Tiered Pharmacy Copayments for Medications, 89383-89391 [2016-29515]
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Federal Register / Vol. 81, No. 238 / Monday, December 12, 2016 / Rules and Regulations
to reincorporate the timing requirement
for cross-actions. Also, this correction
revises § 2.145(d)(1) concerning crossappeals to have consistency between
§ 2.145(d)(3) and (d)(1).
This correcting rule may be issued
without prior notice and opportunity for
comment as the corrections are
nonsubstantive and being implemented
to avoid inconsistencies and confusion
with the rule issued on October 7, 2016.
The USPTO corrects the errors as
discussed below.
In FR Doc. 2016–23092, published on
October 7, 2016 (81 FR 69950), make the
following corrections:
§ 2.123
[Corrected]
1. On page 69981, column 2, in
paragraph (a)(2) of § 2.123, the first
sentence is corrected to read
‘‘Testimony taken in a foreign country
shall be taken: by deposition upon
written questions as provided by
§ 2.124, unless the Board, upon motion
for good cause, orders that the
deposition be taken by oral
examination, or the parties so stipulate;
or by affidavit or declaration, subject to
the right of any adverse party to elect to
take and bear the expense of crossexamination by written questions of that
witness.’’
■
§ 2.124
2. On page 69982, column 3, in
paragraph (d)(1) of § 2.124:
■ i. The cross reference to ‘‘paragraph
(b)’’ is corrected to read ‘‘paragraphs
(b)(1) and (2)’’;
■ ii. The term ‘‘direct testimony’’ is
corrected to read ‘‘direct examination’’
in both instances;
■ iii. In the third sentence the phrase
‘‘or service of a testimony affidavit or
declaration,’’ is added before the phrase
‘‘any adverse party may serve cross
questions upon the party who proposes
to take the deposition’’; and
■ iv. In the sixth sentence the phrase ‘‘or
who earlier offered testimony of the
witness by affidavit or declaration’’ is
added after the phrase ‘‘any party who
served cross questions may serve recross
questions upon the party who proposes
to take the deposition’’.
3. On page 69983, column 1, in
paragraph (f) of § 2.124, the cross
reference to ‘‘§ 2.125(b)’’ is corrected to
read ‘‘§ 2.125(c)’’.
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■
[Corrected]
4. On page 69983, column 3, in
paragraph (c) of § 2.126, the cross
reference to ‘‘§ 2.125(e)’’ is corrected to
read ‘‘§ 2.125(f)’’.
■
VerDate Sep<11>2014
16:18 Dec 09, 2016
[Corrected]
5. On page 69987, column 2, in
paragraph (d)(1) of § 2.145, the last
sentence is removed and added in its
place is ‘‘In inter partes cases, the time
for filing a notice of cross-appeal expires
14 days after service of the notice of
appeal or 63 days from the date of the
decision of the Trademark Trial and
Appeal Board or the Director, whichever
is later.’’
■ 6. On page 69987, column 2, in
paragraph (d)(3) of § 2.145, this final
sentence is added ‘‘In inter partes cases,
the time for filing a cross-action expires
14 days after service of the summons
and complaint or 63 days from the date
of the decision of the Trademark Trial
and Appeal Board or the Director,
whichever is later.’’
■
Dated: December 6, 2016.
Michelle K. Lee,
Under Secretary of Commerce for Intellectual
Property and Director of the United States
Patent and Trademark Office.
[FR Doc. 2016–29728 Filed 12–9–16; 8:45 am]
BILLING CODE 3510–16–P
DEPARTMENT OF VETERANS
AFFAIRS
38 CFR Part 17
RIN 2900–AP35
[Corrected]
■
§ 2.126
§ 2.145
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Tiered Pharmacy Copayments for
Medications
Department of Veterans Affairs.
Final rule.
AGENCY:
ACTION:
The Department of Veterans
Affairs (VA) adopts as a final rule, with
changes, a proposal to amend its
regulations concerning copayments
charged to certain veterans for
medication required on an outpatient
basis to treat nonservice-connected
conditions. Prior to this final rule, VA
charged non-exempt veterans either $8
or $9 for each 30-day or less supply of
medication, and that amount may have
changed in future years. This
rulemaking replaces those rates and
establishes three classes of medications
for copayment purposes, identified as
Tier 1, Tier 2, and Tier 3. These tiers are
defined further in the rulemaking and
are distinguished in part based on
whether the medications are available
from multiple sources or a single source,
with some exceptions. Copayment
amounts are fixed and would vary
depending upon the class of medication.
The following medication copayment
amounts are applicable on the effective
date of this final rule: $5 for a 30-day
or less supply of a Tier 1 medication, $8
SUMMARY:
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89383
for a 30-day or less supply of a Tier 2
medication, and $11 for a 30-day or less
supply of a Tier 3 medication. For nonexempt veterans these copayment
amounts will result in lower out-ofpocket costs, thereby encouraging
greater adherence to taking prescribed
medications and reducing the risk of
fragmented care that results when
veterans use non-VA pharmacies to fill
their prescriptions. The proposed rule
was published on January 5, 2016 and
the public comment period closed on
March 7, 2016. We received nine
comments and respond to these
comments here.
DATES: Effective Date: This rule is
effective on February 27, 2017.
FOR FURTHER INFORMATION CONTACT:
Bridget Souza, Office of Community
Care (10D), Veterans Health
Administration, Department of Veterans
Affairs, 810 Vermont Avenue NW.,
Washington, DC 20420, (202) 382–2537.
(This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: Under 38
U.S.C. 1722A(a), VA must require
veterans to pay at least a $2 copayment
for each 30-day supply of medication
furnished on an outpatient basis for the
treatment of a non-service-connected
disability or condition, unless the
veteran is exempt from having to pay a
copayment because the veteran has a
service-connected disability rated 50
percent or more, is a former prisoner of
war, or has an annual income at or
below the maximum annual rate of VA
pension that would be payable if the
veteran were eligible for pension. VA
has the authority under 38 U.S.C.
1722A(b) to increase that copayment
amount and establish a maximum
annual copayment amount (a ‘‘cap’’)
through regulation. We have
implemented this statute in 38 CFR
17.110. Both the copayment amount for
certain priority groups, as well as an
annual cap on those copayments, are
addressed in 38 CFR 17.110(b).
On January 5, 2016, we proposed a
new medication copayment formula, in
order to address longstanding concerns
that the regulatory formula VA had been
using was not competitive with non-VA
retail copayment structures, lacked
parity, may result in decreased
medication adherence, and increased
the likelihood of fragmented care due to
price-shopping. 81 FR 196. The public
comment period closed March 7, 2016,
and we received nine comments, all of
which were generally supportive.
Several commenters expressed strong
support for lowering the annual
medication copayment amount.
However, several commenters urged VA
to make changes to different aspects of
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the proposed rule. The majority of the
comments focused on the definition of
multi-source medication. We address
those comments, and make changes to
the rulemaking as noted below.
The new regulatory formula
established by this rule focuses on the
type of medication being prescribed and
would remove the automatic escalator
provision, meaning that changes in
copayments would only occur through
subsequent rulemakings. Veterans
exempt by law from copayments under
38 U.S.C. 1722A(a)(3) continue to be
exempt. This VA rulemaking includes a
definition of ‘‘medication’’ and ‘‘multisource medication.’’ We also establish
three classes of medications for
copayment purposes: Tier 1
medications, Tier 2 medications, and
Tier 3 medications. Tiers 1 and 2
includes multi-source medications, a
term that is defined in § 17.110(b)(1)(iv).
