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California Makes Moves to Ban PBM Gag Clauses on Pharmacists

California’s legislature is entertaining a bill that would, among other things, prevent pharmacy benefit managers from imposing gag clauses on pharmacists.

AB-315 amends the Health and Safety Code to include certain requirements for pharmacy benefit managers, or PBMs. Among the requirements is a ban on gag clauses in contracts with pharmacists (Sec. 152152(a)(1)). The bill was introduced in February of 2017, and gained momentum throughout the year. The bill is currently in the inactive file, but could be brought out of inactive status at any time.

Pharmacy benefit managers can tell your pharmacist what to say – and it could cost you money.

A doctor's hands in handcuffs.

Currently, some pharmacists are not able to tell patients when they could be paying less for their medications because PBMs put gag clauses in their contracts. PBMs sometimes set the copay price of a drug (what you pay if you used insurance) higher than the list price of the drug (the price you pay without using insurance). When insurance companies do this price setting, it is called a “clawback.” Gag clauses order a pharmacist not to tell you about the clawback, so they cannot say if you could pay less for a drug if you did not use your insurance. This results in higher prices for the patient. This practice is especially detrimental for people with diabetes because they pay about 2.3 times more on healthcare than people without diabetes. Gag clauses are surprisingly widespread; some independent pharmacists estimate that if they were allowed, they could have saved their patients money in about 10% of transactions. DPAC has done a deep dive into gag clauses on our blog.

We need Californians to speak up! Tell the legislature that you don’t want PBMs telling your pharmacist what they can and cannot say!

 

Click here to send a letter to the California Assembly asking them to support AB-315!

Pharmacy Benefit Manager (PBM) Gag Clauses Tie Pharmacists’ Hands

Your pharmacist’s hands may be tied when it comes to telling you drug prices.

Gag clauses in contracts with pharmacy benefit managers (PBMs) prevent pharmacists from telling the truth about the price of some medications.

Currently, patients cannot rely on their pharmacist to give them all available information because PBMs are able to issue gag clauses within their contracts with pharmacies. The result of these gag clauses is higher costs for the unknowing patient. This problem is particularly egregious for people with diabetes, who pay about 2.3 times more on healthcare than people without diabetes. Contractually mandated gag clauses for pharmacists must be banned so that pharmacists are able to do their jobs and patients are able to trust their providers.

Three men wearing suits with their arms crossed.

The problem arises when PBMs engage in clawbacks.

Clawbacks occur when PBMs, standing in for insurance companies, set the copay price of a prescription drug higher than the cash price of that drug. When the patient goes to the pharmacy to purchase their prescription medicine, they pay their copay price, believing that they are getting a good deal through their insurance. In actuality, they may be better off skipping their insurance and paying the list price. The pharmacist knows the two prices, but is prevented from telling the patient that they are being ripped off because of gag clauses in PBM contracts.

Many pharmacists are bound by these gag rules, and there are many lost opportunities to inform patients of their pricing options.

According to a survey by the National Community Pharmacists Assn., 59% of independent pharmacists said they were subject to gag clauses prohibiting them from volunteering pricing information. The survey also revealed that 83% of pharmacists said there were at least 10 times during the past month when patients could have saved money if the pharmacists were allowed to tell them about the price difference. Some pharmacists estimate clawbacks happen in 10% of their transactions.

A doctor holding a heart and a businessman holding money.

Gag clauses are not always explicit, but always restrict pharmacists from telling their patients the whole truth.

Some contracts between PBMs and pharmacists explicitly bar the pharmacist from publicly criticizing benefit managers or suggesting customers obtain the medication cheaper by paying out of pocket. But even if the contract does not explicitly say that the pharmacist may not discuss lower priced options with their patients, it may include language that has the same effect. In one OptumRX provider manual, there is language that requires the pharmacist to charge their customers using their insurance the required copay “and only this amount.” Waiving the copay is “strictly prohibited.” And pharmacists who contracted with OptumRX in 2017 could lose their contract for many reasons, including engaging in “actions detrimental to the provider network,” doing anything that “disparages” it, or trying to “steer” customers to other coverage or discounted plans. Why would a pharmacist agree to such terms? Pharmacists are often forced into contracts with gag clauses because they need to serve people with insurance in order to stay competitive and retain customers. PBMs rarely negotiate with pharmacists, and the contracts PBMs offer are usually take-it-or-leave-it contracts. If a pharmacists refuses to sign the contract because it includes a gag order, the PBM will simply take its business to the next pharmacy in town.

State and federal governments are taking action to protect patient-constituents from deceitful gag clauses imposed on pharmacists.

Many states have outlawed clawbacks all together or have prohibited gag clauses for pharmacists. The Federal government is taking notice as well, with bills presented in the Senate and the House. In the Senate, the Patient Right to Know Drug Prices Act, or S. 2554, would ban the practice of pharmacy gag clauses. 

In a press release, bill sponsor Senator Collins said:

“Multiple reports have exposed how this egregious practice has harmed consumers, such as one customer who used his insurance to pay $129 for a drug when he could have paid $18 out of pocket… Americans have the right to know which payment method — insurance or cash — would provide the most savings when purchasing prescription drugs. By prohibiting gag clauses, our legislation would take concrete action to lower the cost of prescription drugs, saving consumers money.”

Thouse House bill, introduced by Representative Earl “Buddy” Carter, is called the Prescription Transparency Act or H.R. 5343. Rep. Carter is a pharmacist by trade, and said this about his proposed legislation:

“As a pharmacist for more than 30 years, there were many times when I was prevented from telling my patients that there was a cheaper option because of a gag clause. There is no reason pharmacists should not be able to talk to patients about what is best for them.”

