November 5, 2015
By Andy Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services
Prescription Drugs: Advancing Ideas to Improve Access, Affordability, and Innovation
Recently, prescription drugs have been in the news a lot, particularly with respect to their cost. Millions of Americans rely on prescription medications to manage chronic illnesses or treat acute conditions, and drug innovation has resulted in better health outcomes for people across our nation. Because of this, finding ways to improve affordability and access for patients, supporting and increasing innovation in the industry, and – most importantly – making people healthier has become an area of significant interest to many.
As medicines become more precise and targeted, there is the potential to develop new generations of therapies that enable interventions to be better tailored to groups of people and even individuals. Medications in the future can improve health outcomes for many diseases such as cancer and Alzheimer’s, and help us better manage our chronic conditions like diabetes, heart disease and depression, providing significant benefits to patients across the country.
In order to have the maximum impact, medications must also be affordable and accessible. This is an important issue for Americans and for patients, businesses, and governments. Surveys suggest that as many as 25 percent of Americans cannot afford and, therefore, do not fill the prescriptions on which they depend. And, spending on medicines increased 13 percent in 2014, compared to 5 percent for health care spending growth overall, the highest rate of drug spending growth since 2001. An important element of this increase in costs is due to new specialty drugs — drugs that account for nearly a third of overall costs, but represent less than 1 percent of prescriptions.
Cost concerns aren’t only limited to brand-name medicines. In some instances, the prices of generics available for years have increased substantially without any additional health benefits for patients. This is a concern across the country, but particularly for consumers on fixed incomes. The Bipartisan Budget Act, just signed into law by President Obama, provides Medicaid with additional rebates if generic drug prices grow faster than inflation, which will discourage manufacturers from increasing prices for generic drugs.
The rhetoric around health care costs can become heated, particularly around the cost of prescription drugs. At times, it can appear as if some of those who produce the pharmaceuticals and those whose lives often depend on them have unaligned interests. But we will not make progress by polarizing this debate. Development of ground-breaking therapies requires significant investment and resources, and we all need to support that important work. We believe patients, manufacturers, providers, insurers and government all share a common goal to foster a health care system that leads in innovation, delivers affordable, high quality medicines, and results in healthier people with access to the care they need. We shouldn’t accept the notion that we as a society must choose between innovation and affordability. We deserve both.
A recent example of a much discussed, highly-effective drug is a therapy used by Hepatitis C patients. Hepatitis C, a debilitating and life threatening infection that leads to chronic conditions of the liver, has undergone a revolutionary improvement in cure rates with innovative new medicines. These medicines are changing the lives of many individuals, but they are also expensive, costing tens of thousands of dollars, sometimes even more than one hundred thousand dollars, per patient. These costs have strained personal as well as public budgets, particularly state health care budgets. Because state budgets generally need to be balanced every year, new drug treatments can surprise states with tens or hundreds of millions of dollars in new spending. As these costs often necessarily compete with other state programs like K-12 education, transportation, law enforcement, and public health programs, some states have made tough choices, including limiting access to these therapies.
Recognizing that we need both access and affordability, today we issued a notice to all 50 state Medicaid directors and sent letters to the CEOs of several drug manufacturers about providing access to therapy for Hepatitis C patients. Our notice to state Medicaid directors reminds states of their obligation to provide access to these promising therapies (consistent with section 1927 of the Social Security Act) based on the medical evidence, and that they have tools available to manage their costs. Our letter to manufacturers asks them to provide us with information on pricing arrangements and asks them for ideas to support the provision of these lifesaving medications to Medicaid programs at sustainable prices.
There are no easy answers to these multifaceted challenges, but there is a significant benefit – to all of us – of working together to find a solution. Earlier this week, Secretary of Health & Human Services Sylvia Burwell invited leaders in innovation, policy, care delivery, academia, manufacturing, purchasing, and patient advocacy to share information at a public meeting on how to achieve our common goals.
These are complex issues, and we recognize that the public is relying on our leadership. We will work to ensure that all viewpoints are considered as we strive for solutions. In the end, we share a common goal of supporting innovation and improving affordable access to medications that improve health outcomes for patients.