Tier 3 includes medications that retain
patent protection and exclusivity and
are not multi-source medications.
Copayment amounts vary depending
upon the Tier in which the medication
is classified. A 30-day or less supply of
Tier 1 medications has a copayment of
$5. For Tier 2 medications, the
copayment is $8, and for Tier 3
medications, the copayment is $11. The
rule also changes the annual cap for
medication copayments, lowering the
cap to $700 for all veterans who are
required to pay medication copayments.
On September 16, 2015, VA published
a final rule maintaining, through
December 31, 2016, medication
copayment amounts at the 2014 rate for
certain priority groups ($8 for veterans
in priority groups 2–6 and $9 for
veterans in priority groups 7 and 8). See
80 FR 55544. VA anticipated at that
time that necessary information
technology (IT) structure changes would
be in place by December 31, 2016,
allowing the current rulemaking to have
an effective date of January 1, 2017.
However, those changes will not be
ready for a full roll-out until February
27, 2017. The effective date of this final
rule is February 27, 2017. VA published
a separate rulemaking that will extend
the current copayment freeze until the
effective date of the present rulemaking.
The end result is that the higher annual
copayment cap of $960 will be in effect
through February 26, 2017, and the
lower annual cap of $700 will apply the
following day. We believe it is unlikely
that a veteran will pay more than $700
in medication copayments during the
short period of time before the lower
annual cap goes into effect. However, in
the event that any veteran exceeds the
$700 cap in this final rule, before the
rule takes effect, VA will refund the
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amount in excess of the $700 cap to the
veteran.
Definition of the Term ‘‘Medication’’
In paragraph (a) of proposed section
17.110, we proposed that for the
purposes of this section, the term
‘‘medication’’ would mean prescription
and over-the-counter medications as
determined by FDA. One commenter
noted that the term ‘‘medication’’ is not
a regulatory term of art used by FDA
and FDA does not determine whether an
item is medication. The commenter
stated that the rule should instead refer
to the regulatory approval authorities for
drugs and biologics, section 505 of the
Food Drug and Cosmetic Act (FDCA) for
drugs, and section 351 of the Public
Health Service Act (PHSA) for biologics.
The commenter stated that citing these
authorities would clarify that the term
‘‘medication’’ does not include medical
supplies, nutritional items, and devices.
Section 505 of the FDCA is codified
at 21 U.S.C. 355 (New drugs) and 355–
1 (Risk evaluation and mitigation
strategies). Citing the former would
inappropriately limit the definition of
‘‘medication’’ to new drugs, and citing
the latter would address only those
instances where FDA determines that a
risk evaluation and mitigation strategy
is necessary to ensure that the benefits
of a new drug outweigh the risks of the
drug. While section 351 of the PHSA is
applicable to the approval of all
biologics, VA believes that it would be
potentially confusing to the public if the
rulemaking cited to statutory authority
related to biologics but not for drugs.
However, VA agrees with the
commenter’s concern that medical
supplies and devices are not specifically
excluded from the definition of
‘‘medication.’’ We have amended the
definition accordingly to exclude
medical supplies and devices. We also
specifically excluded oral nutritional
supplements from the definition of
‘‘medication’’ because they are exempt
from copayments. Oral nutritional
supplements are commercially prepared
nutritionally enhanced products used to
supplement the intake of individuals
who cannot meet nutrient needs by diet
alone.
Definition of ‘‘Multi-Source
Medication’’: General Comments
One commenter stated that the
definition of multi-source medication in
§ 17.110(b)(2)(A) is inappropriately
broad, misaligned with the conventional
use and understanding of the term, risks
public confusion, and poses a potential
risk to patient safety. The commenter
stated that the term is typically used to
describe only those drugs that FDA has
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determined to be therapeutically
equivalent (i.e., pharmaceutically
equivalent and bioequivalent), and that
FDA’s definition is also consistent with
Centers for Medicare and Medicaid
Services’ regulatory use of the term
‘‘multiple source’’ for purposes of the
Medicare and Medicaid programs.
Another commenter stated that the
definition of ‘‘multi-source medication’’
‘‘includes multiple categories of drugs
defined separately under the Medicaid
Drug Rebate Program in 42 U.S.C.
1396r–8(k)(7)(A) as ‘multiple source
drug,’ ‘innovator multiple source drug,’
‘non-innovator multiple source drug,’
and ‘single source drug.’’’ The
commenter asserts that VA’s proposed
definition of multi-source medication
conflicts with these statutory
definitions. Another commenter stated
that the proposed definition of multisource medication contributes to
nonuniformity in federal regulations,
noting that TRICARE regulations at 32
CFR 199.21(j) classify generic
medications as multi-source products,
and specifically define that term.
In response to these commenters, we
note that our definition of multi-source
medication is intentionally broad to
differentiate medication that would fall
under Tiers 1 and 2 from those in Tier
3 in the regulation. We determined that
the use of a single term to describe
medications that do not retain patent
protection and exclusivity is
appropriate because veterans receiving
care from VA, not drug manufacturers,
are primarily affected by this
rulemaking. VA considered several
options on how to address the types of
medications we include in the
definition of multi-source medications
in § 17.110(b)(1)(iv)(A). Our primary
considerations were to ensure, first, that
the types of medications were
adequately defined and, second, that the
rulemaking clearly states to which
copayment tier each of these types of
medications is assigned. It became
evident during the drafting process that
treating the types of medications
currently described in
§ 17.110(b)(1)(iv)(A) as separatelydefined terms was problematic, because
adding multiple definitions could lead
to confusion. VA believes that using a
single term to refer to types of
medication with a shared major
characteristic is less confusing than
referring to multiple separate
definitions. The characteristic shared by
each type of medication in current
§ 17.110(b)(1)(iv)(A) is that it is
available from multiple sources. VA
believes that using the term ‘‘multisource medication’’ has a lower risk of
confusing the public than does the use
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of separate terms like those suggested by
the commenter. The various Medicaid
definitions referred to by the
commenters are necessary for
administration of medication payments
or reimbursement by Medicaid to states,
retail or hospital pharmacies, other
health care providers, and drug
manufacturers. That degree of
differentiation in definitions is
unnecessary for tiered copayment
purposes, and would lead to confusion
in our veteran population. Likewise,
adopting definitions of similar terms
used by Medicaid would not be helpful
to veterans, as the Medicaid definitions
of terms were drafted to serve another
purpose and were targeted to their
specific audience. As one commenter
stated, TRICARE regulations do classify
generic drugs as multi-source products.
However, as noted above, several classes
of medications can properly be
described as being multi-source. As the
definition of multi-source medication in
this rulemaking relates solely to
determining whether a particular
medication should be in one of three
tiers for purposes of VA medication
copayments, we do not anticipate that
nonuniformity of VA and other
agencies’ terms will be a problem. We
make no changes based on these
comments.
Two commenters stated that VA
should clarify that the definition of
‘‘multi-source medication’’ applies only
to VA’s copayment structure in order to
avoid confusion given the use of similar
terminology in other federal regulations.