The total cost of diabetes in 2012 was $245 billion, and 18% of that cost ($44.1 billion) was attributed to prescription medications. People with diabetes should not have to pay more for their medications simply because they did not ask the right questions.

Send a letter to your representatives asking them to co-sponsor legislation to prohibit gag clauses so you can trust that your pharmacist can tell you the whole truth!

Send a letter to your Senators

Send a letter to your Representative

A doctor's hands holding a stethoscope and handcuffed.

 

How an Idea Becomes a State Law

Have you ever thought to yourself, “there ought to be a law about that”? Working to get state laws introduced, passed, and signed is an important part of diabetes advocacy, especially now that states are taking a very active role in healthcare. Here’s a look through the whole process, from idea to law!

Refining Your Idea

A lightbulb crashing through a wall

Having the idea to make something a state law is usually the easiest part of the process. Even if you don’t have an idea you feel strongly about yourself, there are tons of people out there trying to get their ideas put into law. Find one you feel passionate about, and you’re on your way! Here are some good questions to ask yourself when coming up with and refining your idea: 

  • Can the state government pass this law?
  • Which government agencies would need to be involved?
  • Does the law simply require authorization (something that allows a change in the law and then orders an agency to implement it) or would it require appropriation (needs money to pay for implementation)?

Getting to Know the Political Landscape

Additionally, you must get involved in the actual politics needed to pass their proposed law. Has anything like it been introduced in the state? How did each party or legislator vote on it? Once you’ve researched these questions, you’ll get a better idea of the political landscape with regard to your particular issue. Every bill has to have sponsors, so the best plan of attack is to find state representatives who are willing to take on this particular cause.

Lobbying for Your Cause

Lobbying has a bad reputation, but activist lobbying simply is talking to others about a subject you’re passionate about and trying to get them to understand your position. Nothing nefarious about it! A bill requires one sponsor from the House and one from the Senate, so you will need to make sure there are multiple parties in the legislature willing to introduce the bill. Once a bill has been introduced, you can advocate for it by joining with professional lobbyists, community organizations, and/or party leadership to promote it to the public. Proponents of the bill can also work individually on many of the same actions: calling voters to spread awareness, calling legislators to express support, knocking on doors with educational information on the bill, etc.

The Lawmaking Process

Definition of the word "law"

For this section, we’re going to generalize a bit. We can do that because, out of 99 total legislative chambers in the United States, 70 use the guide Mason’s Manual of Legislative Procedure. The other 13 use either Jefferson’s Manual or Robert’s Rules of Order. Because the vast majority of legislatures are structured similarly, the process for law creation can be generalized. Some legislatures use a shorter version for their particular processes, but the following steps are usually involved in each state legislative body. BUT make sure you’re following the right steps for your legislature before charging ahead! 

Bill Introduction

Bills can be introduced in either the state house of representatives or the senate. They must be sponsored by a senator and a representative. Bills are assigned an identification number upon introduction that citizens can use to track progress.

Committee Procedure

It’s hard to get a big group of people to decide on things, right? That holds true in state legislatures. Because the legislatures are so large, the majority of state government operations are through committees. Each committee is specialized to consider bills on a particular topic, so it’s important for you to identify the committee that works on the issue you are passionate about. Committees recommend bills they think are important to move on in the legislative process.

Reports of Committee

After a committee is finished working on a bill and has recommended it for further consideration, it refers the bill to the state house or senate during the reports of committee section of daily business. If a bill is reported, it is given a second reading by the larger group and put on the schedule. State legislature websites usually have daily schedules, and bills that have been reported positively by committees will be listed with a date and time for consideration by the entire house or entire senate.

Definition of the word 'legislation"

Third Reading

Once a bill gets on the calendar, it is considered at a third reading. The third reading is considered by all members of the house or senate, at which point members can study the bill in detail, debate, and amend it. If the majority vote in favor to pass the bill, it moves on to the next phase.

Transmission to the Other Chamber

If a bill passes when heard by the house of representatives or the senate, it is formally transmitted to the other chamber for consideration (if it’s been heard by the house of representatives, it’ll be passed to the senate, and vice-versa). Then the ‘new’ chamber goes through the same process as the one that’s already done the work. If the chamber receiving it does not report it from the committee it falls under, or does not consider it with the entire chamber, the bill fails. If the receiving chamber goes through the same process as the first chamber and the bill moves through each stage into the third reading, the bill is returned to the original chamber, usually with amendments. There are several ways a bill can move after this:

  • If the original chamber concurs with the amended bill, it is ready for enrollment.
  • If the original chamber does not concur with the amendments, the bill fails.
  • If the original chamber does not concur with the amendments but requests a conference committee, one such committee is appointed. Each chamber appoints members to the committee and the process continues.

Conference Committees

A conference committee works with both chambers’ versions of a bill and tries to compromise to create a single final bill. If an agreement is made, the bill passes and moves on to the governor. If one chamber refuses to adopt the report of the conference committee, further conference can be ordered, or a new conference can be appointed. If no agreement is made before the legislative session ends, the bill fails.

legal books

Presentation to Governor

Once an identical bill has passed in both chambers, it goes to the governor’s desk for consideration. The governor may sign it, which enacts the bill into law. A governor may also veto the bill, at which point he/she returns it to the original chamber with an explanation. The bill is then reconsidered (usually with suggestions for amendments by the governor) and returned to the governor if both chambers approve of the changes.

Reacting to a Veto

Another option is for a majority of each chambers’ members to approve a veto bill in the form passed by the legislature, which overrides the governor’s veto and enacts the bill into law. If a governor does not return the bill to a legislative chamber within a certain number of days after presentation, it becomes law without his/her signature. Finally, if a bill reaches the governor a certain number of days before the legislative session ends, the governor has the opportunity to veto after session adjournment. This is a pocket veto, and a very final veto, as the legislature has no chance to reconsider it.

a hand drawing a lightbulb

Revisiting Your Idea

That’s a lot of steps. We get it. It’s easy to look at that process and think that your idea will never make it through. But think about all that has come before – both good laws and bad ones – and consider that at one point, they were an idea in someone’s head. You can make it!

