The United States Department of Justice Antitrust Division announced on October 10, 2018, that it was conditionally approving the CVS/Aetna merger, a $69 billion transaction that combines the nation’s largest retail pharmacy chain and the nation’s third largest health insurer. The deal, which was announced late last year, has been under review by the Antitrust Division (and state regulators) since that time. The approval is contingent upon the sale of Aetna’s Medicare Part D Individual Prescription Drug business to WellCare, which Aetna recently announced it was prepared to do to gain regulatory approval. Accordingly, while some additional state approvals are still required, the deal now appears poised to close before the end of the year.
Two pieces of related legislation that would prohibit so called “gag clauses” in contracts between pharmacists and health plans and pharmacy benefit managers (PBM’s) have been passed by both the Senate and the House. The legislation prohibits any restrictions on the ability of pharmacists to alert consumers to situations where it may be less expensive for them to pay for prescription drugs out-of-pocket, rather than through their insurance benefits. The legislation received bipartisan support in both the Senate and the House, and is expected to be signed into law by the President (in September, President Trump tweeted his support for the legislation).
While the two bills apply to different insurance products, the provisions of both bills are largely the same. S. 2553, the “Know the Lowest Price Act of 2018,” prohibits contractual provisions that forbid a pharmacist from disclosing pricing information to enrollees with respect to Medicare Advantage and Medicare Part D drug plans, while S. 2554, the “Patient Right to Know Drug Prices Act,” eliminates such provisions in employee-sponsored and individual health insurance plans. By eliminating these restrictions, the legislation is designed to permit pharmacists to alert consumers that, on occasion, it may be less expensive for them to purchase drugs out-of-pocket, rather than through their insurance benefits. Notably, S. 2554 also amends the Medicare Prescription Drug, Improvement and Modernization Act of 2003 to require the reporting to the Federal Trade Commission of patent settlements between the manufacturers of biologics and biosimilar drugs (currently such reporting only applies to settlements between generic and branded pharmaceutical companies). Continue Reading
In a memorandum issued by the Centers for Medicare and Medicaid Management (“CMS”) on August 29, 2018, the federal government outlined new ‘flexibility’ and tools for Part D plans to “expand choices and lower drug prices for patients.” Beginning in 2020, Part D plans will be able to utilize what is called ‘indication-based formulary design’ to change their drug formularies to allow different drugs to be included for different indications. The theory behind this shift in policy is that it will allow Part D plans to negotiate more freely for lower drug prices. The theory also posits that such actions will provide Part D beneficiaries with more drug choices in a formulary.
At the present time, if a Part D plan includes a drug in a formulary, the Part D plan must provide coverage for all FDA-approved indications for the drug, even if another medication may be more appropriate for a certain diagnosis. The end result, according to the federal government, is that the present policy disincentivizes Part D plans from including more medications on a formulary, and thus, limits the Part D plans’ negotiating power. Continue Reading
On September 17, the United States Department of Justice (DOJ) Antitrust Division issued a “closing statement” in which it announced that it was closing its investigation into Cigna’s proposed acquisition of Express Scripts, a transaction valued at $67 billion. The announcement states that “After a thorough review of the proposed transaction, the Antitrust Division has determined that the combination of Cigna, a health insurance company, and ESI, a pharmacy benefits management (“PBM”) company, is unlikely to result in harm to competition or consumers.” Notably, the announcement brings to an end a six-month investigation by the Antitrust Division, during which it reportedly reviewed over two million documents received from the merging parties and interviewed over one hundred industry participants. Continue Reading
In the Matter of Your Therapy Source, LLC – is the most recent example of federal antitrust enforcers’ increasing interest in curtailing anticompetitive conduct in employee markets, which was first announced when the Federal Trade Commission (FTC) and the Department of Justice (DOJ) issued guidance on the subject in late 2016. See Antitrust Guidance For Human Resource Professionals (available here). On July 31, the FTC announced that it had reached a settlement with a Texas therapist staffing company that the FTC alleged had agreed with a rival staffing company to reduce the compensation paid to their therapist employees.
In the Therapy Source matter, the FTC accused Sheri Yabray, the owner and CEO of Therapy Source, a Dallas therapist staffing company, of conspiring with Neeraj Jindal, the owner of a rival company, to reduce the rates paid to their physical therapists and physical therapist assistants. Specifically, the FTC Complaint alleges that, in response to a reduction in the fees that the staffing companies were receiving from insurers, Mr. Jindal and Ms. Yabray sought to reduce the rates paid to their therapist employees. After Mr. Jindal shared his proposed new rate schedule with Ms. Yabray in a text message, she allegedly responded by texting “Ok, we are going to lower [physical therapist rates] to your numbers.” The Complaint further alleges that Ms. Yabray subsequently sent text messages to other therapist staffing companies in the Dallas/Fort Worth area encouraging them to join in the agreement as well. Continue Reading
It’s not just pile drivers, combines, and frozen fish. Much of the news coverage has discussed how industrial and agricultural products are subject to new Trump administration tariffs on goods imported from China. However, the list of Chinese products subject to the new tariffs also includes goods more familiar to healthcare providers: items like pacemakers, rubber medical gloves, MRI and CT machines, and sterilizers.