We specify in § 17.110(b)(1)(iv) that the
definition of ‘‘multi-source medication’’
is for purposes of that section only. We
make no changes based on these
comments.
Definition of ‘‘Multi-Source
Medication’’: Biosimilarity and
Interchangeability
In paragraph (b)(1)(iv)(A)(1)(ii) we
proposed that the term ‘‘multi-source
medication’’ would include a
medication that has been and remains
approved by FDA under section 351(k)
of PHSA (42 U.S.C. 262), and has been
granted an I or B rating in the current
version of the FDA’s Lists of Licensed
Biological Products with Reference
Product Exclusivity and Biosimilarity or
Interchangeability Evaluations (the
Purple Book). We received multiple,
highly technical comments on this
issue, which are summarized below.
After the summary, we respond to the
comments.
Several commenters stated that VA
should clarify that it defers to FDA
regarding both therapeutic equivalence
for drugs and interchangeability for
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biological products. The commenters
asserted that by defining multi-source
medication to mean, in part, a
medication that has been granted an I or
B rating by FDA, VA would treat both
biological products that FDA has
determined to be interchangeable (I
rated) and those deemed biosimilar (B
rated) exactly the same. The
commenters stated that the proposed
rule erroneously conflates entirely the
two very distinct approval standards for
these two very distinct categories of
biological products.
Several commenters stated that the
proposed rulemaking failed to recognize
the significant differences between
generic drugs and biosimilar products.
The commenters noted that biosimilar
products are not necessarily
interchangeable. Whereas drugs
typically have small molecule structures
that can be completely defined and
entirely reproduced, biologics are largeprotein molecules that are generally
more complex, and reproductions are
unlikely to be shown to be structurally
identical to the innovator product. In
recognition of this difference, the
Biologics Price Competition and
Innovation Act of 2009 (BPCIA)
established separate approval standards
for biosimilar and interchangeable
biological products, distinct from
standards for generic drugs. Generic
drugs must be the same as a previously
approved Reference Product, and are
approved for the same indications. In
contrast, to receive FDA approval,
biosimilar products must be
demonstrated to be ‘‘highly similar,’’ but
not identical, to the innovator product.
Approved B rated biosimilar products
have not been determined by FDA to be
safe for substitution with the Reference
Product. Biologics must meet additional
criteria established by the FDA to be
interchangeable, or I rated. One
commenter urged VA to exclude
biosimilar products that FDA has not
determined to be interchangeable from
the definition of multi-source
medication. In the alternative, the
commenter stated that VA should clarify
that a biological product licensed by
FDA as a biosimilar is not
interchangeable absent an FDA
determination of such.
Commenters noted that the BPCIA
sets forth criteria for a biologic being
rated as a biosimilar product, and two
additional requirements for
interchangeability. Only those
biosimilar products that have met these
two additional criteria are deemed by
FDA to be interchangeable. Two
commenters stated that FDA sets a
higher standard for interchangeability of
biological products and other related
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89385
biosimilar products than it does for
biosimilarity or therapeutic equivalence
for smaller molecule drugs. The
commenters stated that, in the absence
of the robust data that FDA requires to
make a determination regarding
biosimilarity or interchangeability, VA
could potentially place patients at
significant risk.
One commenter stated that the
proposed rulemaking encourages the
use of the lowest cost biosimilar
regardless of interchangeability and
whether the biosimilar has been tested
for the indication for which it is
prescribed.
One commenter noted that there are
some smaller molecule drugs that have
not been determined by FDA to be
therapeutically equivalent. The
commenter stated that VA should
consider the unique safety questions
surrounding substitution of biological
products, including those that have
been determined to be biosimilar,
especially with regard to
immunogenicity.
One commenter stated that VA should
clarify that B rated biological products
have not been approved as
interchangeable with the reference
Product. FDA approval as an
interchangeable biological product (I
rated) requires the successful
demonstration of an entirely separate
and more rigorous set of standards. The
commenter states that VA should clarify
that the inclusion of B rated biologics in
the definition of multi-source
medication does not imply that B rated
biologics have been determined by FDA
to be interchangeable.
We appreciate the complete analyses
provided by the commenters on the
topic of biosimilarity and
interchangeability, and we have made
changes to the regulation responsive to
their concerns. Our reasoning follows.
The Purple Book lists biological
products, including any biosimilar and
interchangeable biological products
licensed by FDA under the PHSA. The
lists include the date a biological
product was licensed under 351(a) of
the PHSA and whether FDA evaluated
the biological product for reference
product exclusivity under section
351(k)(7) of the PHSA. The Purple Book
enables a user to see whether a
biological product licensed under
section 351(k) of the PHSA has been
determined by FDA to be biosimilar to
or interchangeable with a reference
biological product (an already-licensed
FDA biological product). Biosimilar and
interchangeable biological products
licensed under section 351(k) of the
PHSA are listed under the reference
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product to which biosimilarity or
interchangeability was demonstrated.
The BPCIA was enacted as part of the
Patient Protection and Affordable Care
Act (Affordable Care Act) (Pub. L. 111–
148) on March 23, 2010. The BPCIA
amends the PHSA and other statutes to
create an abbreviated licensure pathway
for biological products shown to be
biosimilar to or interchangeable with an
FDA-licensed biological reference
product (see sections 7001 through 7003
of the Affordable Care Act). Section
351(k) of the PHSA, added by the
BPCIA, sets forth the requirements for
an application for a proposed biosimilar
product and an application or a
supplement for a proposed
interchangeable product. There are three
relevant definitions in this statute.
Section 351(i) defines biosimilarity to
mean that the biological product is
highly similar to the reference product
notwithstanding minor differences in
clinically inactive components and that
there are no clinically meaningful
differences between the biological
product and the reference product in
terms of the safety, purity, and potency
of the product.
To meet the standard for
interchangeability, an applicant must
provide sufficient information to
demonstrate that the biological product
is biosimilar to the reference product
and can be expected to produce the
same clinical result as the reference
product in any given patient.
Additionally, if the biological product is
administered more than once to an
individual, the risk in terms of safety or
diminished efficacy of alternating or
switching between the use of the
biological product and the reference
product is not greater than the risk of
using the reference product without
such alternation or switch (see section
351(k)(4) of the PHSA). Interchangeable
products may be substituted for the
reference product by a pharmacist
without the intervention of the
prescribing health care provider (see
section 351(i)(3) of the PHSA).
Reference product means the single
biological product licensed under
section 351(a) of the PHSA against
which a biological product is evaluated
in a 351(k) application (section 351(i)(4)
of the PHSA).
The definition of multi-source
medication in this rulemaking was
crafted for only one purpose—to
differentiate several classes of
medication (including drugs and
biologics) that can be termed either Tier
1 or 2 for medication copayment
purposes. This definition does not
equate an I rated product with one that
is B rated by FDA. Nor does it conflict
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with or supersede a determination by
FDA that a particular drug is the
therapeutic equivalent of another, or
that two biologics are biosimilar. The
Purple Book lists biological products,
including any biosimilar and
interchangeable biological products
licensed by FDA, and the definition of
multi-source medication at paragraph
(b)(1)(iv)(A)(1)(ii) recognizes that fact
and categorizes those already-licensed
products for VA’s purposes. We have
added clarifying language to indicate
that VA defers to FDA regarding both
therapeutic equivalence for drugs and
interchangeability for biological
products.
