Frier Levitt has tools to help pharmaceutical and biotech companies control the narrative on drug pricing, understand and follow the maze of existing and newly enacted state and federal laws, and deal with aggressive Pharmacy Benefit Managers (PBMs).
The total healthcare spending per person in the United States has grown dramatically, reaching 18% of our national economy. The percentage of the healthcare spend allocated to drugs—and in particular specialty drugs — has grown at an even steeper rate. Pharmaceutical manufacturers have been thrust into the spotlight, often for the wrong reasons, as other stakeholders have controlled the narrative. The industry may have misplayed an opportunity to explain the role of PBMs in forcing pharmaceutical companies to increase the list price of drugs to pay PBMs outrageous drug rebates to “buy” formulary placement. By not representing PBMs, Frier Levitt is unrestricted in helping pharmaceutical manufacturers address the full panoply of supply chain, PBM, and drug pricing issues.
Meanwhile, pharmaceutical manufacturers face an increasingly-complex distribution model, coupled with increasingly-complex regulatory requirements and scrutiny. Industry trends towards greater integration between pharmaceutical manufacturers and pharmacy providers can provide great opportunity, but also great risks. Frier Levitt can navigate these complex regulatory frameworks and find solutions for pharmaceutical manufacturers.
Pharmacy Benefit Manager (PBM) and Regulatory Scrutiny of Relationships Between Drug Manufacturers and Pharmacies
PBMs have broadened their scrutiny of pharmacy-manufacturer relationships. PBMs are aggressively seeking out certain pharmacy-manufacturer relationships. Recently, PBMs have gone beyond publicly criticizing “captive” pharmacies, and have begun targeting manufacturer-sponsored HUB arrangements, removing drugs from formulary, attacking copayment assistance programs, and scrutinizing pharmacy sales from any one manufacturer. Particular focus is additionally applied to drugs that are distributed in a Limited Distribution Drug (LDD) model that excludes PBM-owned pharmacies.
As a result of these trends, drug manufacturers need to be aware of PBM trends and PBM pharmacy network requirements. In the past, PBMs have relied on technical noncompliance with contractual requirements as a pretext for network termination, while more recent actions include pressing copay accumulator programs that reverse the effectiveness of manufacturer copayment assistance programs, decreasing reimbursement to independent pharmacies on specialty and LDDs as well as DIR fee programs. Frier Levitt assists manufacturers in dealing with these complex topics.
Formulary Placement, Prior Authorization, Rebates, PBMs and the “List Price of Drugs”
Of the many weapons PBMs have in their arsenal to extract dollars from manufacturers, formulary design for Medicare Part D and commercial claims may be the most economically powerful. PBMs use formulary placement, formulary design, copay tiers and prior authorization to generate rebate revenue. Manufacturers not wanting to pay rebates, are forced to endure a copay tier that disincentives patients from buying the drug. Meanwhile, PBMs and Rebate Aggregators, which are often owned or affiliated by PBMs, pocket a majority of the rebate funds and share only a portion with the Plan Sponsors. In doing so, PBMs and Rebate Aggregators – especially in the Part D Prescription Drug Plan arena – rack up their revenue at the expense of the Plan Sponsors, patients, taxpayers, and the government. Specifically, the federal government shares a certain level of financial risk with the Part D Plan Sponsors by making subsidy payments based on an estimated cost of a plan. Therefore, PBMs, by and through egregious rebate schemes, will skew the cost analysis of the plan and the federal government subsidy payments, which will further increase the overall healthcare cost. Unfortunately, PBMs have been successful at pointing fingers to the manufacturers whenever the scrutiny over the drug price come to light.
Meanwhile, opportunities exist in the form of Value Based Contracting, whether through innovative contracting with PBMs and payors, or through joint ventures with coalitions of providers. These models provide manufacturers the ability to help steer the narrative on drug pricing, and deliver cost savings in line with higher quality and access. Frier Levitt has addressed each of these concepts with PBMs, payors and providers alike.
Patient Access and Affordability
Between copay coupons, contributions to charitable assistance programs, and cash patient programs, manufacturers utilize a variety of methods to increase patient affordability and access. But these opportunities are not without risk. Regulators and PBMs are becoming increasingly focused on the use of these programs to provide benefits to patients and the impact they have on drug prices. Several major pharmaceutical companies have settled with the Federal government and agreed to pay millions of dollars and enter into Corporate Integrity Agreements (CIAs) over payments made to independent charitable foundations. Meanwhile, through the use of copay accumulators and other tools, PBMs have equally stepped up their scrutiny over manufacturer-sponsored assistance programs. Frier Levitt assists manufacturers in complying with CIAs, and in developing compliant patient access and assistance arrangements.