Even if your idea does not become a state law, think about the other impacts you could have. Throughout this entire process, you’ll meet people you can convince to care about diabetes issues. You’ll bring awareness to your idea. And you’ll work hard to make your views known, which is so fulfilling. Having your idea become a state law can change so much for so many, and even if it doesn’t make it all the way through to become a law, it can change the entire community!

What ideas do you have for your state legislature? Feel free to comment below!

Advocacy 101: Writing an Effective Op-Ed

Extra! Extra! Read all about it!

When well written, op-eds can be wildly successful at convincing people to take action on a certain diabetes issue. This blog post will show you how to write an op-ed that will encourage people to advocate for your solution!

Op-eds are commentary articles from readers of a particular news source. A good advocacy op-ed outlines a problem and then suggests a way to fix it (kind of like what we do at DPAC!). There’s a formula for writing op-eds:

  1. Opening = outline the problem and say how to fix it
  2. Middle = your opinion with supporting facts
  3. End = restate the problem and call on the reader to act!

Writing the Opening

Hands on a desk writing on a pad of paper.

A good opening does three things: it clearly states the problem, shows how the problem is relevant, and provides a suggestion to fix it. You can do all that in just three sentences!

For example, you can show relevancy by tying the issue to something in the current news. Stating the problem should be easy- it’s what made you want to write the op-ed in the first place! Then all you have to do is write how you’d like someone to fix it. This can be by writing a letter of their own, calling their state or federal representatives, or any other action that will help solve the problem.

Here’s an example opening: (Relevancy →) On April 1, Medicare rolled out a new program for beneficiaries, the Medicare Diabetes Prevention Program, which is designed to help beneficiaries who have prediabetes avoid being diagnosed with diabetes through education and lifestyle changes. (Problem →)However, many potential beneficiaries do not even know if they have prediabetes. (Solution →) Physicians should screen their patients for prediabetes to ensure that the patients know about what treatment options are available.

Writing the Middle

The middle should be three paragraphs of information. Lead with your opinion, then back up your opinion with objective facts. Don’t only use opinion or only use facts because it is the mixture of the two that best convinces people to see your side. Plus, even if someone disagrees with you, they cannot disagree with facts.

Here’s an example of a middle paragraph: (Opinion →)Doctors should test their patients for prediabetes so that eligible patients can receive treatments like the Medicare Diabetes Prevention Program. (Facts →) According to the CDC, at least 23 million people age 65 and older have prediabetes. Unfortunately, about nine out of ten people who have prediabetes do not know they have it. Without treatment, prediabetes can lead to a diabetes diagnosis, and all the lifestyle changes, medication, and inappropriate stigma that comes with it.

Writing the End

After you’ve written all that in the middle, you should get to the point quickly in the end. After all, if they’re still reading, you’ve gotten their attention- now make them work! Your ending should be two sentences; the first one restates your solution, and the second one issues a call to action. The call to action should be something people can do. Asking people just to support your view doesn’t cause enough change.

Here’s an example of the ending: (Solution →) If physicians test their patients for prediabetes, then the patient can engage in programs like the Medicare Diabetes Prevention Program that may help them avoid a diagnosis of diabetes later. (Call to Action →) Sign this letter to the physician’s group asking them to pay more attention to prediabetes!

Tips and Tricks

Hopefully we’ve made it very simple for you. Here’s a couple bonus tips to make your op-ed extra special:

Newspapers that say 'breaking news'

  1. It’s tempting to write your story and ask people to empathize with you. You can do that, but make sure you back up your experiences with facts! An op-ed shouldn’t just be a way to complain!
  2. Try to shoot for 750 words in your op-ed. Editors usually look for at least 500 words and no more than 1200. (However, some newspapers and online news outlets have a limit of 300 words or less, so make sure you check to see the word count – and then make those words count!)
  3. Remember, your audience is not just the people reading the final product, but also the editor who will decide if the op-ed gets published.
  4. Focus on only one issue. You can always write another one for other issues!
  5. Write how you talk. If you wouldn’t say it in real life, avoid it in your writing. The key is to be personable, but not chatty. Read some op-eds in trusted news sources to get a feel for the language.
  6. Have confidence in your writing! Your passion for diabetes advocacy will shine through!

What Next?

Go forth and write! The easiest way to get good at writing op-eds is to practice.  And there are plenty of diabetes issues on which to advocate.

Here’s an issue that everyone can be concerned with, whether you’re on Medicare now or plan to be someday: seniors on Medicare who use CGM are not allowed to view their data on a smartphone, which means they can’t use the Dexcom Follow app to have their loved ones view their data and get alarms when they have high or low blood sugars. It’s a huge safety issue!

If you choose to write on this issue, feel free to call your readers to visit the DPAC website and have them send a letter to the Representatives asking them to make CMS justify their decision to put beneficiaries at risk. Read more and get writing!

Introducing the 2018 DPAC Patient Advisory Board!

DPAC is proud to announce the

2018 Patient Advisory Board!

The members of the inaugural PAB will act as trusted spokespeople in all of DPAC’s advocacy efforts, promote DPAC’s mission within their communities, share their policy training skills, and much more. We welcome our new Patient Advisory Board. 

Randall Barker

Randall Barker is a born and raised Texan. He attended Midwestern State University where he doubled majored in Biology and Chemistry. Randall has had Type 1 diabetes for over 27 years and his daughter, 15 years old, is also Type 1. Similar circumstances surrounded both his diagnosis and his daughter’s; both were diagnosed at age 10. Neither one was symptomatic when diagnosed and both diagnosis’ were made during routine medical visits.

