A robust regulatory outlook brings fresh challenges and innovative thinking at MDRP 2023

A robust regulatory outlook brings fresh challenges and innovative thinking at MDRP 2023

Attendees converging on Informa’s Medicaid Drug Rebate Program Summit in Chicago this September were welcomed with a long list of drug pricing trends and government-led changes to dissect and discuss. While the industry-shaping drug pricing provisions of the Inflation Reduction Act (IRA) were top of mind for all attendees, taking center stage was a broader discussion that suggested the government was taking a more assertive posture to impact drug pricing.  

Amid the packed schedule of sessions and panel conversations, attendees focused on:

  • Gaining an understanding of the business impact of the latest laws and regulations.
  • Exploring how manufacturers can operationalize drug pricing changes.
  • Anticipating what additional challenges may lie ahead and the proactive steps manufacturers and covered entities can take today to address them.

Drug pricing in the national spotlight

Chairperson Odalys Caprisecca, Vice President, Managed Markets Finance at Novartis, summed up the current landscape succinctly in her opening remarks: “Pricing is a hot topic.” In many more sessions and informal conversations, her statement proved true.  

In an insightful look at the IRA, session speaker Alice Valder Curran, Partner at Hogan Lovells, remarked there was national political focus on drug pricing that went all the way to the top, suggesting that President Biden plans to make drug pricing a central issue in his 2024 presidential campaign. One slide shared by Valder Curran highlighted that the IRA’s new maximum fair prices would be announced roughly two months before Election Day in 2024.

A look down the road from Valder Curran invited manufacturers to “mark their calendars” for all the key Medicare Drug Negotiation Program dates, including the rapidly approaching October 1, 2023, deadline for manufacturers of the Part D list-selected drugs to sign a contract to participate in the negotiation program. 

The perspectives of Caprisecca and Valder Curran that drug pricing had become a top administration priority was underscored by many other speakers who shared the view that government agencies across the board were taking a more robust posture on drug pricing. 

In the State of the Industry report, Matt Salo, Founder and CEO of Salo Health Strategies, described a “firehose of regulatory changes” coming from the administration. Later, in an attorney panel, Chris Schott, Partner at Latham & Watkins, remarked that Centers for Medicare & Medicaid Services (CMS) was “getting more assertive,” specifically regarding communications surrounding a proposed new rule around drug classification and pricing.

Operationalizing new regulations

While speakers and panelists spent time analyzing perceived changes in tone and action from the entities that govern drug pricing, many others focused on how new legislation and rules would specifically impact manufacturers’ business operations.

The IRA was front and center for multiple workshop sessions that sought to put the sometimes-ambiguous language of the IRA’s drug pricing provisions into real-world terms. The “Government Program Financial Liabilities Summary” got into the nitty-gritty of rebates and chargebacks for government programs. A critical takeaway from this session was to avoid making uninformed decisions on drug prices because, in some cases, setting a higher price could result in a lower profit once all rebates and discounts are accounted for. 

Other sessions included examining the downstream effects of the IRA on other markets and the uncertainty surrounding innovation and R&D that could result from the IRA’s implementation. One notable downstream impact discussed: how price competition works when one drug is subject to a maximum fair price and competitors are not.   

The Kalderos session “Trends in Revenue Leakage and Strategic Considerations for Mitigation” zeroed in on the IRA-related challenge of modifiers on dispensing records. Kalderos’ Micah Litow and Vishali Amin revealed “the truth about modifiers” and highlighted a real-world situation where modifier usage was challenged in a state dispute but was confirmed by covered entities after an outreach effort led by Kalderos. The session made clear that while the inadequacy of modifiers is not only a cause of duplicate discounts from the 340B program, there also exists the risk of triplicate and even quadruplicate discounts from commercial contracts and the IRA’s maximum fair price.

A “proactive” approach

With so many government pricing challenges facing manufacturers, states, covered entities and other stakeholders, MDRP Summit also put forth a positive message to rally around collaboration and innovative solutions. “We are all in this together” was the number one takeaway Caprisecca wanted to share with attendees. 

In an external counsel roundtable, Valder Curran reminded government pricing experts in the room to “stop being reactive” and advised attendees they should be “proactively engaging” to address any and all operational impacts from new regulations. 

The spirit of collaboration was echoed in a panel on understanding covered entity operations and 340B good faith inquiries. Fern Paul-Aviles, Assistant Vice President of Pharmacy at Atrium Health, made it known that communication was key, saying, “We appreciate it when a manufacturer brings something to our attention.” 

Solutions built around technology also stood out. On the topic of managing Medicaid claims and preventing duplicate discounts, Josephine Hawkins, Associate Director, Medicaid at AstraZeneca, said her biggest piece of advice to manufacturers was to “get help” from technology to reduce manual efforts. Hawkins emphasized that automating processes wherever possible was a best practice she encouraged others in government pricing to follow. 

Kalderos was, as always, honored to lend our voice to MDRP Summit’s detailed and thoughtful discussions on drug pricing trends and operations. To learn more about how manufacturers are reducing their risks from government pricing programs with Kalderos technology, check out our recently shared series of impact studies

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Article published
October 12, 2023