Q&A: What community practices need to know about drug pricing reform, biosimilar reimbursement, and COVID vaccinations
Q: What current policy topics should community physician practices be tracking closely?
Brad Tallamy: The extent to which drug pricing reforms are used to help pay for the proposed $3.5 trillion spending bill currently working its way through Congress, which will include expansions of Medicare, Medicaid and Affordable Care Act subsidies, climate change policies, paid family leave, and a number of other policies.
We know one of the ways Democrats intend to try to pay for a massive bill like this is through drug pricing reforms, and when you talk to the committees working on the bill, they're hoping to raise up to $500 billion in revenue just from drug savings.
However, we won't know the specifics of what will be included in the bill, even beyond healthcare, until the committees make their recommendations public in mid-September.
Q: What is the danger to specialty practices if this budget bill passes?Brad Tallamy: Reducing specialty physician practices Medicare reimbursement saves the government money. That's why our SPS customers will always be at risk, because one of the easiest ways for the government to save healthcare expenditures is to cut provider reimbursement. Unfortunately, when policymakers try to go after high drug prices, so often our customers get caught in the crossfire.
Q: In August, the Biden administration released their list of drug pricing priorities, including allowing Medicare to negotiate drug prices, capping Medicare Part D patients’ out-of-pocket costs, and accelerating the development of biosimilars and generics, etc. If one or more of those policies came to pass, how would that impact our practices?
Brad Tallamy: Importantly, an executive order is the president’s way of saying, it is my intention to do X, Y, and Z, and I am calling on my agencies to come up with a plan to implement these policies. President Biden directed the Department of Health and Human Services (HHS) to deliver a report detailing a plan to reduce drug prices, which was made public on September 9th. The report's recommendations include: allowing the federal government to negotiate drug prices under Medicare Parts B and D; tying drug rebates to inflation, and changes to the Part D benefit that lower patients' out-of-pocket costs.
The executive order and forthcoming report are political messaging, to remind everyone of the drug pricing policies the President supports, and to encourage Congress to include them in legislation.
However, whether you're talking about price negotiation, or incentivizing biosimilars, or capping out of pocket costs, all of these proposals require legislation. Medicare cannot currently negotiate drug prices with manufacturers. Congress would need to pass legislation eliminating or modifying the “non-interference clause” providing the Secretary the authority to negotiate drug prices. While the Biden administration can propose mandatory pilot programs to test new reimbursement policies for Part B and D, they will likely wait to see which reforms Congress might enact before pressing forward.
Q: Ultimately, where do you see drug pricing reform headed? And how is that going to potentially impact our physician practices?Brad Tallamy: The issue may never really go away, especially if Congress does not enact policies that reduce patient out-of-pocket costs which drives public anger towards drug pricing. Almost 90% of Americans favor allowing the federal government to negotiate for lower prices on medications (including 77% of Republicans, 89% of Independents and 96% of Democrats) if seniors and the federal government would save money on their prescription drugs.1 The challenge for practices is the potential unintended effects of drug pricing policies – reduced reimbursement, access and innovative therapies for patients.
"Biosimilars are a proven mechanism to lower Part B drug costs and our SPS customers are leading the way by showing tremendous adoption."
Q: What other pending legislation has the potential to impact our practices?Brad Tallamy: Another major issue affecting our physician customers is the sequestration moratorium which expires at the end of the 2021. On August 11, the Senate passed a $550 billion bipartisan infrastructure bill funding the largest investment in U.S. public works in decades. The House will consider the legislation in September. Unfortunately, the bill is partially funded by extending the Medicare sequestration cuts (currently paused through the remainder of 2021 due to COVID) through FY 2031. This signals the challenges ahead as we continue our efforts to extend the sequester moratorium beyond 2021 or repeal the cuts completely.
In addition, physicians face another 4% reimbursement cut, the expiration of the Congressionally enacted 3.75% temporary physician fee schedule increase, and a statutory freeze on payment updates through 2026. All told, without intervention, cuts to physicians would total 9.75% starting January 1, 2022.
Due to the fluid situation with COVID-19, it’s hard to predict if the moratorium might be extended. Practices need to start preparing now for the very real possibility of payment cuts starting January 1, although we will be advocating aggressively to prevent the cuts from taking place.
Q: We hear a lot about biosimilars these days. Is there any pending legislation that could improve practice’s ability to get reimbursed for biosimilars?
Brad Tallamy: There’s very strong bipartisan support for legislation to increase biosimilar utilization. Some of the proposals include increasing reimbursement for biosimilars from ASP+6 to ASP+8 in Medicare Part B; waiving Medicare Part B patient cost-sharing for biosimilars; establishing Part D biosimilar specialty tiers, etc. If drug pricing policies are included in the aforementioned budget bill, some of these policies could be included. Yet, it’s unlikely standalone biosimilar legislation would advance through Congress on its own.
Biosimilars are a proven mechanism to lower Part B drug costs, and our SPS customers are leading the way by showing tremendous adoption. There’s a common myth that physicians are incentivized to prescribe more expensive drugs yet our SPS customers are proving this theory wrong. Their use of biosimilars shows a willingness to use lower-cost drugs to help patients. We continue to keep our eye on anything that could negatively affect biosimilar reimbursement.
Q: COVID-19, especially with the ongoing Delta variant, is still very much a concerning public health issue. What actions can our specialty practices take?
Brad Tallamy: Practices should be tracking what's happening with the Delta variant and vaccine distribution. There’s still a lot of uncertainty. What's going to happen this fall with COVID? Are patients or staff not going to be able to come in? What if schools get shut down again?
We’re dealing with Delta now, but what happens if there's another variant that changes the trajectory? That could have policy implications.
Our SPS customers continue to lead by example by requiring their staff to be vaccinated. Practices do have access to the COVID vaccine, so at the very least they can make sure their staff is vaccinated.
The big question is, will physician practices be able to vaccinate a greater segment of their communities? Policymakers need to need to think “outside of the box” to cast the widest possible net in terms of sites of care where people can get their COVID vaccine. AmerisourceBergen recently made headway in California, with a distribution agreement that delivers the vaccine to small physician practices.
1. KFF Health Tracking Poll - May 2021: Prescription Drug Prices Top Public’s Health Care Priorities. 3 June 2021. Accessed 7 September 2021. Available online at: https://www.kff.org/health-costs/poll-finding/kff-health-tracking-poll-may-2021/