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Newsletter

Drug Pricing Digest

December 12, 2022
Latham’s Government Price Reporting Team covers general developments, the Medicaid Drug Rebate Program, the 340B Drug Pricing Program, Medicare Part B, and state law developments.

Inflation Reduction Act Implementation

On Dec. 1, 2022, the Centers for Medicare & Medicaid Services (CMS) distributed an invitation addressed to “All Drug Manufacturers” announcing that CMS “will host monthly one-hour calls on the implementation of the Medicare provisions” of the Inflation Reduction Act (IRA). The first call is scheduled for Dec. 13, 2022.Pink Sheet. InsideHealthPolicy. Politico Pro.

President Biden continues to focus on the IRA, with a spokesperson stating that “one of the biggest priorities for us right now is the change to the Part D benefits so that seniors will have a $2,000 cap on their spending at the pharmacy.”Bloomberg Law. 

To learn more about the IRA’s key provisions regarding the pharmaceutical industry, please see this Latham & Watkins Client Alert. It provides a roadmap to the legislation that presents the topics in a thoughtful order, while providing citations to the IRA for easy reference to the legislative text.

Health Reform and Midterm Results

Republicans are expected to use their House majority to initiate oversight of CMS, including its implementation of the IRA. Separately, some members from both sides of the aisle appear to share a renewed focus on the 340B program. Sources: Pink Sheet, Politico Pro, 340B Report

A Senate bill that aims to limit the cost of insulin for beneficiaries with private insurance is facing an unlikely path to passage in the Senate, which is scheduled to remain in session only until Dec. 22, 2022. Source: Bloomberg Law

Medicaid Drug Rebate Program (MDRP)

No developments to report.

340B Program

HRSA Publishes Proposed Administrative Dispute Resolution Proposed Rule

On Nov. 30, 2022, the Health Resources and Services Administration (HRSA) released a proposed 340B Administrative Dispute Resolution (ADR) rule. Comments are due on Jan. 30, 2023.

The proposed rule would replace the current ADR final rule, which became effective on Jan. 21, 2021.

Key differences between the proposed and current rule include the following:

  • The 2020 final rule established that the 340B ADR board must consist of an equal number of members from HRSA, CMS, and the Health and Human Services (HHS) Office of General Counsel (OGC). The proposed rule would make HRSA’s Office of Pharmacy Affairs (OPA) the exclusive source of panel members.
  • The proposed rule would no longer require ADR proceedings to be governed by the Federal Rules of Evidence (FRE) and Civil Procedure (FRCP).
  • The current minimum relief threshold of $25,000 for claims would be eliminated.

Sources: InsideHealthPolicy, Pink Sheet, Bloomberg Law, 340B Report (link, link)

A coalition of health centers that had challenged the existing ADR regulation in court dropped its suit in response to the proposed rule. The case is Nat’l Ass’n of Community Health Centers v. Azar, et al., No. 1:20-cv-03032 (D.D.C.). The litigation was discussed in issue No. 1 of this digest. A related case brought by an association of Ryan White clinics remains ongoing. Sources: Bloomberg Law, 340B Report

340B Reform Initiatives

A recent proposal to create a separate program for non-hospital covered entities, dubbed the 340C program, continues to be a focus of discussion. The program was proposed by the Advocates for Community Health (ACH), a newly formed group composed of Federally Qualified Health Centers. Source: 340B Report (link, link, link)

Two recent studies analyzed the impact of the 340B program on drug pricing. One study, commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA), found that “on average, biosimilar utilization at 340B outpatient hospitals is lower than at non-340B outpatient hospitals” during the period studied. The second study noted that research “suggests that 340B is one of many factors putting upward pressure on launch prices.” Source: 340B Report (link, link)

Medicare Part B

No developments to report.

State Law Developments

Colorado Pursues Drug Importation

Colorado is pursuing its aim to import prescription drugs from Canada. The state submitted the list of drugs it seeks to import to the federal government. The importation mechanism and related litigation is discussed in issues No. 3 and No. 29 of this digest. Source: The Colorado Sun

Endnotes

    This publication is produced by Latham & Watkins as a news reporting service to clients and other friends. The information contained in this publication should not be construed as legal advice. Should further analysis or explanation of the subject matter be required, please contact the lawyer with whom you normally consult. The invitation to contact is not a solicitation for legal work under the laws of any jurisdiction in which Latham lawyers are not authorized to practice. See our Attorney Advertising and Terms of Use.
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