Randall became heavily involved in patient advocacy efforts after his daughter’s diagnosis. Most recently, Randall traveled to Washington D.C. to speak with Congressional Members regarding diabetes issues. He has also worked to start several Diabetes Awareness campaigns in his local community. Efforts included starting the local non-profit, the Texoma Diabetes Foundation.

Randall has also written several articles online for various social media websites including Beyond Type 1 and The Diabetic Journey. Randall looks forward to bringing his experience of living with diabetes to the table on issues related to diabetes advocacy.

Erin Bubb

Erin hails from the great state of Michigan. She is a wife, mother, and lover of music, nature, and Michigan football. Her son was diagnosed with Type 1 Diabetes at the age of five. Since then, she has immersed herself in learning all she can about this disease and how it impacts people.

Erin has heard so many heart-wrenching stories that scream for change in the diabetes community. She has a passion to make these stories known and affect change. Erin currently volunteers on the Patient Advisory Counsel at her local hospital and enjoys connecting patients, caregivers, providers, and staff to help make Diabetes care a positive experience for all involved.

Martin J. Drilling

Martin J. Drilling was diagnosed with Type 1 Diabetes in April of 1953. He is very active in clinical research: he was a participant in a 1974 NIH story of effectiveness of laser surgery to prevent blindness due to diabetes, a 2008 artificial pancreas study testing the effectiveness of CGM, and is in a 50-year medalist study being conducted at the Joslin Center in Boston. He also volunteers by speaking to groups on living successfully with diabetes.

Martin earned a bachelor’s degree at Fordham University in 1970 and a JD at the Boston College Law School in 1974. He was a solo practitioner in Plymouth, Massachusetts before he retired in 2017. He has been married to wife Maureen for 45 years, and has two children and four grandchildren.

Laurel Garrison

Laurel is an epidemiologist by training and became involved in diabetes advocacy when her daughter was diagnosed with Type 1 Diabetes at 16 months old. Her experience includes working for and with governmental agencies, using scientific evidence to form national public health policy, creating health education materials, and writing and responding to legislators.

She is passionate about advocating for diabetes research funding as well as healthcare coverage and affordability. She lives with her husband and two children in Cincinnati, OH.

Andrea Herndon

Andrea Herndon has been living with diabetes for 14 years. She was originally diagnosed as type 2, but five years ago realized that she is LADA type 1.5 at a TCOYD conference. Upon returning home, she had a C-Peptide test done and the LADA diagnosis was official. Her experience taught her that knowledge is power and the importance of being her own advocate.

Since her corrected diagnosis, Andrea has been an advocate for the American Diabetes Association and recently attended her second Call to Congress. She also leads a support group through Diabetes Sisters. She has more time to pursue her advocacy efforts now that she is recently retired. She has two recently-married children and is patiently waiting for grandchildren. She wants to do everything she can to work towards a cure so that her future grandchildren and other young people can live without the struggles she lives with.

 

Moira McCarthy Stanford

Moira McCarthy has been an active advocate in the diabetes space since shortly after her then six-year- old daughter, Lauren Stanford, was diagnosed with Type 1 Diabetes in 1997. Since they she has served as National Chair of Grass Roots Advocacy for JDRF, ChairMom of JDRF’s Children’s Congress, and was named JDRF International Volunteer of the Year in 2007, much for her work on Capitol Hill.

She has also served on the board of the Barton Center for Diabetes Education, the Diabetes Education Camp Association, and as Chairman of the Board of the Diabetes Scholars Foundation. She speaks nationally and internationally on family diabetes topics, and is the author of numerous books on the topic. She lives in Plymouth, Massachusetts with her husband, Sean, and is an avid skier, tennis player, runner and grandmother.

David Richer, Ed.D

David is currently a school psychologist with the Riverside County Office of Education.  In that position, David provides psychoeducational support and services for the students in special education programs operated by the Riverside County Office of Education.  He has over 30 years of experience advocating for children with disabilities. This experience includes positions as a school psychologist, program specialist and special education director, in both rural and urban settings. He was diagnosed in 2014 with Type 2 Diabetes.

David’s professional interests include crisis counseling, supporting students with Attention Deficit Hyperactive Disorder, supporting students who are deaf or are hard-of hearing, and meeting children’s mental/behavioral needs. David has a Doctorate in Education from the University of La Verne and a BA and MA in psychology from California State University, Northridge. 

Victoria Riggle

Victoria “Vikki” Riggle retired after more than 40 years in the field of human resource management and non-profit administration. During her primary career, she also spent many years as an adult educator, providing work-related training topics and teaching classes in at the University of Phoenix Baton Rouge. Ms. Riggle also became a well known public speaker at the state and national level, conducting workshops and training sessions on a variety of topics.

After her diagnosis of diabetes at age 41, Riggle found the lack of knowledge about her disease, even among some medical practitioners, to be very concerning. She has realized that educating people to the truths and the differences in these two diseases has become a way of life.

Lucy Trankina

Lucy grew up outside Chicago, Il. and was diagnosed with Type 1 Diabetes at age 15. She has been on an insulin pump ever since, which has made a huge difference in her management. Since her diagnosis, Lucy’s passion has become helping people through adversity. She has volunteered in homeless shelters and with children in the foster care system. Her career has been in volunteer management for non-profits. Lucy loves to read, write, paint, and go on hikes with her dog. She is looking forward to using her experience and knowledge to help those who also have diabetes.  

 

We are honored to have such passionate advocates volunteering for DPAC.

Pills flowing out of a tipped blue plastic bottle

Transparency in Diabetes Drug Pricing

What is transparency in diabetes drug pricing?