We do not agree with the commenter
concerned that the rulemaking
encourages the use of the lowest cost
biosimilar regardless of
interchangeability and whether it has
been tested for the indication for which
it is prescribed. A VA health care
provider makes decisions on prescribing
specific medications based on the
clinical need of the individual patient
being treated for a given illness or
condition. Prescribing decisions are
generally limited to those medications
included in the VA National Formulary,
which is discussed in greater detail
below. If a particular medication is not
available, sound clinical practice is for
the health care provider to select an
alternate medication that is
interchangeable or otherwise approved
by the FDA for treatment of the illness
or medical condition. Cost is only one
of several factors considered when VA
determines which medications are on
the National Formulary. In general,
individual prescribing choices are
influenced by medication copayment
charges only when the issue is raised by
the veteran, and only in those instances
where a clinically justifiable alternative
is available. We make no changes based
on this comment.
Definition of ‘‘Multi-Source
Medication’’: Substitutability
In paragraph (b)(1)(iv)(A)(3) we
proposed that the term ‘‘multi-source
medication’’ would include a
medication that has been and remains
approved by the FDA pursuant to FDCA
section 505(b)(1) or PHSA section
351(a); and has the same active
ingredient or active ingredients, works
in the same way and in a comparable
amount of time, and is determined by
VA to be substitutable for another
medication that has been and remains
approved by the FDA pursuant to FDCA
section 505(b)(1) or PHSA section
351(a).
One commenter expressed concerns
that the proposed rule gives VA total
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discretion to determine whether two
approved drugs or biological products
are ‘‘substitutable.’’ The commenter
stated that VA should defer to FDA’s
determination of therapeutic
equivalence and interchangeability
when making decisions regarding
substitutability of products.
The commenter also expressed
concern that VA’s determination that
products are substitutable may be
misconstrued by the public as
indicating that the products have been
determined by FDA to be
interchangeable or therapeutically
equivalent when they are not.
One commenter stated that the
portion of the proposed rulemaking
addressing substitutability is written in
a manner to suggest that there may be
more treatment options, and thus there
are competitive forces at play, when
certain drugs and biologics have the
‘‘same active ingredient or ingredients,
work . . . in the same way, and in a
comparable amount of time.’’ The
commenter argued that it is outside
VA’s authority to determine when
products are ‘‘substitutable’’ with one
another. The commenter stated that it is
FDA’s scientific determinations about
therapeutic equivalence (for small
molecule drugs) and interchangeability
(for biologic products) that impact
substitutability determinations.
VA agrees that FDA determinations
regarding therapeutic equivalence and
interchangeability are important
considerations. However,
substitutability is not the same as
therapeutic equivalence or
interchangeability. Whether one
medication can be substituted for
another is a clinical decision made by
a health care provider, based on sound
clinical judgment, and the decision
should be evidence-based. A health care
provider may decide to substitute one
medication for another to treat a given
medical condition for several reasons
including, but not limited to, a
comparison of relative side effects,
contraindications, and potential adverse
reactions; patient tolerance of one
medication over another; a request by
the patient; or an effort to decrease costs
for the patient while achieving the same
or similar benefits. Therapeutic
equivalence and interchangeability may
play a part in the decision-making
process, dependent upon the range of
treatment options available to the health
care provider. When therapeutic
equivalence and interchangeability are
considerations, FDA determinations on
these issues are highly relevant. We
make no changes based on this
comment.
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Definition of ‘‘Multi-Source
Medication’’: Authorized Generics
In paragraph (b)(1)(iv)(A)(4) we state
that the term ‘‘multi-source medication’’
would also include a medication that is
a listed drug, as defined in 21 CFR
314.3, that has been approved under
FDCA section 505(c) and is marketed,
sold, or distributed directly or indirectly
to retail class of trade with either
labeling, packaging (other than
repackaging as the listed drug in blister
packs, unit doses, or similar packaging
for use in institutions), product code,
labeler code, trade name, or trademark
that differs from that of the listed drug.
The definition in paragraph
(b)(1)(iv)(A)(4) is substantively identical
to the definition of ‘‘authorized generic
drug’’ found in FDA regulations at 21
CFR 314.3.
One commenter stated that this
definition unfairly precludes drugs
approved as brand drugs and marketed
as generics (authorized generics) from
being included as a multiple-source
medication at the Tier 1 or 2 copayment
amount if there is no generic source
rated in the Orange Book or if a drug
approved as a brand drug is not lower
in cost than other generic sources.
For clarification, the FDA publication
‘‘Approved Drug Products with
Therapeutic Equivalence Evaluations’’
is commonly known as the Orange
Book. The Orange Book identifies drug
products approved on the basis of safety
and effectiveness by the FDA under the
FDCA. The publication does not include
drugs on the market approved only on
the basis of safety covered by the
ongoing Drug Efficacy Study
Implementation review or pre-1938
drugs. The main criterion for the
inclusion of any product is that the
product is the subject of an application
with an effective approval that has not
been withdrawn for safety or efficacy
reasons. In addition, the Orange Book
contains therapeutic equivalence
evaluations for approved generic drugs.
Finally, the Orange Book lists patents
that are purported to protect each drug.
The commenter stated that it is unfair
to charge veterans more for an
authorized generic drug simply because
there is no marketed generic drug
approved under section 505(j), or when
VA’s cost for a drug approved as a brand
drug is only slightly higher than another
generic source.
Nothing in this rulemaking precludes
an authorized generic drug from
inclusion in either Tier 1 or 2.
Authorized generics are prescription
drugs produced by brand
pharmaceutical companies and
marketed under a private label, at
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generic prices. Authorized generics
compete with generic products in that
they are identical to their brand
counterpart in both active and inactive
ingredients, while generic drugs are
required to contain only the same active
ingredient as the brand name.
Pharmaceutical manufacturers typically
launch an authorized generic when
patent protection and exclusivity have
expired, and the authorized generic
competes in the marketplace against any
generic equivalents approved by FDA.
The three classes of medications
defined for copayment purposes, Tier 1,
Tier 2, and Tier 3, are found in
paragraph (b)(1)(iv)(B)–(D). Multi-source
medications generally fall under either
Tier 1 or 2; placement in either tier
being governed by whether the
medication meets all the criteria found
at paragraph (b)(2) for Tier 1 placement.
The only medications that would fall
under Tier 3 are those approved by the
FDA under a New Drug Application
(NDA) or a biological product approved
by the FDA pursuant to a biologics
license agreement (BLA) that retains its
patent protection and exclusivity. The
definition of multi-source medication
specifically includes authorized generic
drugs at paragraph (b)(1)(iv)(A)(4).
There is nothing in the criteria for
inclusion in Tier 1 or 2 that would
disqualify an authorized generic
because no other generic equivalent had
yet been approved by FDA.
The comment does highlight two
elements of the Tier 3 definition that
may cause confusion: Patent protection
and exclusivity. Tier 3 medication
includes medications approved by FDA
under a NDA that retains exclusivity.
