Federal and State Legislative Impact on Managed Care Pharmacy

Cincinnati—Federal and state legislative proposals that will affect AMCP members and other stakeholders were the focus of a Contemporary Issues session at the AMCP meeting. Paul Lakomski, RPh, pharmacy director, Empire BlueCross BlueShield/WellPoint, discussed the status of pending legislative proposals during the Federal and State Legislative Updates presentation.

Healthcare has been a major focus during the presidential election race between President Barack Obama and Republican candidate Mitt Romney. Mr. Lakomski opened the session with an update on the Patient Protection and Affordable Care Act (ACA), which was signed into law by President Obama in March 2010. The bulk of the ACA will be implemented in 2014.

Part of the healthcare reform law was the ACA’s creation of the Medicare Independent Payment Advisory Board (IPAB). The 15-member board, which will be appointed by the president and confirmed by the Senate for 6-year terms, would have the authority to make cost-cutting recommendations if Medicare spending exceeds target growth rates. Congress, however, can override recommendations. Republicans and some Democrats have denounced the concept. The Medicare Decisions Accountability Act of 2011 (HR 452), which would repeal the IPAB provision, passed the House of Representatives 223-181. Mr. Lakomski said Senate passage of the bill is unlikely, and President Obama has threatened to veto the repeal should it pass the Senate.

The IPAB is not the only part of the ACA that has come under fire by Republicans in Congress, as well as several state houses. On June 28, 2012, the Supreme Court ruled on the constitutionality of the 2 main provisions of the act—the individual mandate and the expansion of Medicaid. The Supreme Court upheld the individual mandate, but declared that Medicaid expansion would be optional. Mr. Lakomski said almost immediately after the Supreme Court declared the Medicaid expansion optional, several governors announced they would not expand Medicaid in 2014. However, he noted the ACA, as part of its Medicare savings, “sharply reduces DSH [Disproportionate Share Hospital] payments for hospitals that treat uninsured patients. This could lead to political pressure from hospitals to governors to expand Medicaid as outlined in the ACA.”

Mr. Lakomski continued the discussion of other federal issues important to managed care pharmacy including the Prescription Drug User Fee Act (PDUFA), which was reauthorized in June 2012. Under the PDUFA, fees are expected to generate $6 billion in revenue over 5 years, about 60% of the FDA’s operating budget. User fees are assessed on drug manufacturers to offset costs of drug approval processes. For the first time, user fees will be assessed on generic and biosimilar applicants. Amendments in the PDUFA reauthorization address drug shortages, integrity of the supply chain, accelerated approval pathway for treatments for serious diseases and unmet needs, and new incentives for antibiotic development, according to Mr. Lakomski.

Additional priority federal issues include funding for the FDA and Agency for Healthcare Research and Quality (AHRQ) and the Medication Therapy Management (MTM) Benefits Act (HR 891/S 274). In the 2013 budget, the Senate has approved a $27 million increase in FDA funding, while the House of Representatives has approved a $16 million decrease in funding. The resolution to the FDA funding difference is that the agency will be funded at current levels through March 31, 2013.

Mr. Lakomski reiterated AMCP’s position on FDA funding: “AMCP believes that an adequately funded FDA will lead to quicker generic approvals and allow for better oversight of the prescription drug supply chain and postmarket surveillance.”

The 2012 AHRQ budget is $369 million, and the Senate has approved a $7 million increase in funding. The House Subcommittee has approved a termination of funding. Mr. Lakomski said AMCP supports continued funding of AHRQ because the agency funds programs that “directly benefit AMCP members and the patients they serve.”

The MTM Benefits Act aims to increase the number of Medicare Part D beneficiaries eligible for MTM services. The legislation also requires plan sponsors to contract with any willing qualified provider in the network for MTM services. In general, AMCP supports MTM programs and payment for services provided by managed care pharmacists, but AMCP opposes this legislation, “recognizing that it would increase costs and that any willing provider requirements would make it difficult to ensure quality and prevent fraud,” Mr. Lakomski told attendees.

The second part of the presentation focused on issues affecting AMCP stakeholders in state legislatures. One such issue is pharmacy audit requirements. Currently, 18 states are considering legislation that would establish standards for the audit process, and 12 states signed audit legislation into law, according to Mr. Lakomski. AMCP recently released Model Audit Guidelines and its position on pharmacy audit requirements is for pharmacies and plans to have time to implement the guidelines without government regulation. Other issues of concern to the AMCP stakeholders in state legislatures include coverage parity, specialty tiers, uniform prior authorization, and mail-order pharmacy, Mr. Lakomski said.