The word “transparency” gets tossed around a lot by people in the healthcare community (it was even one of DPAC’s top 5 buzzwords from a drug supply chain Congressional Health Subcommittee hearing in December).  When patients call for more transparency, what do they actually want? The answer varies, of course, but for most people, transparency boils down into one main idea:

Patients should be able to clearly see the price of a drug or treatment

and determine how much they will pay out-of-pocket before receiving care.

Transparency in drug pricing has many positive consequences. When pricing information is available, consumers are better able to compare prices so they can make more informed decisions about their care. A Public Agenda survey found that most people in America want greater price transparency and would compare health care prices if given the option. And drug price transparency does not only educate patients, it actually lowers the cost of healthcare in the long run, according to Health Affairs.

A page of the dictionary with the definition of "law" in lights.

How can federal and state governments help make drug pricing more transparent?

Federal efforts to increase transparency in diabetes drug pricing largely have not succeeded. Despite growing public and political outrage over pricing practices, legislation to require more federal oversight has not happened.

Rather than wait for federal assistance with drug pricing issues, states have been addressing the issues themselves. More than 176 bills on drug pricing and payment were introduced in 2017, in 36 different states, according to the National Conference of State Legislatures. States have had differing techniques for increasing transparency. Patient advocacy groups have been vocal with their suggestions to states. Public Agenda says state governments can combat price opacity by empowering providers and insurance personnel to talk about pricing and by guiding people toward reliable price information and explaining how prices vary across providers. The Catalyst for Payment Reform says states can fight price opacity through legislation and litigation. No matter how they get there, one thing is certain: state legislatures want solutions to the lack of transparency in drug pricing.

a one hundred dollar bill with the words "health care" on top

What states have transparency laws enacted and what states are currently considering them?

Most state drug price transparency bills are designed to identify the costs that contribute to drug manufacturer expenses and list prices and unveil the often opaque business practices of pharmacy benefit managers (PBMs). Some of the enacted state laws require manufacturers to justify prices, particularly for new drugs or for large increases in the price of older drugs.

Other states chose to use existing “unfair business practices” laws to impose new reporting requirements on manufacturers and PBMs. The states that currently have transparency laws are California, Colorado, Hawaii, Idaho, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nebraska, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

Most of these same states also have legislation in process currently to strengthen their laws encouraging transparency. Many of the bills have similar provisions. Several would require public reporting of manufacturer information to justify price increases of a certain percentage over a year. Many target PBMs, requiring them to disclose conflicts of interest, financial benefit from dispensing prescription drugs, and contracts with manufacturers and labelers. Finally, many states are requiring manufacturers and PBMs to provide detailed reports on the pricing structure of prescription drugs that are popular in that state.

three insulin pens in front of a pink backdrop

Some states are specifically targeting transparency in diabetes drug pricing.

Colorado HB 1009, Hawaii HB 2668, and South Carolina H 4490 would all require drug manufacturers to submit reports to the state board of health for diabetes products when the price increases more than the increase in the medical component of the consumer price index. The bills would require manufacturers to report market analysis, research, production, and marketing costs, among other information. There are proposed financial penalties for failing to comply. Finally, the bills would require PBMs to report on the total rebates received for diabetes products, the amount of those rebates retained by the PBM, and other information. Most advocate groups agree that these bills would be good steps in the effort to produce a more transparent diabetes drug pricing system.

Medicaid Work Requirements Will Prevent People from Receiving Care

Medicaid Work Requirements Will Prevent People from Receiving Care

In January, the Centers for Medicare and Medicaid Services (CMS) issued a guidance which announced that states would be allowed to require work hours for certain people on Medicaid. This is a huge departure from what CMS has said before, and already Kentucky and Indiana (which had pending requests in at the time the guidance was released) have been approved to implement work requirements. However, there is a lot of research that shows that Medicaid work requirements will not raise people out of poverty, as CMS hopes. Instead, work requirements will lead to people falling off the Medicaid rolls (an estimated 95,000 people would lose Medicaid in Kentucky alone) because of inability to work, inability to find a job, and/or inability to complete the necessary paperwork.

Who is Affected and What They Would be Required to Do

The guidance released by CMS gives states the authority to “incentiviz[e] work and community engagement among non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.” Let’s define some terms from that sentence to work out what the states are now allowed to require:

A manufacturing worker squats on a board with his head down

  • “work”= the guidance does not give examples of what might be work and what is not, because each state defines work on their own. Generally, states define work as an activity that generates income. Governor Bevin in Kentucky hopes to require Medicaid beneficiaries to work 20 hours a week.
  • “community engagement”= the examples the guidance gives are skills training, education, job search, caregiving, or volunteer services, substance disorder treatment, and tribal employment programs. Again, states have a lot of leeway to pick and choose what they think counts as “community engagement.”
  • “non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability”= this language targets people who came on Medicare after the Affordable Care Act (ACA) gave states the right to expand Medicare to individuals earning up to 138% of the federal poverty line. The majority of those people were newly able to enroll in Medicaid because they did not make enough money to pay for healthcare services, not because they were pregnant, disabled, or elderly. The guidance also lists exemptions to this group of people that states could (but do not have to) apply: exemptions for age, disability, responsibility for a dependent, or participation in a drug addiction or alcohol treatment and rehab program. And again, states have leeway to decide who meets this definition.

Bottom line? Low-income people who recently joined Medicaid because they couldn’t afford healthcare without it are now targets for work requirements, which could include working for income, or any number of state-specified community involvement.

Most Medicaid Recipients Who Can Work Already Do

A pie chart showing the work status and reason for not working for medicaid adults

The Kaiser Family Foundation found that six out of ten Medicaid adults are already working, and those that are not report that they are ill or disabled, are caregivers, or are in school. That leaves only a relatively small population of Medicaid recipients who would be subject to work requirements, and that they report that they are not working because they are looking for work and unable to find a job.

