Colsa Insurance Agency, Inc. Blog
President Trump has issued executive orders aimed at reducing the cost of medications by tying Medicare payment for outpatient drugs to international prices, passing drug-maker rebates to patients and not middlemen, and allowing individuals to import prescription medications.
Another executive order aims to force community health centers that receive 340B drug discounts to pass discounts for insulin and injectable epinephrine on to patients.
Here's a run-down of the orders:
The Executive Order on Increasing Drug Importation to Lower Prices for American Patients calls for new regulations that would:
The system that Trump is proposing is reportedly modeled after new laws that took effect in Vermont in 2018, Florida in 2019 and then Colorado and Maine last year, allowing for the importation of certain prescription drugs from Canada.
Florida's bill directed the state's Agency for Health Care Administration to establish a Canadian Prescription Drug Importation Program and an International Prescription Drug Importation Program.
Vermont and Florida have already submitted proposals to the U.S. Department of Health and Human Services to import prescription drugs from Canada, as the president in recent weeks has reiterated his intention to allow states to do so.
Federal law already grants HHS the authority to allow drug imports, as long as the department's secretary certifies the imported drugs are safe and effective and would lower costs to U.S. consumers.
HHS and the Food and Drug Administration in early August unveiled two pathways that entities could use to import drugs.
Under one pathway, HHS and the FDA would use existing rulemaking authority to allow states, pharmaceutical manufacturers and pharmacists to develop pilot programs to import drugs from Canada "that are versions of FDA-approved drugs that are manufactured consistent with the FDA approval."
Eliminating secret deals
Another order would prohibit secret deals between drug makers and pharmacy benefit manager (PBM) middlemen, ensuring patients directly benefit from available discounts at the pharmacy counter.
The Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen would pass drug-maker rebates to patients and allow them to apply the rebate to their cost-sharing, such as deductibles in Medicare Part D plans.
The order states that the any rebate rule could not be advanced unless the HHS secretary gave public confirmation that it would not raise premiums, taxpayer spending or out-of-pocket costs.
In particular, the proposed rule would exclude from safe-harbor protections under the anti-kickback statute price reductions that are not applied at the point-of-sale or other remuneration that drug manufacturers provide to health plan sponsors, pharmacies or PBMs in operating the Medicare Part D program.
It would also establish new safe harbors that would allow health plan sponsors, pharmacies and PBMs to apply discounts at the patient's point-of-sale in order to lower the patient's out-of-pocket costs.
This would be a significant step in getting drug-maker discounts to patients instead of the PBMs. One of the reasons pharmaceutical prices are so high is the complex mix of payers and negotiators that often separates the consumer from the manufacturer in the drug-purchasing process.
The result is that the prices patients see at the point of sale do not reflect the prices that their insurance companies, and PBMs hired by those companies, actually pay for medicines. Instead, PBMs negotiate significant discounts off of the list prices, sometimes up to 50% of the cost of the drug, and often the Medicare patient can never enjoy that discount.
International reference pricing
Another executive order, which hasn't yet been published publicly, would establish an international pricing index that would set the price Medicare Part B pays for the costliest medications covered under the program to the lowest price in other economically advanced countries.
However, Trump said his administration will hold the order until Aug. 24 because he may not implement it. He said he needs to meet with pharmaceutical executives first.
Epinephrine and insulin discounts
The Executive Order on Access to Affordable Life-saving Medications would require federally qualified health centers to pass along discounts on insulin and injectable epinephrine received from drug companies to certain low-income Americans.
Only patients with low incomes; those with high cost-sharing requirements for insulin or epinephrine; those with high, unmet deductibles; and/or those without health insurance would be eligible for the discount.
In all, Trump issued four executive orders that will require the Centers for Medicaid and Medicare Services to draft new regulations, which would likely not be completed by the end of the year. Regulations often take months to draft and then have to be sent out for public comment before final regs are written.
The regulations will likely only come to fruition if Trump wins the presidency for a second term, as any regulatory initiatives in mid-stream would probably otherwise be abandoned.
As a new decade begins, the health insurance industry is on the cusp of making a leap towards improved, higher-tech management of health plan participants.
A recent paper by Capgemini, an insurance technology and consulting firm, predicts the following trends that will be taking shape in the health insurance industry and how they may affect businesses that are paying for their employees' coverage.
1. Realigned relationships - Insurers are trying to shift risk between themselves and pharmaceutical companies in an effort to reduce drug outlays. The report says insurers are also working more closely with health care providers for early intervention in medical issues that may be facing participants. Addressing health issues early can reduce long-run treatment costs.
2. Fluid regulations - As we've seen, just because the Affordable Care Act became the law of the land, the regulations governing health care and health insurance have continued streaming out of Washington. If the last two years are any guide, this will continue to be the case. Also, the constitutionality of the ACA is now being litigated once again after an appeals court upheld a lower court's ruling that the individual mandate is unconstitutional.
3. Increasing transparency - More stringent regulations, along with President Trump's recent executive order to improve price and quality transparency, are forcing the health care industry and insurers to become more transparent in their pricing.
One of the biggest focuses is on the drug industry and the role of pharmacy benefit managers, the largest of which have been criticized for being opaque in their pricing, discounts and how they handle drug company rebates.
Also, insurers are increasingly providing detailed information regarding services covered under their health plans, claims processing and payments. Additionally, some insurers are helping enrollees to make more informed decisions before they use a health care service by providing digital tools to help them reduce out-of-pocket expenses.
4. Predictive analytics - Health insurers are using predictive analytics for risk profiling and early intervention for enrollees with health issues. Predictive analytics provide insurers with insightful assessments of potentially high-risk customers, in order to mitigate losses.
With advancements in technologies such as big data and connected devices, insurers now have access to vast amounts of customer data, which can be used to remind people it's time for their check-ups, medications and other necessary medical services.
Insurers are using predictive analytics to identify and monitor high-risk individuals to intervene early and prevent further complications. This in turn can help reduce claims.