Labeling and Advertising/Off-Label Promotion
It is well known that the U.S. Food and Drug Administration (FDA) has long taken the position that a medical device or drug manufacturer who promotes any unapproved uses of FDA-approved drugs/devices is in violation of the Federal Food, Drug, and Cosmetic Act (FDCA). The FDA has asserted that off-label promotion leads to misbranding of the product and circumvention of the regulatory approval process that is taken to ensure product safety and efficacy. Interestingly, it appears that FDA’s position on off-label promotion has changed somewhat in the recent past.
On June 12, 2018, the FDA issued a statement about what was portrayed as a new effort to advance medical product communications to support drug competition and value-based healthcare. According to the statement, the FDA is now approving “truthful and non-misleading” off-label promotion when directed to an audience of third-party payors. The FDA’s revised approach on this critical issue has brought positive outcomes. For example, in 2016, the FDA issued fifteen warning letters to drug and device manufacturers regarding alleged false or misleading advertising. In 2017, we saw only three such warning letters and one untitled letter.
Averse to this recent development, the pharmaceutical/medical device manufacturers should take cautionary steps when implementing the FDA’s perspective on off-label promotion in their marketing strategy. For example, FDA’s Office of Prescription Drug Promotion (OPDP) issued an untitled letter to Eisai Inc. in or around October 2018 because of statements made by the manufacturer’s representative during a luncheon where healthcare professionals attended. The letter describes the alleged off-label promotion as “especially concerning from a public health perspective,” because the representative reportedly claimed the medication was “intended for new uses for which it lacks approval, and for which the labeling does not provide adequate directions for use.”
Frier Levitt can assist with evaluating the marketing/promotional materials, campaigns and training materials, and provide label evaluation. Through such efforts, Frier Levitt can provide a blue-print to the manufacturers to maximize the market access/share while minimizing the risk of potential lawsuits.
Risk Evaluation and Mitigation Strategy Programs
The firm also guides drug manufacturers in Risk Evaluation and Mitigation Strategy (REMS) programs, including FDA Submissions and Compliance, distribution, monitoring and auditing of REMS vendors, adverse drug event tracking, Elements to Assure Safe Use (ETASU) and Medication Guides, REMS related civil and criminal litigation, PBM related REMS counseling, and preparation of REMS patents for Orange Book listing.
Manufacturers often request or require prescription data from their partners and affiliates in order to evaluate marketing efforts, patient assistance programs, adherence, patient outcomes and quality metrics. Health Insurance Portability and Accountability Act (HIPAA) restricts the transmission of data in order to protect patient privacy and security, and may impose limitations on a manufacturer’s ability to compile the data they seek. HIPAA violations may result in civil penalties and/or even criminal penalties, which may extend to the employees, including, but not limited to, sales representatives and executives. Frier Levitt can assist in developing compliant arrangements and data reports that provide manufacturers with the substance they require without placing affiliates in a position to breach their obligations pursuant to federal law.
Full line of Intellectual Property (IP) legal services to protect your business and inventions. Our team can assist with:
- Patent, Trademark and Copyright registrability opinions, preparation and prosecution before the U.S Patent & Trademark Office
- Patent Infringement and Intellectual Property disputes and litigation
- Prosecution and Advocacy before the Trademark Trial and Appeal Board
- Trade Secrets
- Patent Invalidity and Freedom-to-Operate Opinions
- Strategic Due Diligence
- Patent Portfolio Management and Valuation
- Hatch Waxman matters and ANDA certifications
- BPCIA Litigation (Biosimilar patent litigation)
- Inter Partes Patent Review before the PTABt
In addition, the stakes for Intellectual Property (IP) protection have never been higher. Our IP Litigation Practice provides a full range of litigation in the fields of patents, trade secrets, unfair competition, false advertising, copyrights and trademarks. We handle an array of IP disciplines in a broad range of technologies ranging from computer software to prescription/OTC pharmaceuticals and biosimilars. We represent market leaders, start-ups, and others in-between and develop winning strategies to protect their investments both at the bargaining table and at trial.
Contact us for additional information.