Quick Summary:
- CMS has decided to no longer exclude certain manufacturer-sponsored copay assistance benefits from the determination of “best price” and AMP, if the assistance is not applied entirely to the patient
- ie., Manufacturer coupon assistance would now be considered a “discount” if the plan applied the support to a Copay Accumulator Adjustment Program (CAAP)
- Places responsibility on manufacturers to ensure that copay assistance benefits are provided entirely to the patient to maintain exclusion from “best price” and AMP calculations
- The effective date for the final rule has been pushed back to January 1, 2023.
Deeper Dive:
CMS has finalized the proposed rule from June 2020 without modification, creating significant changes to the relationship between manufacturer-sponsored coupon programs and the determination of important pricing metrics. The final rule from CMS piggybacks off the much broader proposed changes to the definition of “best price” as discussed in the previous VHS article. As presently defined, the determination of “best price” excludes certain manufacturer assistance “to the extent that the program benefits are provided entirely to the patient and the pharmacy, agent, or other entity does not receive any price concession.” Until this proposal, manufacturer-sponsored assistance in the form of coupons had been excluded from the accounting practices for “best price” and AMP. With the advent of CAAPs, CMS wants to apply the “entirely to the patient” clause quite literally.
In the final rule, CMS uses the example of a CAAP to show that “the health plan is benefiting from the manufacturer-sponsored copay assistance program instead of the patient (consumer).” Armed with this interpretation, CMS believes that manufacturer assistance coupon programs should no longer qualify for exclusion from “best price” calculations when their coupons are not applied entirely to the patient (i.e., they are applied within a CAAP).
Insights:
The new, literal interpretation held by CMS poses a number of challenges for manufacturers. Being forced to incorporate copay assistance as a “discount” will lower the “best price” reimbursement by the same amount being offered in assistance. The accompanying lowering of AMP would hold similarly concerning implications on the 340B ceiling price and the Medicare Part B payment rate. The punitive damage from these calculations may lead to a combination of increasing list prices and discontinuing/significantly altering copay assistance programs while considering CAAP mitigation strategies.
The legality in removing the “best price” exclusion for manufacturer coupon assistance (when applied within a CAAP) remains deeply in question. PhRMA argued as much in their public comments on the CMS proposal, stating “because manufacturers provide assistance solely to patients, who are not best price-eligible entities, CMS’ Proposed Rule contravenes the best price statute.” Simply put, their argument states that manufacturer copay assistance is applied directly to a patient while any copay accumulator program occurs after the point-of-sale, thus the exclusion from “best price” should remain.
Added Responsibility:
The final rule places responsibility on pharmaceutical manufacturers to ensure that copay assistance benefits are provided entirely to the patient to maintain exclusion from “best price” determination. CMS states:
“We believe manufacturers have the ability to establish coverage criteria around their manufacturer assistance programs to ensure the benefit goes exclusively to the consumer or patient.”
There is simply no existing evidence, nor any offered by CMS, supporting the veracity of this claim. Despite what CMS opines, the expectation of manufacturers to track how insurers apply their coupon assistance programs projects to be unrealistic. TrialCard reported as much in their recent comments on the CMS proposal, stating “it is simply not possible for a manufacturer to ensure that the co-pay assistance provided is passed entirely to the patient, even though it’s the manufacturer’s intent.” CMS responded to comments of this nature in part by offering up their opinion that “the electronic prescription claims processing ‘highway’ offers a foundation upon which a technology could be developed to track their copay assistance, including contracting with third-party switches and brokers.” CMS made sure to share their expectation that “PBMs will work with manufacturers to provide this [claim] information to help manufacturers ensure their assistance is passed through.” As an alternative to the electronic coupon assistance, CMS offered that manufacturers “may redesign programs to require patients first pay for the drug and then collect the rebate directly,” which leaves out any mention of the enormous cost directed to patients absent the proactive assistance. It is unclear whether CMS may be referencing manufacturer-provided VISA gift cards used as payment at the point-of-sale or simply offering guidance on an alternative approach to the existing electronic, switch-board dependent coupon cards.
Impact on Part B and 340B Ceiling Price:
After a commenter raised concerns around the impact to Part B reimbursement, CMS acknowledged the potential reduction in AMP for “5i” drugs (instilled, infused, injected, intraocular, and implanted drugs), although it is unlikely the rule will impact “5i” AMP significantly enough to result in the substitution of 103 percent AMP for ASP (average sales price). CMS acknowledges the lowering of the “best price” from the final rule, could impact (lower) the 340B ceiling price of certain medications. The 340B ceiling price is calculated as the difference between AMP and the unit rebate amount (URA). Except in cases when the statutorily-defined minimum rebate is higher, the URA is calculated from the difference between AMP and “best price” plus the sizeable inflationary component when applicable (see the CMS notice for specifics on the standard URA and alternative URA calculations). Clearly, the URA would increase from the new, lower “best price,” thus resulting in the lower 340B ceiling price.
In the event, the final rule reaches the future effective date, significant alterations to manufacturer-sponsored coupon strategies will take place to account for changes in “best price” and AMP reimbursement along with the administrative cost in tracking the patient benefit.
Timeline:
CMS published the final rule in December of 2020, however, the effective date is not until January 1, 2023. The new Administration could delay the implementation of the final rules put forth by CMS with future effective dates. Additionally, CMS acknowledges the comments around the potential legal challenges based on a perceived lack of statutory authority. CMS responded in kind by stating they “have the statutory authority for this rule and have explained the overall context or rationale to support our proposed policies and now our final policies.”
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