An authorized generic medication is
manufactured by the original patent
holder under a NDA, but is not
marketed under the brand name. While
an authorized generic medication may
not retain exclusivity for patent
purposes, the term ‘‘exclusivity’’ does
come into play. Authorized generic
medications are typically brought to the
market during the 180-day exclusivity
period during which a first filer of an
Abbreviated New Drug Application
(ANDA) under the Drug Price
Competition and Patent Term
Restoration Act (Pub. L. 98–417) can
bring to market a generic version of the
brand name drug. During this 180 day
period no other manufacturer may
market a generic version of the
medication, other than the original
patent holder who can market the
authorized generic. To clarify the scope
of Tier 3, we will amend the definition
of Tier 3 to explicitly state that Tier 3
does not include authorized generic
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medications defined in paragraph
(b)(1)(iv)(A)(4).
The commenter further stated that if
the concern is that multiple source drug
prices be competitive, the requirement
should be that a drug approved as a
brand drug be equivalent in cost to a
generic version not lower in cost,
particularly given generic drug pricing
volatility. As noted above, the comment
is based on an incorrect analysis of the
definition of multi-source medication
and what is included in each tier for
copayment purposes. Authorized
generic medications (which are generic
versions of a medication that is
marketed by the brand drug
manufacturer) are not included in Tier
3. By definition, authorized generic
medications are considered multisource medication at paragraph
(b)(1)(iv)(A)(4). A drug approved by the
FDA as a brand drug is considered
under this rule in one of two ways,
dependent on whether the drug is
marketed as both a brand drug and
authorized generic medication, or solely
as a brand drug. In the latter case, the
brand drug would be considered a Tier
3 medication, while in the former case
the authorized generic medication
would be either a Tier 1 or 2, and the
brand drug would be Tier 3. This
differentiation between an authorized
generic medication and a brand drug is
consistent with how many non-VA
health insurers categorize these
products. The commenter correctly
states that generic drug pricing can be
volatile. However, VA has been
successful at stabilizing generic drug
acquisition prices through a variety of
government contract vehicles and
therefore has minimized generic price
volatility. Generic price volatility is not
the primary determining factor in
whether an authorized generic
medication is Tier 1 or 2. We do not
agree with the commenter that VA
should require brand drug to be
equivalent to either the authorized
generic version of that drug, or other
generic versions of that drug. Finally,
the description of authorized generic
medication in paragraph (b)(1)(iv)(A)(4)
does not include a requirement that the
medication be lower in cost; that
requirement is in (b)(1)(iv)(A)(2)(iii) and
is not applicable to authorized generic
medication. We make no change based
on this comment.
Tier Structure
One commenter stated that, while the
proposed rule is intended to align
medication copayments charged by VA
with commercial practice, the threetiered system deviates further from
established commercial practice than
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the current two-tiered system. The
commenter stated that the proposed
three-tiered model will lead to
confusion, and veterans may be less
likely to fill needed prescriptions.
The primary purpose of this
rulemaking is not to strictly align VA’s
medication copayment structure with
commercial practice. Rather, it is to
make medication copayments more
affordable to the greatest number of
affected veterans, while recognizing
differences in costs of those medications
to VA and the effect of that differential
for veterans who may exercise a non-VA
retail option. The previously utilized
two-tiered system was inflexible and
nonresponsive to changing conditions,
and resulted in some veterans bearing a
heavy financial burden to obtain
necessary medication. We make no
changes based on this comment.
One commenter was concerned that a
single source drug or biologic for which
there is no generic version is precluded
from Tier 2, even where there is a
therapeutic alternative that is also a
single source drug or biologic. The
commenter noted that single source
drugs on the VA National Formulary
may be clinically effective and cost
effective compared to alternative
treatments. The VA National Formulary
is a listing of products (drugs and
supplies) that must be available for
prescription at all VA facilities. Only
those products that actually have been
approved by FDA under a NDA, ANDA,
or biologics license, may be added to the
National Formulary.
The commenter stated that many high
use medications, such as oncology drugs
and biologics, are for conditions for
which no drug is available under
another tier and which may not be on
the VA formulary. The commenter
asserted that the proposed tier structure
will increase costs of these medications
for veterans.
One commenter did not support the
tiered copayment model, specifically
Tier 3. The commenter argued that
requiring higher copayments for Tier 3
medication penalizes veterans who
benefit from newer medication, those
who have no other option than using
medication that retain patent protection
and exclusivity to treat their medical
condition. The commenter further stated
that raising copayment amounts may
force veterans to pick and choose which
of several medications they will fill.
A medication is considered a
therapeutic alternative if that
medication differs chemically from the
medication prescribed, but has the same
therapeutic effect as the prescribed
medication. An example is the various
classes of calcium channel blockers that
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are prescribed to treat hypertension.
One calcium channel blocking
medication could be considered a
therapeutic alternative to another,
dependent upon case-specific factors.
Placement of a medication into any of
the three copayment tiers is not
dependent on whether a therapeutic
alternative exists. Rather, the issue is
whether a particular medication is a
multi-source or single source
medication, and whether (in the case of
a multi-source medication) the
medication qualifies for Tier 1. The
primary criteria for determining
whether a medication is single source or
multi-source is if it is a medication
approved by the FDA under a New Drug
Application (NDA) or a biological
product approved by the FDA pursuant
to a biologics license agreement (BLA)
that retains its patent protection and
exclusivity and is not a multi-source
medication identified in paragraph
(b)(1)(iv)(A)(3) or (4). Using ‘‘therapeutic
alternative’’ as the touchstone to
determine whether a medication is
single source would not be consistent
with the common usage of that term,
and would be difficult to administer
since medications may sometimes be
prescribed to treat several different
medical conditions. For one indication,
medication X may be the therapeutic
alternative to medication Y, and for
another indication would be the
therapeutic alternative to medication B.
Medication copayment amounts paid
in non-VA pharmacies vary dependent
upon whether the prescription is for a
generic or brand name medication. The
tiered copayment structure in this
rulemaking follows the same pattern.
What is commonly referred to as a brand
name medication is equivalent to a
medication that would fall under Tier 3.
VA estimates that approximately 15
percent of billable prescriptions
dispensed in a year will be in Tier 3,
and that the total copayments for
veterans prescribed Tier 3 medications
will remain the same for many veterans
and will decrease for a sizable portion.
A reduction in the copayment cap
provides a unique benefit to veterans
who exclusively use Tier 3 medications.
The total annual copayment costs for
these veterans will not exceed $700,
whereas under the prior regulations the
costs would be $960, or more for those
veterans in priority groups 7 or 8 that
are not currently subject to a cap. So,
while some veterans may still decide
not to fill all of their prescriptions, we
estimate that fewer will do so for
financial reasons as a result of these
changes.
We note that a veteran may request a
waiver of medication copayment
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charges, as provided for in 38 CFR
17.105(c). That section states that the
veterans must submit a form requesting
a waiver, and that a hearing may be
requested. We make no changes based
on these comments.
Copayment Amounts
Two commenters stated that this rule
will still result in veterans being subject
to copayments higher than they would
have to pay in a non-VA pharmacy. One
commenter argued that VA should offer
the same copayment rates available in
non-VA pharmacies.
In the impact analysis published
concurrently with the proposed rule,
VA considered the potential costs or
savings to veterans as a result of this
rulemaking. Based on a comparison of
the current and proposed copayment
amounts, we anticipate that most
veterans would realize between a 10 and
50 percent reduction in their overall
pharmacy copayment liability each year
based on historic utilization patterns. By
our estimates, 94 percent of copayment
eligible veterans would experience no
cost increase, and 80 percent would
realize a savings of between $1 and $5
per 30-day equivalent of medications.