Since April 2018, the United States Trade Representative (USTR) has announced three lists of Chinese products that will be subject to 25% tariffs. Together, the lists cover $250 billion of imports from China. Tariffs on the first list of goods are already in effect, and imposition of tariffs on the second and third lists is in progress.
Under the direction of President Trump, USTR has the power to impose trade sanctions on foreign countries under section 301 of the Trade Act of 1974, codified at U.S. Code title 19, section 2411. The tariffs are based on what the USTR has determined are discriminatory trade practices by China, including forced transfer of American intellectual property to Chinese firms and stealing of American trade secrets through attacks on companies’ computer networks. Continue Reading
The leadership of the House Energy & Commerce Committee has called upon the Federal Trade Commission to undertake a retrospective review of past mergers involving pharmacy benefit managers (PBMs). Specifically, in a July 27 letter to FTC Chairman Joseph Simons, House Commerce Committee Chairman Greg Walden (R-OR) requested that the FTC examine “(1) how these mergers have affected downstream prices for consumers and (2) whether these mergers have helped PBMs save plan sponsors money.”
The Commerce Committee’s request follows a February 14 hearing on the effects of consolidation in the healthcare industry generally, in which several witnesses testified that the competitive impact of several large mergers in the PBM industry over the last decade (which ultimately created what are today Caremark, Express Scripts and Optum Rx) were somewhat unclear. The letter cites a 2016 report that concluded that PBMs help plan sponsors generate savings by, among other things, reducing waste, negotiating discounts and encouraging the use of generic drugs. However, the letter also notes that other reports suggest that, in some circumstances, consolidation among PBMs may have led to an increase in drug costs and increased co-pays for insureds. Given these opposing views, several witnesses, including Professor Leemore Dafny, who previously served as the Deputy Director for Healthcare and Antitrust in the FTC’s Bureau of Economics, expressly suggested that a retrospective review of these mergers by the FTC would likely be beneficial. Continue Reading
In December of 2017, CVS Health and Aetna announced their intention to merge. The transaction, if approved by regulators, would combine the country’s second largest pharmacy benefit manager (PBM), Caremark – a CVS subsidiary – and the nation’s third largest commercial health insurer, Aetna, and has been valued at $69 billion. Since the announcement, federal and state regulators have been investigating whether this “vertical merger” raises any significant antitrust concerns, and a hearing at the federal level – before a United States Judiciary Committee subcommittee – was held in late February. More recently, a good deal of activity has started to occur at the state level.
Specifically, on June 19, California Insurance Commissioner Dave Jones held a lengthy hearing on the deal, inviting over ten witnesses to appear and express their views on the deal. Commissioner Jones heard from representatives from the merging parties, academia, various provider groups (including the AMA and the California Medical Association), and consumers (including Consumers Union and Consumer Watchdog) regarding their views of the proposed deal. Continue Reading
On July 9, 2018, President Trump announced his intention to nominate D.C. Circuit Court Judge Brett Kavanaugh to replace retiring Justice Anthony Kennedy on the Supreme Court. Since the announcement, there has been considerable discussion about what Judge Kavanaugh’s views are on several “hot button” issues, including free speech, religious-rights and abortion, and how Judge Kavanaugh might influence the law on those subjects if confirmed. Less attention has focused – at least so far – on Judge Kavanaugh’s healthcare-related decisions, notwithstanding that he has authored several high-profile decisions in that area. If confirmed, these opinions may well provide a window into Judge Kavanaugh’s thinking on several high-profile antitrust issues in healthcare, including the proposed mergers between CVS and Aetna and Express Scripts and Cigna. Continue Reading
The Florida legislature passed HB 21, which imposes a number of new requirements on prescribers and pharmacists regarding controlled substance prescribing and dispensing. Part of the law requires pharmacists to verify the identity of the person named on the prescription. These requirements do not apply in an institutional setting or to a long-term care facility, including assisted living facilities or in-patient hospitals.
The following steps are required to satisfy the identification requirements when dispensing controlled substance prescriptions in Florida.
- If the patient is known to the pharmacist, then verifying a government issued photo ID is unnecessary;
- If the patient is not known, the pharmacist must:
- Have the patient present valid government issued photographic identification or other verification of his or her identity of one of the types of identification set forth in 8 C.F.R. s. 274a.2(b)(1)(v)(A) and (B) – this is a detailed list of ID types that can be used; or
- If the patient does not have proper ID, verify the validity of the prescription and identity of the patient with the prescriber or his or her agent; or
- For prescriptions billed through insurance, the pharmacist may query the system to determine health plan eligibility through a real-time inquiry or adjudication system.
Click here to view a graphical description of the ID process.