The CMS guidance cites TANF, or Temporary Assistance for Needy Families, as a guide to how work requirements may work out. Fans of TANF say that it helps people get out of poverty because it imposes work requirements. However, just like Medicaid recipients, TANF enrollees work regardless of whether they are required to do so, so the work requirement has little impact on increasing employment over the long-term. And TANF enrollees work in low wage jobs and remain poor despite being employed. We can expect to see the same effect if work requirements are imposed on Medicaid beneficiaries.

A bar graph showing the work status of medicaid adults

For Medicaid recipients who are able to work, there’s also a Catch-22 in play. For some, working at minimum wage could make them financially ineligible for Medicaid in states with low eligibility levels for adults. For those people, if they DO NOT work, they’ll be kicked off of Medicaid because of work requirements. If they DO work, they’ll be kicked off of Medicaid because they make too much income. Either way, they’re loosing essential coverage for health services.

The CMS guidance makes it very clear that states must show how they are helping people meet the work requirements, by implementing programs such as job training. The state can help those trying to find work and unable to through programs and outreach. However, states may not use federal Medicaid funds for job-search support services. It is not clear how states are supposed to pay for these programs.

Complex Documentation and Administration Processes Would Make People Lose Coverage

A man covers his face with a question mark above his head

Implementing work requirements for Medicaid enrollees would generate huge amounts of paperwork, for the government and for enrollees. Even if a Medicaid recipient was exempt from a work requirement program because they are disabled, elderly, a caregiver, or in school, they would still have to fill out paperwork to prove that status to the government. Those Medicaid recipients who are already working would also have to document their work and provide proof to the government. A Medicaid recipient could be following the rules perfectly and still lose coverage because of incorrect or late paperwork. Studies of both Medicaid and the Children’s Health Insurance Program (CHIP) show that complex enrollment rules and documentation result in barriers to coverage, and more people enroll in programs when the process is easy.

Additionally, the economic and administrative burden on states to process all this paperwork would be extensive. States would need to pay for staff, new systems to track both verifications and exemptions, and education for individuals to complete the new paperwork.

Working May Not Make People Healthier

The guidance supposes that when people work, they become healthier, based on many studies that show correlation between health and work. However, there is a difference between correlation and causation. There is not sufficient research to say that working causes better health. It could very well be the case that these studies show that healthy people are more able to work. In other words, it is not clear whether income and work lead to better health, or whether better health facilitates income and work.

A woman rubs her temples in an office

The guidance fails to take into account studies that show that work has negative impacts on health as well. The Kaiser Family Foundation writes that “research has found some deleterious health effects of work, particularly for people in shift work positions or those with high job insecurity, and evaluations of existing work requirements in other programs find weak evidence for an effect on health and well-being.” There are some studies that show positive effects of work in programs for working people with disabilities, but the work in these programs is voluntary, and there are plentiful support services for those people. That would not be the case for Medicaid work requirements as outlined by the CMS guidance.

What You Can Do

Medicaid work requirements would prevent people from enrolling in Medicaid and would force people out of the program. Medicaid is necessary for many low-income people in order to access medical care, and having fewer people enrolled means more people going without care. Already Kentucky and Indiana have received permission to implement work requirements and Maine, New Hampshire, Wisconsin, Mississippi, Arkansas, Kansas, Utah, and Arizona have applications pending.

If you live in one of the states that has been approved for a waiver or has an application pending, write or call your state delegates and tell them how Medicaid work requirements would hurt the people in your state!

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Top 5 Takeaways from the White House Report on Drug Pricing

Top 5 Takeaways from the White House White Paper on Drug Pricing

On February 9th, the White House released a white paper on the causes and potential solutions to high drug prices. There are several important takeaways from the report, and we’ve compiled the top 5 for you here (just in case you don’t have time to read 28 pages!). If there’s a theme to this report, it’s dreams; the report is very aspirational, but does not give a lot of concrete steps to how these dreams would be accomplished.

1. There was plenty of blame to go around.

The White House was quick to point fingers at who may be responsible for high drug prices. According to the White House, the biggest culprits are:

two people pointing at each other accusatorially

  1. the U.S. government, because there are too many regulations that hinder competition,
  2. foreign governments that set pricing guidelines for drug manufacturers, because their guidelines give them a competitive advantage that the U.S. does not have,
  3. pharmacy benefit managers, or PBMs, because there are not enough of them, and the lack of competition means they can inflate prices, and
  4. the FDA approval process, which hinders competition in the drug market because it takes too long.

It’s not clear that all of these factors actually contribute to the drug pricing problem, and if they do, it might not be for the reasons the White House claims. For example, regarding PBMs, the report claims that:

“Policies to decrease concentration in the PBM market and other segments of the supply chain, i.e., wholesalers and pharmacies, can increase competition and further reduce the price of drugs paid by consumers.”

But the report does not say how to actually reduce the concentration in power. The government could block acquisitions that would increase the power of the largest PBMs, but that would not reduce the already-present imbalance. For most things proposed in this report, there are ideas, but no directions on implementing them.

2. The White House thinks other countries are “free-riding.”

A one hundred dollar bill with the words "health care" on top

The report attacks the way European countries reimburse drug manufacturers. It says the U.S. is hurt by “unfairly low” drug prices in those countries, and that they are relying on the U.S. to subsidize drug development. The report states:

“Meaningful reforms could address the free-riding that takes unfair advantage of American innovation, whether through enhanced trade policy or policies that tie public reimbursements in the United States to prices paid by foreign governments that free-ride or other methods.”

It isn’t clear what that language actually means. It would be difficult for the U.S. to get other countries to spend more on drugs, so there’s no obvious way to develop the reforms the report calls for.

3. Changes to Medicare and Medicaid are Proposed

Woman testing her blood sugar.

