Possible unintended consequences for provider-administered drugs
CSRO asked for a meeting with the Colorado PDAB after they announced their list of drugs for which UPLs would be set. We spoke with the PDAB in October, hoping to point out some of the unintended consequences that needed to be considered. One of the big questions we have revolves around the “buy and bill” provider-administered drugs. According to the language of the Colorado statute, providers would not be paid any more than the UPL for a drug administered in their office. CSRO is concerned that this would leave providers uncompensated for the service of administering the drug and associated overhead. This is not to mention that providers may not be able to find a group purchasing organization that would even sell the drug at the UPL, much less a lower price than the UPL. And even if a provider could buy it at the UPL, that would mean there would be no margin to cover the overhead for their infusion suite. Interestingly, while Colorado’s rules for the UPL state that pharmacies can be paid an additional reasonable dispensing fee beyond the UPL, no such allowance is made for providers administering one of these medications. In fact, the Colorado PDAB specifically indicated that the goal of the state’s UPL methodology was to ensure that there was no “delta” between what is paid for the drug by the provider and what is reimbursed to a provider for the drug by the payer. This may cause some providers to be unable to “afford” to administer those drugs with UPLs, which ultimately reduces access for residents of Colorado to that particular medication. This is the exact opposite of what the PDAB is supposed to accomplish.
There are still many questions. What impact will UPLs have on a medication’s placement on a formulary? As we know, preferred formulary placement is often given to drugs with the highest price concession from the manufacturers. Will setting a UPL on payment for specialty pharmacy drugs to pharmacy benefit manager-owned specialty pharmacies affect that drug’s ability to be on the formulary? And again, how will the PDAB resolve the issue of compensating the provider for overhead costs associated with administering the medication?
Even more confusing questions remain. How will the UPL be enforced when a “purchase” or “sale” of the drug is made by an out-of-state entity somewhere along the supply chain? When ultimately the drug is purchased and delivered to a Colorado consumer by a Colorado provider/pharmacy, there are multiple points of the supply chain that may be outside of the jurisdiction of Colorado to enforce the UPL. This would create a misalignment in pricing among various supply chain entities.
While the sentiment behind creating PDABs is noble, it may end up having the unintended consequence of patients losing access to these drugs because of the perverse incentives involved in formulary construction or providers’ inability to afford to offer provider-administered drugs with UPLs.
Remember, expensive specialty pharmacy medications are already discounted greatly by manufacturers, often more than 50% to pharmacy benefit managers; and yet those cost savings are not passed on to the patients. Also, there is no oversight of 340B hospital contracted pharmacies to make sure that they pass those savings on to needy patients. Perhaps PDABs should address those issues, as well, if patient access to expensive medications is the goal.
Clearly, there are no easy answers. But with so many variables in the drug supply chain affecting patient access, concentrating only on one aspect may end up causing more harm than good. If your state is thinking of passing a PDAB, please let your legislators know that there are issues with this type of legislation that perhaps should be worked out before the bill is passed.
Dr. Feldman is a rheumatologist in private practice with The Rheumatology Group in New Orleans. She is the CSRO’s Vice President of Advocacy and Government Affairs and its immediate Past President, as well as past chair of the Alliance for Safe Biologic Medicines and a past member of the American College of Rheumatology insurance subcommittee. You can reach her at rhnews@mdedge.com.