Link to notice to all 50 state Medicaid directors and sent letters to the CEOs of several drug manufacturer can be found here: http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Benefits/Prescription-Drugs/HCV-Communication.html
CMS letter about access to Hepatitis C drugs
NOVEMBER 5, 2015
MEDICAID DRUG REBATE PROGRAM NOTICE Release No. 172
For State Technical Contacts
ASSURING MEDICAID BENEFICIARIES ACCESS TO HEPATITIS C (HCV) DRUGS
The Centers for Medicare & Medicaid Services (CMS) remains committed to Medicaid beneficiaries continuing to have access to needed prescribed medications, a commitment we know that states share. The purpose of this letter is to advise states on the coverage of drugs for Medicaid beneficiaries living with hepatitis C virus (HCV) infections. Specifically, this letter addresses utilization of the direct-acting antiviral (DAA) drugs approved by the Food and Drug Administration (FDA) for the treatment of chronic HCV infected patients.
Rules Regarding Medicaid Drug Coverage
Coverage of prescription drugs is an optional benefit in state Medicaid programs, though all fifty (50) states and the District of Columbia currently provide this benefit. States that provide assistance for covered outpatient drugs of manufacturers that have entered into, and have in effect, rebate agreements described in section 1927(b) of the Social Security Act (the Act) under their Medicaid fee-for-service (FFS) programs or Medicaid managed care plans are required to comply with the requirements of section 1927(d)(1) and (2) of the Act.
Section 1927(d)(1) of the Act provides that a state may subject a covered outpatient drug to prior authorization, or exclude or otherwise restrict coverage of a covered outpatient drug if the prescribed use is not for a medically accepted indication as defined by section 1927(k)(6) of the Act, or the drug is included in the list of drugs or drug classes (or their medical uses), that may be excluded or otherwise restricted under section 1927(d)(2) of the Act.
Section 1927(k)(6) of the Act defines the term “medically accepted indication” as any use of a covered outpatient drug which is approved under the Food Drug And Cosmetic Act (FFDCA), or the use of which is supported by one or more citations included or approved for inclusion in any of the compendia described in section 1927(g)(1)(B)(i).
When establishing formularies, states must ensure compliance with the requirements in section 1927(d)(4), including the requirements of section 1927(d)(4)(C) of the Act. Under this provision, a covered outpatient drug may only be excluded with respect to the treatment of a specific disease or condition for an identified population if, based on the drug’s labeling, or in the case of a drug the prescribed use of which is not approved under the FFDCA, but is a medically accepted indication based on information from the appropriate compendia described in section 1927(k)(6), the excluded drug does not have a significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness, or clinical outcome of such treatment for such population over other drugs included in the formulary and there is a written explanation (available to the public) of the basis for the exclusion.
Accordingly, to the extent that states provide coverage of prescription drugs, they are required to provide coverage for those covered outpatient drugs of manufacturers that have entered into, and have in effect, rebate agreements described in section 1927(b) of the Act, when such drugs are prescribed for medically accepted indications, including the new DAA HCV drugs.
CMS is aware that, given the costs of these new DAA HCV drugs, states have raised concerns about the budgetary impact to their Medicaid programs and beneficiary access to needed care. The agency shares these concerns. However, the recent launch of multiple DAA HCV drugs in the marketplace is creating competition in this class that may result in downward pressure on the prices of these drugs. This competition may enhance the ability of states to negotiate supplemental rebates or other pricing arrangements with manufacturers to obtain more competitive prices for both their FFS and managed care programs, thereby reducing costs. CMS encourages states to take advantage of such opportunities.
To that end, manufacturers have a role to play in ensuring access and affordability to these medications. CMS has sent a letter to the manufacturers of these DAA HCV drugs, asking them to provide information regarding any value-based purchasing arrangements they offer for these drugs so that states might be able to participate in such arrangements.
Permissible Limitations to Medicaid Drug Coverage
CMS is concerned that some states are restricting access to DAA HCV drugs contrary to the statutory requirements in section 1927 of the Act by imposing conditions for coverage that may unreasonably restrict access to these drugs. For example, several state Medicaid programs are limiting treatment to those beneficiaries whose extent of liver damage has progressed to metavir fibrosis score F3, while a number of states are requiring metavir fibrosis scores of F41.