The report suggests several changes to Medicare drug reimbursement. It targets Medicare Part B and Medicare Part D. For Medicare Part B, the report says we should eliminate payment policies that are price-based and give doctors more money for prescribing more costly drugs. For Medicare Part D, the report claims that the requirement which guarantees coverage of certain drugs causes higher prices because it limits the ability of Part D insurance companies to negotiate for lower prices. These programs have been called out before, by the Obama administration, but the it didn’t go anywhere. The administration backed off due to public outcry.

Pills flowing out of a tipped blue plastic bottle

4. The White House Wants to Speed Up the FDA Drug Approval Process

Last year, the Food and Drug Administration (FDA) approved over 1,000 generic drugs, the highest amount approved in one year in the history of the FDA’s drug approval program. The agency accomplished this by expediting applications for certain drugs that are the second or third drug in a particular drug category. The report proposes expanding this practice to drugs that are second or third drugs in a class that does not have a generic alternative. There are differing views as to whether this proposal would actually lower drug prices or if the approved drugs would simply cost the same as their “leader” drug. But speeding up the approval process could also have safety implications for patients – something that the report does not discuss.

Man with question mark over his head

5. Notable: What’s Missing from this Report

There is a lot in this report, but perhaps what is most surprising is what is not in it. The report gives a full 28 pages on how to reduce drug costs through public programs, but does not give any recommendations or policies focused on lowering the costs for patients who get their health insurance through their employer. Over half of U.S. citizens get their insurance through their employer than through any other method, yet those people are not addressed by this report.

Next Steps:

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If you’ve got some time to spare, read the full report here.

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How Closed Formularies Hurt Patients

How Closed Formularies Hurt Patients

Insurance providers have a problem: how do they balance the cost of drugs to patients versus the cost of drugs to themselves? Drug costs can pile up quickly on either side of the scale (or both!). To try and find the balance, many healthcare plans opt to reduce their costs by implementing a drug formulary method. But drug formularies hurt patients when they deny access to important medications. 

A picture of a man in a suit holding a sign that says "no"

What is a closed formulary?

Drug formularies are lists of medications created by medical professionals that correspond to certain diseases or conditions. Formularies can be open, limited, or closed.

  • Open Formulary: drugs that are “non-formulary” can still be accessed by patients, but they require a larger copayment.
  • Limited Formulary: has components of both open and closed models by using cost levels. For instance, you may find that the insurer will allow you to purchase different brands of test strips, but they may have a “preferred” brand that is the lowest co-payment or co-insurance cost to a patient. Other test strips may be listed, but you will pay more to access them. If you wish to use a brand of test strip not found on the formulary, you will pay out of pocket. 
  • Closed Formulary: access to medications used for a particular condition are restricted. The drug list (formulary) can be limited to specific prescribers, geographic areas, or severity of condition. This means you either use the brand/generic listed on the formulary or you pay out of pocket. Often, you may have only one or two choices for a drug. 

Closed formularies became popular in the 1990s, died out, and are now making a comeback in many states across the nation because they are popular with drug manufacturers. Some manufacturers see cost savings of 10 – 25% with formulary management services.

The resurgence of the closed formulary model is especially notable for diabetes drugs. According to Managed Care Magazine, some payers were not willing to limit options for diabetes patients as recently as a few years ago. Now, however, times have changed. Closed formularies are becoming increasingly popular for diabetes medications (and test strips).

A photograph of a doctor's hand giving a prescription

How does it affect patients?

Closed formularies may sometimes force patients to frequently change drugs, and they may not be able to get their preferred medications. Closed formularies are based on the assumption that all drugs will act the same with anyone who has a particular affliction. But as we know, diseases do not affect each person in the same way. A drug that effectively manages one person’s condition may not work for another individual with the same diagnosis.

Closed formularies also disable a patient’s ability to work with their physician to freely choose the best treatment for their particular symptoms. Remember, part of the formulary design is categorization by prescriber, by area, or condition, so there may not be an obvious reason to who has access to certain medications.  A patient living in one area may have access to a drug that helps their symptoms, but if he or she moves to a home on the other side of town, it may be barred from them. And the patient of one endocrinologist may not have access to drugs that another endocrinologist could prescribe for them simply because their endocrinologist is not on the formulary list. 

Which states have closed formularies?

As of February 2018, Montana, Texas, Oklahoma, Arizona, Ohio, New York, and Tennessee have adopted closed drug formularies within certain state programs. California is also slated to implement a closed formulary in 2018. Closed formularies are spreading as well; already four more states have made moves to implement the system, and two are considering it.

An outline of the United States of America filled in with a dollar bill

  • Indiana: S.B. 369 (authored by state Senator Randall Head) would require adopting a closed drug formulary for injured employees by 2019. It would also require insurance prior authorization for any drug not on an employer’s formulary.
  • Massachusetts: As of February, Massachusetts has a pending waiver that would allow adoption of a closed formulary for Medicare patients statewide. What is horrifying is they wish to restrict their formulary to one drug per class of medications. (Think one brand of basal insulin and one brand of rapid insulin. One brand of test strips. One brand of cholesterol drugs.)
  • Arizona: As of December 2017, Arizona’s state Medicaid Agency requested a waiver from the Centers for Medicare & Medicaid Services that proposes implementation of a closed formulary.
  • Pennsylvania: S.B. 936 was introduced in February 2018 and would require a closed formulary for the state’s Workers Compensation program.
  • Florida and Louisiana are also considering implementing closed formularies as well, mainly due to increasing statewide pressure to limit opioid prescriptions.

What is being done to fight closed formularies?

There has been public pushback across the country to stop states from implementing closed formularies. California is the best example of the effectiveness media campaigns can have on state legislation or requests for Medicare waivers. The state has promoted multiple periods of public comments and a highly structured stakeholder feedback event, resulting in changes to the proposal and delay of implementation.