While a small percentage of veterans
may experience a small increase in
medication copayments, a large majority
will encounter no cost increase, or will
realize savings, as a result of this
rulemaking.
Medication copayment amounts vary
widely between different non-VA
pharmacies and under commercial
health insurer policies, due to many
factors. There is no standard non-VA
medication copayment rate structure
that can be used as a model for creating
a copayment structure in VA. Uniformly
adopting the lowest level of copayments
found outside of VA would result in a
copayment system that is not
sustainable in the long term, and could
possibly violate statutory requirements
in 38 U.S.C. 1722A(a), which requires
VA to charge a minimum copayment,
with certain limited exceptions. VA
believes that this rulemaking will result
in copayment amounts that will benefit
the greatest number of veterans. We
make no changes based on these
comments.
One commenter stated that
manufacturers may be providing VA
with competitive prices to increase
market share of a single source drug
within a therapeutic class, and the
lower cost to VA should be passed along
to veterans through a lower tier
copayment amount. Given the number
of pharmaceutical manufacturers and
suppliers VA contracts with, and the
varying terms and lengths of these
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contracts, determining copayments
amounts on an individual contract basis
would be difficult from an
administrative standpoint and could
lead to uncertainty as to the amount an
individual veteran would pay for a
medication copayment. In addition, this
could result in different copayments for
the same medication where more than
one manufacturer or supplier provides
that medication. Under this rulemaking,
VA does include acquisition cost as an
element considered in determining
whether a medication will be included
in Tier 1. See paragraph (b)(2). We make
no changes based on this comment.
Exemption From Copayments
One commenter stated that if a large
number of veterans are diagnosed with
any one medical condition such as
hypertension, medication to treat that
condition should be considered serviceconnected and exempt from
copayments. Another commenter stated
that any veteran who has served in the
military over 20 years, or served in a
war or conflict, should be exempt from
medication copayments. The
commenter also stated that a pool of
emergency funds should be set aside for
use by veterans who are unable to afford
medication copayments.
Exemptions from the medication
copayment are controlled by statute.
Under 38 U.S.C. 1722A(a)(3), the
following veterans are exempt from the
medication copayment: A veteran with
a service-connected disability rated 50
percent or more; a veteran who is a
former prisoner of war; and, a veteran
whose annual income (as determined
under 38 U.S.C. 1503) does not exceed
the maximum annual rate of pension
which would be payable to such veteran
if such veteran were eligible for a VA
pension. VA does not have the statutory
authority to exempt other veterans from
the medication copayment. While VA
does not have the statutory authority to
exempt other veterans from medication
copayment charges, as noted above a
veteran may request a waiver of such
charges under 38 CFR 17.105(c). Service
connection is not determined by
whether a certain number of veterans
have been diagnosed with a particular
disease or condition. ‘‘Serviceconnected’’ means that the disability
was incurred or aggravated in the line
of duty while in active military, naval,
or air service. 38 CFR 3.1(k). A finding
that a disability is service connected
means that the facts, shown by
evidence, establish that a particular
injury or disease resulting in disability
was incurred coincident with service in
the Armed Forces, or if preexisting such
service, was aggravated therein. 38 CFR
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3.303(a). Likewise, VA does not have
the statutory authority to set aside
appropriated funds for the use of
individual veterans. We make no
changes based on these comments.
Miscellaneous
One commenter stated that, unlike the
Department of Defense, VA provides no
opportunity for veterans, manufacturers,
or the public to address the comparative
clinical benefits, and cost benefits or
effectiveness of a drug or biologic under
consideration for addition to the
National Formulary. The commenter
stated that VA should make the
formulary decision-making process
more transparent. The process VA
utilizes to consider changes to the
National Formulary is beyond the scope
of the rulemaking, and we make no
changes based on this comment.
One commenter asked for a
clarification on how this rulemaking
will impact contracting decisions for the
National Contract covering short acting
and human insulins, along with future
contracting processes. Although changes
in the prices of certain medications may
affect certain future contracting actions,
VA will continue to follow all federal
contracting requirements and will make
purchases accordingly.
Finally, we make a technical edit to
paragraph (b)(1). This paragraph
establishes the medication copayment
amounts for each tier of medication. As
drafted, each clause in paragraph
(b)(1)(i) through (iii) reads ‘‘[f]or a 30day supply or less of . . . medication,
the copayment amount is . . .’’ This
language could be misinterpreted to
mean that no medication copayment is
charged for medication amounts greater
than 30 days. This would be
inconsistent with the statutory mandate
at 38 U.S.C. 1722A(a), that VA must
require certain veterans to pay at least
a $2 copayment for each 30-day supply
of medication furnished on an
outpatient basis for the treatment of a
non-service-connected disability or
condition. In prior rulemakings we used
the phrase ‘‘for each 30-day or less
supply of medication’’ when
establishing copayment amounts.
Paragraph (b)(1) is edited to reflect that
same language.
Based on the rationale set forth in the
proposed rule and in this document, VA
is adopting the provisions of the
proposed rule as a final rule with
changes as noted above.
Effect of Rulemaking
Title 38 of the Code of Federal
Regulations, as revised by this final
rulemaking, represents VA’s
implementation of its legal authority on
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89389
this subject. Other than future
amendments to this regulation or
governing statutes, no contrary guidance
or procedures are authorized. All
existing or subsequent VA guidance
must be read to conform with this
rulemaking if possible or, if not
possible, such guidance is superseded
by this rulemaking.
Paperwork Reduction Act
This final rule contains no provisions
constituting a collection of information
under the Paperwork Reduction Act of
1995 (44 U.S.C. 3501–3521).
Regulatory Flexibility Act
The Secretary hereby certifies that
this final rule will not have a significant
economic impact on a substantial
number of small entities as they are
defined in the Regulatory Flexibility Act
(5 U.S.C. 601–612). This final rule will
generally be small business neutral. The
rule will not affect pharmaceutical
manufacturers, as it does not change the
amount VA pays for medications to
supply its pharmaceutical benefits
program, only the amount VA collects
from veterans as copayments. To the
extent there are effects on
pharmaceutical companies, we believe
it will most likely have a positive affect
if VA is purchasing more medications
and supplies from them. Similarly, VA
does not believe that this rule will have
a significant economic impact on small
pharmacies. It is possible that some
veterans will choose to fill their
prescriptions within VA rather than
from a community pharmacist, but we
anticipate such a shift will not result in
a significant economic impact on a
substantial number of such entities.
Therefore, under 5 U.S.C. 605(b), this
rulemaking is exempt from the initial
and final regulatory flexibility analysis
requirements of sections 603 and 604.
Executive Order 12866 and 13563
Executive Orders 12866 and 13563
direct agencies to assess the costs and
benefits of available regulatory
alternatives and, when regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, and other advantages;
distributive impacts; and equity).