Certain states are also requiring a period of abstinence from drug and alcohol abuse as a condition for payment for DAA HCV drugs. In addition, several states are requiring that prescriptions for DAA HCV drugs must be prescribed by, or in consultation with specific provider types, like gastroenterologists, hepatologists, liver transplant specialists, or infectious disease specialists in order for payments to be provided for the drug.
While states have the discretion to establish certain limitations on the coverage of these drugs, such as preferred drug lists and use of prior authorization processes,2 such practices must be consistent with requirements of section 1927(d) of the Act to ensure appropriate utilization.
As such, the effect of such limitations should not result in the denial of access to effective, clinically appropriate, and medically necessary treatments using DAA drugs for beneficiaries with chronic HCV infections. States should, therefore, examine their drug benefits to ensure that limitations do not unreasonably restrict coverage of effective treatment using the new DAA HCV drugs.
CMS encourages states to exercise sound clinical judgment and utilize available resources to determine their coverage policies. These resources include pharmacy and therapeutics (P&T) committees, drug utilization review (DUR) boards, and comparative analysis of the costs to treat HCV patients in light of the efficacy of these newer regimens in terms of cure rates, when compared to those of preexistent therapies. Additionally, CMS notes the availability of guidelines for states to refer to regarding testing, managing, and treating HCV put forth by the American Association for the Study of Liver Diseases (AASLD), the Infectious Diseases Society of America (IDSA), and the International Antiviral Society-USA (IAS-USA), which can be found at http://www.hcvguidelines.org/full-report-view. CMS also suggests that states consider implementing programs that provide patients on HCV treatment with supportive care that will enhance their adherence to regimens, thereby increasing the success rates.
Coverage under Medicaid Managed Care Plans
CMS is also concerned that in many states, Medicaid managed care organizations (MCOs) or other managed care arrangements’ conditions for payment for DAA HCV drugs appear to be more restrictive than coverage under the states’ fee-for-service (FFS) programs. Furthermore, in states with multiple MCOs or arrangements, the conditions for payment for DAA HCV drugs often differ between various plans.
CMS reminds states that the drugs under the approved state plan must be available to individuals enrolled in Medicaid managed care arrangements. As with their FFS program, states are urged to carefully monitor the DAA HCV drug coverage policies of their MCOs to ensure enrollees have appropriate access. States have the option to include these drugs in the managed care contracts and capitation rates or to “carve out” the drugs used in the treatment of chronic HCV infections from managed care contracts and capitation rates and instead provide access to these drugs through FFS or other arrangements.
Consistent with the regulation at 42 CFR §438.210, services covered under Medicaid managed care contracts (with MCOs, prepaid inpatient health plans, and prepaid ambulatory health plans) must be furnished in an amount, duration, and scope that is no less than the amount, duration,
and scope for the same services for beneficiaries under FFS Medicaid. While managed care plans may place appropriate limits on DAA HCV drugs using criteria applied under the state plan, such as medical necessity, the managed care plan may not use a standard for determining medical necessity that is more restrictive than is used in the state plan.
CMS notes that managed care plans are permitted to use other utilization controls provided that the services, as controlled under the health plan’s policies, can be reasonably expected to achieve their purpose. However, states should carefully monitor utilization controls and the HCV coverage policies of their managed care plans to ensure that the organizations are providing appropriate access to covered services and benefits consistent with 42 CFR §438.210.
CMS recognizes the challenges of defining policies in the face of new and innovative drug treatments. It will monitor the policies and conditions states impose for the coverage of DAA HCV drugs to ensure compliance with the requirements of the Act and access to effective, clinically appropriate, and medically necessary treatments for beneficiaries. CMS will monitor state compliance with their approved state plans, the statue, and regulations to assure that access to these medications is maintained.
CMS shares with states the common goal of ensuring access to quality care for Medicaid beneficiaries. Given the complexities that have arisen with the introduction of the DAA HCV drugs, CMS will continue to work with State Medicaid agencies to continue providing and improving care to persons infected with chronic HCV infections. If you have any questions, please contact John M. Coster, Ph.D., R.Ph., Director of the Division of Pharmacy, at [email protected].
/s/
Alissa Mooney DeBoy
Acting Director
Disabled and Elderly Health Programs Group
