From the Director

What's the latest flavor in pharmaceutical news?    

** Drug shortages, especially of some generics, are raising eyebrows and causing rationing of crucial drugs, as well as creating a booming expensive and risky gray market. Read more 

** Trade negotiations for the next big trade deal, the Trans-Pacific Partnership (TPPA),  move to Peru where the next round of talks are planned for later this month, as President Obama sends three completed deals to Congress for ratification.  Will the Korea and TPPA agreements negatively affect Medicaid and other state pharmacy programs?  Read more

** PBM transparency: We're finally seeing some (limited) regulation of Pharmacy Benefit Managers (PBMs).  Under both Medicare and the Affordable Care Act, CMS is dipping its toe into the murky water of PBM payments and asking for a little transparency.  Read more 

** Medicaid Cuts: What options do states have to keep access to medicines?  Kaiser Family Foundation offers several new reports on Medicaid and pharmacy benefits.

Where's NLARx next?  Next week we're presenting in Concord, New Hampshire at a University of New Hampshire Law School forum "Constitutional Constraints on State Health Care & Privacy Regulation" looking at state options after the US Supreme Court's  IMS v. Sorrell decision. Its an appropriate venue, given the leading role NH Representative (and current NLARx Board Chair) Cindy Rosenwald has had in developing and advocating for privacy protections in pharma datamining.    

Check out the News Ticker in this issue, as well as our Facebook page, for more news of interest on a variety of pharmaceutical topics.  Keep the emails and calls coming.  Sincerely, Sharon Treat    

Feds Begins to Tackle PBM Transparency in Health Exchanges and Medicare 

At long last, the federal government is starting to wake up to the issue of Pharmacy Benefit Manager self-dealing, conflicts of interest and anti-competitive behavior.  We hope.  Proposed rules from HHS implementing the Affordable care Act Health Exchanges would require in Section 156.295 reporting by health plans on the percentage of prescriptions provided through retail compared to mail order pharmacies, and the percentage of generic drug prescriptions dispensed, broken down by pharmacy type, aggregate information on amount and the type of rebates, discounts or price concessions, as well as the aggregate amount of the difference between the amount the health plan pays its contracted PBM and the amounts that the PBM pays retail pharmacies, and mail order pharmacies.   

The rule contains a potentially big loophole, however, in the form of exemptions for medication compliance and patient care programs that can be alternative mechanisms for PBM remuneration.  

CMS has proposed a similar PBM transparency rule for Medicare Advantage Plans.  Here is the story in Pharmalot and here is a link to the rule.  State legislators from across the country who are members of the Working Group of State Legislators for National Health Reform have submitted comments to HHS in support of the proposed Exchange PBM rules.

Opposition to the merger of Express Scripts and Medco continues to mount. NLARx has signed a letter with other national consumer groups opposing the merger. Antitrust attorney David Balto, a senior fellow at the Washington-based Center for American Progress Action Fund, says a growing coalition of organizations are opposed to the proposed merger, including unions, employers, healthcare plans and more than 20 states. Several national associations have also weighed in, including the Independent Specialty Pharmacy Coalition, the National Community Pharmacists Association, the National Coordinating Committee on Multi-Employer Plans, and the National Association of Chain Drug Stores.  Read the comments of North Carolina Congresswoman Eva Clayton in The Hill's Congress Blog. On the other hand, don't count out Express Scripts, which has hired a former hill staffer to lobby in support of the deal. 

It's Up to Congress Now: Korea Trade Deal Could Jeopardize Low-Cost Drugs  

NLARx and member legislators have raised concerns about both procedural and substantive provisions in the Australia and the Korea free trade agreements (FTAs), which include pharmaceutical provisions that could conflict with the effective implementation of Medicaid and reduce access to affordable medicines under  340B and other programs.  Although the Australia FTA's pharmaceutical provisions [Annex 2-C] is a done deal, the Korea agreement has just been sent to Congress for ratification. The Trans-Pacific Partnership Agreement (TPPA), a multi-country trade deal still being negotiated, builds on the Korea language.  

While state legislators were able to convince the US Trade Representative to include a footnote in in the Korea FTA "carving out" Medicaid from its provisions, we continue to have concerns because this carve-out does not include other important state-based programs such as 340B, and because the FTAs would essentially lock the US into the current way of pricing drugs in Medicare Part D and call into question reforms in the Affordable Care Act.  

Substantive pricing provisions.  Language in KORUS about "appropriately valuing" drugs, or requiring a premium for "innovative" products, or - as suggested by the pharmaceutical industry in public statements - possible new TPPA text requiring linkage of reimbursement and pricing decisions to in-country market prices, all raise red flags.  Such language is designed to keep drug prices high, and the United States already has some of the highest pharmaceutical prices in the world. 

Procedural "transparency" provisions. So-called "transparency" provisions in these trade agreements can impose unnecessary red tape or procedural hurdles on US states and the federal government that interfere with the effective administration of Medicaid and other health programs, delay the addition of generic versions of drugs to Preferred Drug Lists (PDLs) or the timely removal of drugs with emerging efficacy and safety concerns, or provide grounds for overturning legitimate evidence-based reimbursement decisions.   

State legislators are concerned that text in the Korea FTA creates mechanisms to inject pharmaceutical industry influence and conflicts of interest into what is supposed to be an evidence based process.  For example, KORUS Article 5.3.5(f) would "make all reimbursement decision-making bodies open to all stakeholders, including innovative and generic companies," inserting major conflicts of interest into the reimbursement and PDL decision by requiring that the very manufacturers that directly benefit from reimbursement and pricing decisions make those decisions. This violates the law in many US states, as well as best practices for evidence based decision-making.   

The US is also seeking investment provisions in the TPP agreement that would expose governments to legal action by foreign companies if governments introduce policies (including policies to protect public health) that affect these companies' profits. Similar trade provisions are the basis for a legal challenge by Phillip Morris to Uruguay's tobacco packaging warning label rules.  

Public health advocates are warning that the TPPA will jeopardize access to AIDS drugs while adding to Big Pharma's bottom line. 

State resolutions and letters on trade and medicines 

NLARx Resolution opposing  provisions in the TPPA

Vermont Governor Peter Shumlin's letter to President Obama  

Background on trade agreements and pharmaceutical policy