Executive Order 13563 (Improving
Regulation and Regulatory Review)
emphasizes the importance of
quantifying both costs and benefits,
reducing costs, harmonizing rules, and
promoting flexibility. Executive Order
12866 (Regulatory Planning and
Review) defines a ‘‘significant
regulatory action,’’ requiring review by
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the Office of Management and Budget
(OMB), unless OMB waives such
review, as ‘‘any regulatory action that is
likely to result in a rule that may: (1)
Have an annual effect on the economy
of $100 million or more or adversely
affect in a material way the economy, a
sector of the economy, productivity,
competition, jobs, the environment,
public health or safety, or State, local,
or tribal governments or communities;
(2) Create a serious inconsistency or
otherwise interfere with an action taken
or planned by another agency; (3)
Materially alter the budgetary impact of
entitlements, grants, user fees, or loan
programs or the rights and obligations of
recipients thereof; or (4) Raise novel
legal or policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in this Executive
Order.’’
The economic, interagency,
budgetary, legal, and policy
implications of this final rule have been
examined, and it has been determined
to be a significant regulatory action
under Executive Order 12866 because it
is likely to result in a rule that may have
an annual effect on the economy of $100
million or more or adversely affect in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or tribal
governments or communities. VA’s
impact analysis can be found as a
supporting document at https://
www.regulations.gov, usually within 48
hours after the rulemaking document is
published. Additionally, a copy of the
rulemaking and its impact analysis are
available on VA’s Web site at https://
www.va.gov/orpm/, by following the
link for ‘‘VA Regulations Published
From FY 2004 Through Fiscal Year to
Date.’’
Congressional Review Act
This final rule is subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801, et seq.), which specifies that
before a rule can take effect, the Federal
agency promulgating the rule shall
submit to each House of the Congress
and to the Comptroller General a report
containing a copy of the rule along with
other specified information. The
required report and this rule have been
submitted to Congress and the
Comptroller General for review.
Unfunded Mandates
The Unfunded Mandates Reform Act
of 1995 requires, at 2 U.S.C. 1532, that
agencies prepare an assessment of
anticipated costs and benefits before
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issuing any rule that may result in the
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
(adjusted annually for inflation) in any
one year. This final rule will have no
such effect on State, local, and tribal
governments, or on the private sector.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic
Assistance numbers and titles for the
programs affected by this document are
64.007, Blind Rehabilitation Centers;
64.008, Veterans Domiciliary Care;
64.009, Veterans Medical Care Benefits;
64.010, Veterans Nursing Home Care;
64.011, Veterans Dental Care; 64.012,
Veterans Prescription Service; 64.013,
Veterans Prosthetic Appliances; 64.014,
Veterans State Domiciliary Care; 64.015,
Veterans State Nursing Home Care;
64.018, Sharing Specialized Medical
Resources; 64.019, Veterans
Rehabilitation Alcohol and Drug
Dependence; 64.022, Veterans Home
Based Primary Care; and 64.024, VA
Homeless Providers Grant and Per Diem
Program.
Signing Authority
The Secretary of Veterans Affairs, or
designee, approved this document and
authorized the undersigned to sign and
submit the document to the Office of the
Federal Register for publication
electronically as an official document of
the Department of Veterans Affairs. Gina
S. Farrisee, Deputy Chief of Staff,
Department of Veterans Affairs,
approved this document on October 3,
2016, for publication.
List of Subjects in 38 CFR Part 17
Administrative practice and
procedure, Alcohol abuse, Alcoholism,
Claims, Day care, Dental health, Drug
abuse, Government contracts, Grant
programs—health, Grant programs—
veterans, Health care, Health facilities,
Health professions, Health records,
Homeless, Medical and Dental schools,
Medical devices, Medical research,
Mental health programs, Nursing
homes, Reporting and recordkeeping
requirements, Travel and transportation
expenses, Veterans.
Dated: December 2, 2016.
Michael Shores,
Acting Director, Regulation Policy &
Management, Office of the Secretary,
Department of Veterans Affairs.
For the reasons set out in the
preamble, VA amends 38 CFR part 17 as
follows:
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PART 17—MEDICAL
1. The authority citation for part 17
continues to read as follows:
■
Authority: 38 U.S.C. 501, and as noted in
specific sections.
2. Amend § 17.110 by:
a. Revising paragraph (a).
b. Revising paragraphs (b)(1)(i)
through (iii).
■ c. Adding paragraph (b)(1)(iv).
■ d. Revising paragraphs (b)(2) and (3),
and adding a heading to paragraph
(b)(4).
■ e. Adding paragraph (b)(5).
The revisions and additions read as
follows:
■
■
■
§ 17.110
Copayments for medications.
(a) General. This section sets forth
requirements regarding copayments for
medications provided to veterans by
VA. For purposes of this section, the
term ‘‘medication’’ means prescription
and over-the-counter medications, as
determined by the Food and Drug
Administration (FDA), but does not
mean medical supplies, oral nutritional
supplements, or medical devices. Oral
nutritional supplements are
commercially prepared nutritionally
enhanced products used to supplement
the intake of individuals who cannot
meet nutrient needs by diet alone.
(b) * * *
(1) * * *
(i) For each 30-day or less supply of
Tier 1 medications, the copayment
amount is $5.
(ii) For each 30-day or less supply of
Tier 2 medications, the copayment
amount is $8.
(iii) For each 30-day or less supply of
Tier 3 medications, the copayment
amount is $11.
(iv) For purposes of this section:
(A) Multi-source medication is any
one of the following:
(1) A medication that has been and
remains approved by the FDA—
(i) Under sections 505(b)(2) or 505(j)
of the Food, Drug, and Cosmetic Act
(FDCA, 21 U.S.C. 355), and that has
been granted an A-rating in the current
version of the FDA’s Approved Drug
Products with Therapeutic Equivalence
Evaluations (the Orange Book); or
(ii) Under section 351(k) of the Public
Health Service Act (PHSA, 42 U.S.C.
262), and that has been granted an I or
B rating in the current version of the
FDA’s Lists of Licensed Biological
Products with Reference Product
Exclusivity and Biosimilarity or
Interchangeability Evaluations (the
Purple Book). FDA determines both
therapeutic equivalence for drugs and
interchangeability for biological
products.
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Federal Register / Vol. 81, No. 238 / Monday, December 12, 2016 / Rules and Regulations
(2) A medication that—
(i) Has been and remains approved by
the FDA pursuant to FDCA section
505(b)(1) or PHSA section 351(a);
(ii) Which is referenced by at least one
FDA-approved product that meets the
criteria of paragraph (b)(1)(iv)(A)(1) of
this section; and
(iii) Which is covered by a contracting
strategy in place with pricing such that
it is lower in cost than other generic
sources.
(3) A medication that—
(i) Has been and remains approved by
the FDA pursuant to FDCA section
505(b)(1) or PHSA section 351(a); and
(ii) Has the same active ingredient or
active ingredients, works in the same
way and in a comparable amount of
time, and is determined by VA to be
substitutable for another medication
that has been and remains approved by
the FDA pursuant to FDCA section
505(b)(1) or PHSA section 351(a). This
may include but is not limited to insulin
and levothyroxine.
(4) A listed drug, as defined in 21 CFR
314.3, that has been approved under
FDCA section 505(c) and is marketed,
sold, or distributed directly or indirectly
to retail class of trade with either
labeling, packaging (other than
repackaging as the listed drug in blister
packs, unit doses, or similar packaging
for use in institutions), product code,
labeler code, trade name, or trademark
that differs from that of the listed drug.
