and G.R. Wagner. 2016. Advancing the Framework for Considering the Effects on Climate Change on Worker Safety and Health. Journal of Occupational and Environmental Hygiene 13(11):847-865. GCRP 2016. citing Sheffield, P.E. and P.J. Landrigan, 2011. Global climate change and children’s health: Threats and strategies for prevention. Environmental Health Perspectives 119:291-298. doi:10.1289/ehp.1002233. Available at: . (Accessed: February 20, 2018). GCRP 2016. citing Tai, A.P.K., L.J. Mickley, and D.J. Jacob. 2012. Impact of 2000–2050 climate change on fine particulate matter (PM2.5) air quality inferred from a multi-model analysis of meteorological modes. Atmospheric Chemistry and Physics 12:11329-11337. doi:10.5194/acp-12-11329-2012. Available at: . (Accessed: March 5, 2018). GCRP 2016. citing Trail, M., A.P. Tsimpidi, P. Liu, K. Tsigaridis, J. Rudokas, P. Miller, A. Nenes, Y. Hu, and A.G. Russell. 2014. Sensitivity of air quality to potential future climate change and emissions in the United States and major cities. Atmospheric Environment 94:552-563. doi:10.1016/j.atmosenv.2014.05.079. GCRP 2016. citing Val Martin, M., C.L. Heald, J.F. Lamarque, S. Tilmes, L.K. Emmons, and B.A. Schichtel. 2015. How emissions, climate, and land use change will impact mid-century air quality over the United States: A focus on effects at National Parks. Atmospheric Chemistry and Physics 15:28052823. doi: 10.5194/acp-15-2805-2015. Available at: . (Accessed: March 6, 2018). GCRP. 2017. Climate Science Special Report: Fourth National Climate Assessment. U.S. Global Change Research Program. [Wuebbles, D.J., D.W. Fahey, K.A. Hibbard, D.J. Dokken, B.C. Stewart, and T.K. Maycock (Eds.)]. U.S. Government Printing Office: Washington, D.C. 477 pp. doi:10.7930/J0J964J6. Available at: . (Accessed: February 16, 2018). GCRP 2017. citing Ashley, W.S., M.L. Bentley, and J.A. Stallins. 2012. Urban-induced thunderstorm modification in the southeast United States. Climatic Change 113:481-498. doi:10.1007/s10584-0110324-1. GCRP 2017. citing IPCC. 2013a. Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (Eds.)]. Cambridge University Press: Cambridge, United Kingdom and New York, NY, USA, 1535 pp. doi:10.1017/CBO9781107415324. Available at: . (Accessed: February 21, 2018). 12-47 a 30-day supply. Specialty pharmacies also play a role in patient education, monitoring, and data reporting. They often employ nurses to provide counseling by telephone about side effects and to monitor adherence. Specialty pharmacies may also facilitate outreach to patient assistance programs.23 A variety of ownership types have evolved to dispense specialty drugs. Owners of specialty pharmacies include pharmacy chains, PBMs, health plans, drug wholesalers, hospital systems, and prescriber practices, or the pharmacy can operate as an independent business. Although most manufacturers do not own specialty pharmacies, a number of drug makers pay fees to specialty pharmacies and have contracts that limit which ones may dispense their drug. These relationships can result in specialty pharmacies with financial incentives that align with manufacturers. Recent regulatory changes to Part D In 2018, CMS finalized a number of regulatory changes in Part D and proposed other steps for stakeholder review and comment. Many of those measures were designed to make the tools that plan sponsors use in Part D more similar to those already available for managing pharmacy benefits in commercial populations. For example, CMS now allows plan sponsors to add a newly approved generic to their formularies and remove or change the tier status of a therapeutically equivalent brandname drug at any point during the benefit year without prior approval. The new generic would have to be offered at the same or lower cost sharing and with the same or less restrictive utilization management criteria, and beneficiaries must receive notification. This is consistent with the Commission’s 2016 recommendation that CMS streamline the agency’s process for reviewing formulary changes (Medicare Payment Advisory Commission 2016a). In July 2018, CMS issued guidance for the 2019 benefit year allowing plan sponsors to use different utilization management requirements for a drug depending on a patient’s indication (Centers for Medicare & Medicaid Services 2018j). As an example, some tumor necrosis factor (TNF) blockers have been licensed by the Food and Drug Administration (FDA) for a broader range of indications than others. Previously, the manufacturer of the product with more indications would have greater leverage in negotiations for plan formulary placement and rebates. Under indication-specific criteria, however, plan sponsors may require a patient with, for example, Crohn’s disease to try a different TNF blocker that is approved for 404 The Medicare prescription drug program (Part D): Status report fewer indications (but includes Crohn’s) before covering the other agent. That approach gives sponsors leverage to encourage more price competition among drug therapies. CMS also noted that beginning with benefit year 2020, the agency will allow plan sponsors to limit on-formulary coverage of certain drugs by indication (Centers for Medicare & Medicaid Services 2018i). Alternative therapies that can be used to treat the same condition sometimes fall across medical and pharmacy benefits. As health plans have expanded their pharmacy benefit management capabilities and acquired large warehouses of member data, those organizations have begun looking to manage specialty drugs across pharmacy and medical benefits. Some entities contend that by doing so, they can introduce greater price competition among manufacturers in certain drug classes. In August 2018, CMS issued guidance that, for 2019 and subsequent years, allows MA–PDs to use step therapy for managing Part B drugs, under which plan sponsors can require enrollees to try a drug covered under either Part B or Part D before using a Part B therapy for the same indication (Centers for Medicare & Medicaid Services 2018f). Drug pricing At all levels of the drug supply and distribution channels, there are incentives that drive prices higher because payments for pharmaceutical products or other services that are provided in conjunction with the distribution of pharmaceutical products are often based on a percentage of the drugs’ prices (Diplomat Specialty Pharmacy 2017, Fein 2018, Feldman 2018, Garthwaite and Morton 2017). Over the past decade, manufacturers have shifted their development pipelines toward higher cost drugs and biologics. Meanwhile, participants in drug supply and distribution channels grew to rely on price inflation for revenue growth (Cahn 2017, Fein 2017, Lopez 2016, Sell 2015). Those factors combined with the increasing market concentration among participants in the drug supply and distribution channels put upward pressure on both prices and rebates. Until recently, the result was aggressive growth in drug prices at the point of sale (POS), which determines gross Part D spending (i.e., aggregate amounts paid at the pharmacy). There has also been a growing divergence between POS prices and net prices (net of postsale rebates and discounts from manufacturers and pharmacies (see text box on the effects of rebates, pp. 406–407)). This ...
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