Continued activity this year in Washington, D.C. will keep health care interests and especially drug manufacturers busy as they work to understand and implement provisions of the Inflation Reduction Act (IRA), which features provisions to cut out-of-pocket costs for prescription drugs in Medicare and determine what the government also pays.
On September 7, Avalere Health convened its experts for an hour-long webinar, “Preparing for Legislative Change and Connecting Equity and Outcomes,” which examined what IRA implementation would look like up close. The webinar covered other recent actions affecting drug sponsors and healthcare providers, such as the announcement of the Enhancement Oncology Model (EOM).
Highlights of the IRA: Changes in Medicare Negotiations, Inflation Deductions, and a Part D Redesign
The IRA, signed on August 16, will be implemented over a 14-month period.
Matt Kazan, MD, said, “Policy making doesn’t stop now that Congress has acted. There are a lot of details in this law now that have yet to be decided. And that’s in CMS and HHS court to find out.”
Kazan said CMS and HHS would undertake the direction of the program — this process gets things moving fast and is both faster and harder to influence than the normal rules suspension process, but also harder to track.. HHS may hire up to 100 new employees, he said , which can shape how policy works.
The IRA has been very specific in some areas but vague in others, said Ryan Orgo, managing director of health policy. Urgo said areas that will need clarification include:
- Implementation of the Maximum Fair Price (MFP) associated with Medicare’s Drug Pricing Negotiation Policy;
- What will the exchange of information between HHS and drug manufacturers look like in the negotiations;
- How will cost-sharing with patients work for vaccines and insulin caps; and the “settlement” policy in Part D, which refers to a provision that would allow certain beneficiaries to pay cost-sharing in equal amounts throughout the year rather than higher overall amounts.
Kazan and Urgo also talked about the negotiation process introduced in the IRA, which requires companies to negotiate drug prices with HHS for the first time. Kazan said negotiations for the first year would begin in 13 months. He said all companies with products that could be selected for negotiations should consider a contracting and re-offering strategy with Part D plans.
“The law states that if you are a select drug, you must be covered by a Part D plan. But the law is silent about discount arrangements, use, forum management, etc., so thinking about how Part D plans interact with this policy is no less The importance of thinking about the negotiation process itself is for the manufacturer,” Kazan said.
Urgo referred to the MFP discount, which was excluded from average manufacturer price (AMP) calculations but included in Medicaid Best Price, which would lead to changes in Medicaid and 340B discount exposure.
“The legislative text appears to say that an MFP antagonist will have an iterative and inhibitory effect on [average sales price] and ASP accounts. This will require a complete rethink of how Part B drug manufacturers think about their contracting strategy and their interaction with providers.
Kazan highlighted Congress’ belated decision to remove trade volume from what is being paid for the inflation deduction, which he said changes the financial obligations manufacturers have to pay and also “changes the dynamics in the manufacturer’s thinking about future pricing decisions and the weight” of trade volume against the volume of sponsorship. medical care as part of this account.”
Orgo indicated that the inflation adjustment period will start earlier than the specified period. “Manufacturers will know what their target price should be, but they will not have much time before that viable period actually begins. So, to the extent that pricing strategy and price increases are usually considered months in advance, this process will likely need to be truncate a little.”
The Medicare Part D redesign is likely to begin in earnest in 2025, but some changes will be on the table by 2024, including a 5% cap for beneficiaries and changes to low-income benefit eligibility.
“There will be a lot of practical benefits associated with a Part D redesign when it comes to this new cap and settlement policy. So, we really can’t overlook the affordability benefits for patients. But that will be at the manufacturers expense when it comes to negotiations with sponsors. plan,” Urgo said.
He said payment and access teams should work together to start thinking about what realistic evidence exists for which products to negotiate and what kind of new purchase agreements might be needed to keep providers complete. Kazan said business units should stay informed of CMS and HHS activities and decisions to keep pace with decisions, and public affairs offices should help translate negotiation information for stakeholders who can influence upcoming decisions.
Preparing to roll out EOM
The oncology care model, the successor to the Oncology Care Model (OCM), will be introduced on July 1, 2023. According to Blair Burnett, a consultant at Avalere Health, this model will look at cancer care more comprehensively but still within the total. The cost of the care model approach.
One of the big changes in this new model is that there will be a reduction in the types of cancer that are included, with EOM covering only 7 of the 21 cancers that the OCM did. Cancers covered include breast, lymphoma, small intestine/colorectal, prostate, and chronic leukemia. “Despite the decrease in the types of cancers included, the seven involved in EOM would account for nearly half, about 48%, of episodes in OCM,” Burnett said.
Monthly Enhanced Oncology Services (MEOS) payments, which are intended to support larger care transformation activities, were reduced from $160 per beneficiary per month under OCM to $70 per beneficiary per month under EOM. However, practices will receive $100 per month when they treat “dually eligible” patients, meaning they receive both Medicare and Medicaid. There are two practice redesign risk models, and patient-reported results electronically will be mandatory in year 3.
Maddie Davidson, a consultant at Avalere Health, said many participants are expected to be motivated to switch to EOM due to systemic changes, ongoing efforts, and a comprehensive transition toward value-based care and model timing. She explained that the EOM payment methodology has been modified from OCM to make pricing more accurate and more achievable because the price will be determined using 7 individual cancer regression models compared to just 1 in OCM. Certain groups associated with diagnosis were also excluded from the calculations, which might appeal to hospital-based practices.
Burnett said that Avalere recommends that all life sciences companies and manufacturers that will be involved in these changes “communicate with their priority accounts to understand how these necessary and systematic modifications that practices are recommending and studying for engagement and how this will support them or not and how those practices interact with external stakeholders.”
The new EOM will address equitable cancer care initially by working with the Cancer Moonshot Initiative to fill in the gaps and address cancer disparities that have worsened with the COVID-19 pandemic. Implementation of patient-reported results and examination of health resources are the two ways in which the EOM hopes to bridge health disparities.
Addressing and reducing disparities in health care
Companies are beginning to look to address inequalities in health care and health equity. But the first step to doing this is often the hardest at first.
All businesses need to start with data, said Brigitte Key Bavour, associate director. “There are many ways that stakeholders can leverage data to address health equity challenges affecting their own patient communities and use the data to develop solutions for positive outcomes,” she said.
Making sure that the algorithms that collect data are not biased and that assigning that data to a specific interest category is just one way companies can begin to address health equity.
Sarah Allwardt, senior vice president of advisory services, agreed, saying that real-world data should always be where companies start, and take it in context. She also spoke about how the patient’s perspectives have become more valuable in addressing these issues. Patients and caregivers can give their perspective after collecting data to truly understand patients’ wishes and the results they want from their treatments.
Combining a patient perspective and data can help companies understand some of the actionable next steps and future strategies for closure identified through these perspectives.