If you are in one of the states mentioned above, where they’re trying to or considering putting a closed formulary in effect, make your voice heard! Contact your state delegates (click here to find your state delegates’ contact information) and tell them how harmful closed formularies can be for their citizens!

 

A part of the FDA building that has the FDA sign outside of it.

How the FDA Drug Approval Process Works

The FDA Drug Approval Process

The FDA Center for Drug Evaluation and Research (CDER) is the watchdog for potential medications seeking approval for use in the United States. In order for CDER to begin evaluating a drug, pharmaceutical companies must first do extensive testing and document the results.

Those results are sent in to the CDER, who assigns a team of doctors, chemists, pharmacologists, and other scientists to review the evidence. From initial formulating to FDA approval, most drugs take around 10 years to make it to the market. This may seem unnecessarily long, but the result is that only the safest drugs make it to the pharmacy.

Phases of Drug Development

picture of clear test tubesPhase I: Discovery & Development

Discovery involves researchers finding new possibilities for medication through testing molecular compounds, noting unexpected effects from existing treatments, or the creation of new technology that allows novel ways of targeting medical products to sites in the body. Drug development occurs after researchers identify potential compounds for experiments.

Studies are conducted on appropriate dosage; methods for administration; side effects and how they may vary within different demographic groups; how the drug is absorbed, metabolized, and excreted; drug interactions, and how effective it is compared with similar compounds.

Phase II: Preclinical Research

Once researchers have examined the possibilities a new drug may contain, they must do preliminary research to determine its potential for harm (toxicity). This is categorized as preclinical research and can be one of two types: in vitro or in vivo.

In vitro refers to experimenting within a controlled environment outside of a living organism, while in vivo means the experiment occurs in a living organism. Both kinds of preclinical research must follow regulated laboratory practices, known as Good Laboratory Practices (GLP), which outline basic requirements for researchers, facilities, equipment, etc.

Preclinical studies are smaller than most clinical trials, but they must provide detailed evidence about appropriate dosing and toxicity levels. If researchers review the findings and determine it is safe to test in humans, drug development moves on to Phase III.

Phase III: Clinical Research

After the safety of a drug is determined, researchers must examine the ways in which drugs interact with the human body. Clinical research involves trials of the drug on people, and it is one of the most involved stages in the drug development and approval process. Clinical trials must answer specific questions and follow a protocol determined by the drug researcher or manufacturer. To design a study, researchers must determine its length and scope, as well as who can participate and how the data will be collected and analyzed.

There are four sub-phases of clinical trials:

  • Phase 1 involves 20 – 100 study participants and lasts several months. This phase is used to determine the safety and dosage of the drug, and about 70% of these drugs move on to the next clinical research phase.
  • Phase 2 involves up to several hundred people, who must have the disease or condition the drug supposes to treat. This phase can last from a few months to two years, and its purpose is to monitor the efficacy of the drug, as well as note side effects that may occur. Only around 30% of these drugs move on to the next clinical research phase.
  • Phase 3 involves 300 – 3000 volunteers and can last up to four years. It is used to continue monitoring the efficacy of the drug, as well as exploring any longer-term adverse reactions. About 25% to 30% of these drugs move on to the last phase of clinical research.
  • Phase 4 involves several thousands of volunteers who have the disease or condition and continues to monitor safety and efficacy. If a drug passes this phase, it goes on to FDA review.

Pills flowing out of a tipped blue plastic bottlePhase IV: FDA Review

Once the pharmaceutical company can prove (through preclinical research and clinical trials) that a drug is safe and is effective in treating a condition, they can file an application to allow marketing of the drug. The application contains clinical results, labeling information, safety information, drug abuse potential, patient information, and directions for use.

The FDA review team ensures that each application is complete, and then takes the next 6 – 10 months to make a decision. The application is reviewed, as well as the clinical study sites. Often, there are issues that must be resolved before approval; the review team may request further data before they make a final decision. If the FDA review team greenlights the drug, they work with the applicant to develop prescribing information and then move on to the next phase.

Phase V: FDA Post-Market Safety Monitoring

Although researchers and applicants must work for many months to determine the safety of a potential drug, there are still issues that may arise only after the drug is on the market.

The last phase of drug approval is an ongoing one while the drug is on the marketplace. If a developer wants to change anything about the drug formulation or approve it for a new use, they must apply with the FDA. The FDA also frequently reviews the drug’s advertising and its manufacturing facility to make sure everything involved in its creation and marketing is in compliance with regulations.

New drugs are protected by patents when they are approved for marketing, and generic drugs can only be manufactured once the patent expires. Generics must contain the same dosage form, strength, safety, quality, and intended use.

Will It Always Take This Long?

The FDA approval process can be long, tenuous, and frustrating, especially for patients waiting on new or generic drugs to hit the market. Although the intention of the process is to ensure patient safety and drug effectiveness, there are some elements that may prove unnecessary and can be expedited under critical circumstances. The FDA has developed four methods to speed up the approval process for drugs designated as such.

  • Fast Track: this process is designed to speed up development and expedite the review of drugs that treat serious conditions and “fill an unmet medical need”.
  • Breakthrough Therapy: this process expedites drugs that are found to be substantially more effective for a certain condition than others on the market.
  • Accelerated Approval: this process is for drugs that fill an unmet medical need and have evidence of potential clinical benefit (although they don’t yet prove clinical benefit).
  • Priority Review: this designation means the FDA has a goal of making a decision on a drug application within six months.

For more information:

U.S. Food & Drug Administration Drug Approval Process

Drugs, Devices, and the FDA: An Overview of Approval Processes for Drugs

Development and Approval Process (Drugs)

 

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