How Does Pfizer’s New Guarantee Program For XALKORI Get Around The Best Medicaid Price? | Foley Hoag LLP – Medicaid and the Law


On October 13, our friends at STAT announced the news [sorry, Paywall] on a pilot Pfizer “guarantee” program that offers both patients and health plans (including Medicare Part D plans) the ability to receive reimbursement for any amount paid to purchase the long-standing oral treatment for lung cancer from the XALKORI Company when use is discontinued within the first three months for clinical reasons. The program has been unique from other emerging value-based agreements for several years, not least because it relies on a guarantee as its reimbursement mechanism, includes Medicare Part D plans alongside commercial payers, and because ‘It offers reimbursements to patients for out-of-pocket expenses, as well as insurers. Of course – this is a Medicaid blog – so we would like to focus on one issue today. How does the Pfizer Guarantee Program avoid involving the best price of Medicaid?

A quick reminder on why we care about the best price

As our regular readers know, we speak a lot about the best Medicaid price on this blog, especially because of the intersection of this central pricing rule and new and emerging value-based agreements. My colleague Haider took a deep dive into the best price rules earlier this year against the backdrop of a Trump administration settlement that would allow manufacturers to set multiple best prices to encourage value-based deals. In 2016 (man, we’re getting older!) I did a great intro that explained to our readers why the best Medicaid price and innovative payment terms are often at odds. But I still think it’s worth reminding our readers why we’re even having this conversation.

For your information, as part of the Medicaid Drug Rebate Program, Congress has required manufacturers to offer rebates on sales of covered outpatient drugs to states and the federal government as a condition of payment for those drugs. as part of Medicaid. The reimbursement amount for each drug is the greater of two amounts: That is a fixed percentage multiplied by the average manufacturer’s price (AMP) of the drug Where the drug’s AMP minus its “best price,” that is, the highest discount given to a purchaser of the drug. These two requirements are detailed in Article 1927 of the Social Security Act.

The best price policy dates back to the beginnings of the Medicaid Prescription Drug Rebate Program (adopted as part of the Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508), which was originally based on the idea that Medicaid programs should ‘State should be obtained the status of most favored customer. Section 1927 (c) (1) (C) of the Social Security Act defines best price, in part, as meaning:

“For a single-source medicine or an innovative multi-source medicine from a manufacturer … the lowest price offered by the manufacturer during the rebate period to any wholesaler, retailer, supplier, health maintenance organization, entity to non-profit or government entity in the United States. ” [With certain exclusion applying.]

In 42 CFR § 447.505, CMS clarified the meaning of the best price as follows:

“For a single-source medicine or an innovative multi-source medicine from a manufacturer (including the lowest price available to any entity for an authorized generic medicine), the lowest price available from the manufacturer during the period of rebate to any wholesaler, retailer, supplier, maintenance organization, non-profit entity, or government entity in the United States under any pricing structure (including capitation payments), during the same quarter for which the ‘AMP is calculated.

Of course – price reporting is complicated – and there are many exceptions and exclusions to the definitions above. But for the purposes of our discussion today, it suffices to know that the best price is usually the “best price” offered by a maker to a defined set of buyers, with a few exceptions. While this rule has very noble political goals at its root, it has also had the unintended impact of preventing some new value-based arrangements. Why? Because in a traditional value-based agreement (such as an outcome-based agreement), in which a manufacturer agrees to reimburse a payer if therapy fails, that reimbursement could redefine a manufacturer’s best price. For example, if a manufacturer offers therapy for $ 100,000 but offers a $ 50,000 rebate / refund for clinical failure, the manufacturer’s best price could become $ 50,000 (requiring the manufacturer to now lower its price). price for the Medicaid program at this new lower amount). One could also imagine an even more extreme example where a full refund resulted in a better price of $ 0.

How does the Pfizer warranty program avoid the best price?

In many ways, from a payer or individual perspective, the Pfizer program is very similar to other traditional value-based agreements and therefore would appear to raise traditional best price concerns (there are potential concerns as well. regarding the anti-recoil law – but we’ll save them for another article and probably another blog!) If a patient has to discontinue treatment for clinical reasons, the patient / payer is entitled to reimbursement up to the cost of the acquisition wholesale, or WAC, of ​​the drug. In the case of the XALKORI pilot program, this could go up to $ 57,432 (the program is currently limited in time until the end of the year and is only available if you stop the product before your fourth top-up. 30 days).

Now is the time that I need you to scroll to the top and look at the law and regulations! If you read the fine print of Pfizer’s program, Pfizer is not make any reimbursements to patients or health plans under this warranty program. Instead, Pfizer partnered with an insurance company (here, New Hampshire Insurance Company, an AIG company) to sign up for the program and pay / process refunds. In return for paying the premiums to its insurer (details of this are not public, of course), the insurance company (not Pfizer) guarantees the clinical utility of XALKORI. And what if a patient stops using XALKORI for clinical reasons within the first three months? The insurer, not Pfizer, pays the patient or the health plan.

Remember the wording of the best price definition? “The lowest price available from the manufacturer. ” When the New Hampshire Insurance Company writes a check for $ 57,432 to a health care plan for abandoning a patient, it is not the manufacturer that makes the payment and therefore, arguably, the best price is not involved.

What does CMS have to say about all of this

There is no safe-haven or best-price exception guarantee, but Pfizer seems to have designed a program that allows it to make value-based deals with health plans and patients, to offer full reimbursements. and to avoid involving the best price. Do we have any idea if CMS has or will adhere to this argument. We do (sort of!)

Recall that I mentioned that the regulation of the Trump administration published at the end of 2020 a regulation which has now been the subject of multiple delays. Well, in that regulation, which dealt in part with a new policy that (if eventually implemented) would allow manufacturers to establish various best prices to encourage the use of value-based arrangements, CMS reviewed – and seemed to bless– the guarantee model:

The premium paid by the manufacturer to a third party to guarantee a drug and provide benefits to payers and patients when certain clinical or performance metrics are not met, provides an incentive for payers, providers and patients to purchase the drug. Therefore, the premium paid by a manufacturer reduces the price of the drug and should be included in the “best price”. However, the benefits paid by the third party in the event that the drug does not meet certain clinical or performance measures are exempt from the “best price” because the payments made by the third party to the payer do not represent a price available from the manufacturer. to any qualifying entity at the best price as provided in § 447.505 (a) and does not represent a sale from the manufacturer to an AMP eligible entity in accordance with § 447.504 (b) or (d). Therefore, under this warranty model, a manufacturer would pay both Section 1927 discounts for the drug, as well as a premium for a warranty policy, the value of which would have to be included in the calculation. of its best price, regardless of whether the manufacturer uses a VBP arrangement which results in several better prices.

Take-away from CMS: While premium payments from Pfizer to the insurance company may involve the best price, reimbursement payments facilitated by a third-party insurer not imply the best price because they do not represent “a price available from the manufacturer”.

Going forward, we expect other manufacturers to follow in Pfizer’s footsteps by developing their own warranty programs for proven therapies. Right now, the Pfizer program is set to expire at the end of 2021, so we’ll have to wait and see if the program has been successful. We will of course come back here as this story evolves!

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