(B) Tier 1 medication means a multisource medication that has been
identified using the process described in
paragraph (b)(2) of this section.
(C) Tier 2 medication means a multisource medication that is not identified
using the process described in
paragraph (b)(2) of this section.
(D) Tier 3 medication means a
medication approved by the FDA under
a New Drug Application (NDA) or a
biological product approved by the FDA
pursuant to a biologics license
agreement (BLA) that retains its patent
protection and exclusivity and is not a
multi-source medication identified in
paragraph (b)(1)(iv)(A)(3) or (4) of this
section.
(2) Determining Tier 1 medications.
Not less than once per year, VA will
identify a subset of multi-source
medications as Tier 1 medications using
the criteria below. Only medications
that meet all of the criteria in
paragraphs (b)(2)(i), (ii), and (iii) will be
eligible to be considered Tier 1
medications, and only those
medications that meet all of the criteria
in paragraph (b)(2)(i) of this section will
be assessed using the criteria in
paragraphs (b)(2)(ii) and (iii).
VerDate Sep<11>2014
16:18 Dec 09, 2016
Jkt 241001
(i) A medication must meet all of the
following criteria:
(A) The VA acquisition cost for the
medication is less than or equal to $10
for a 30-day supply of medication;
(B) The medication is not a topical
cream, a product used to treat
musculoskeletal conditions, an
antihistamine, or a steroid-containing
medication;
(C) The medication is available on the
VA National Formulary;
(D) The medication is not an
antibiotic that is primarily used for
short periods of time to treat infections;
and
(E) The medication primarily is used
to either treat or manage a chronic
condition, or to reduce the risk of
adverse health outcomes secondary to
the chronic condition, for example,
medications used to treat high blood
pressure to reduce the risks of heart
attack, stroke, and kidney failure. For
purposes of this section, conditions that
typically are known to persist for 3
months or more will be considered
chronic.
(ii) The medication must be among
the top 75 most commonly prescribed
multi-source medications that meet the
criteria in paragraph (b)(2)(i) of this
section, based on the number of
prescriptions issued for a 30-day or less
supply on an outpatient basis during a
fixed period of time.
(iii) VA must determine that the
medication identified provides
maximum clinical value consistent with
budgetary resources.
(3) Information on Tier 1 medications.
Not less than once per year, VA will
publish a list of Tier 1 medications in
the Federal Register and on VA’s Web
site at www.va.gov/health.
(4) Veterans Choice Program. * * *
(5) Copayment cap. The total amount
of copayments for medications in a
calendar year for an enrolled veteran
will not exceed $700.
*
*
*
*
*
[FR Doc. 2016–29515 Filed 12–9–16; 8:45 am]
BILLING CODE 8320–01–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R04–OAR–2014–0424; FRL–9956–35–
Region 4]
Air Plan Approval/Disapproval; MS;
Infrastructure Requirements for the
2012 PM2.5 National Ambient Air
Quality Standard
AGENCY:
Environmental Protection
Agency.
PO 00000
Frm 00035
Fmt 4700
Sfmt 4700
ACTION:
89391
Final rule.
The Environmental Protection
Agency (EPA) is taking final action to
approve, in part, and disapprove in part,
the State Implementation Plan (SIP)
submission, submitted by the State of
Mississippi, through the Mississippi
Department of Environmental Quality
(MDEQ), on December 11, 2015, to
demonstrate that the State meets the
infrastructure requirements of the Clean
Air Act (CAA or Act) for the 2012
annual fine particulate matter (PM2.5)
national ambient air quality standard
(NAAQS). The CAA requires that each
state adopt and submit a SIP for the
implementation, maintenance and
enforcement of each NAAQS
promulgated by EPA, which is
commonly referred to as an
‘‘infrastructure SIP submission.’’ MDEQ
certified that the Mississippi SIP
contains provisions that ensure the 2012
Annual PM2.5 NAAQS is implemented,
enforced, and maintained in
Mississippi. With the exception of the
PSD permitting requirements and the
interstate transport provisions, for
which EPA is not acting upon, and the
state board majority requirements
respecting significant portion of income,
for which EPA is finalizing disapproval,
EPA is finalizing that portions of
Mississippi’s infrastructure submission,
submitted to EPA on December 11,
2015, as satisfying certain required
infrastructure elements for the 2012
Annual PM2.5 NAAQS.
DATES: This rule will be effective
January 11, 2017.
ADDRESSES: EPA has established a
docket for this action under Docket
Identification No. EPA–R04–OAR–
2014–0424. All documents in the docket
are listed on the www.regulations.gov
Web site. Although listed in the index,
some information is not publicly
available, i.e., Confidential Business
Information or other information whose
disclosure is restricted by statute.
Certain other material, such as
copyrighted material, is not placed on
the Internet and will be publicly
available only in hard copy form.
Publicly available docket materials are
available either electronically through
www.regulations.gov or in hard copy at
the Air Regulatory Management Section,
Air Planning and Implementation
Branch, Air, Pesticides and Toxics
Management Division, U.S.
Environmental Protection Agency,
Region 4, 61 Forsyth Street SW.,
Atlanta, Georgia 30303–8960. EPA
requests that if at all possible, you
contact the person listed in the FOR
FURTHER INFORMATION CONTACT section to
SUMMARY:
E:\FR\FM\12DER1.SGM
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Agencies
[Federal Register Volume 81, Number 238 (Monday, December 12, 2016)]
[Rules and Regulations]
[Pages 89383-89391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29515]
=======================================================================
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 17
RIN 2900-AP35
Tiered Pharmacy Copayments for Medications
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Veterans Affairs (VA) adopts as a final
rule, with changes, a proposal to amend its regulations concerning
copayments charged to certain veterans for medication required on an
outpatient basis to treat nonservice-connected conditions. Prior to
this final rule, VA charged non-exempt veterans either $8 or $9 for
each 30-day or less supply of medication, and that amount may have
changed in future years. This rulemaking replaces those rates and
establishes three classes of medications for copayment purposes,
identified as Tier 1, Tier 2, and Tier 3. These tiers are defined
further in the rulemaking and are distinguished in part based on
whether the medications are available from multiple sources or a single
source, with some exceptions. Copayment amounts are fixed and would
vary depending upon the class of medication. The following medication
copayment amounts are applicable on the effective date of this final
rule: $5 for a 30-day or less supply of a Tier 1 medication, $8 for a
30-day or less supply of a Tier 2 medication, and $11 for a 30-day or
less supply of a Tier 3 medication. For non-exempt veterans these
copayment amounts will result in lower out-of-pocket costs, thereby
encouraging greater adherence to taking prescribed medications and
reducing the risk of fragmented care that results when veterans use
non-VA pharmacies to fill their prescriptions. The proposed rule was
published on January 5, 2016 and the public comment period closed on
March 7, 2016. We received nine comments and respond to these comments
here.
DATES: Effective Date: This rule is effective on February 27, 2017.
FOR FURTHER INFORMATION CONTACT: Bridget Souza, Office of Community
Care (10D), Veterans Health Administration, Department of Veterans
Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 382-2537.
(This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: Under 38 U.S.C. 1722A(a), VA must require
veterans to pay at least a $2 copayment for each 30-day supply of
medication furnished on an outpatient basis for the treatment of a non-
service-connected disability or condition, unless the veteran is exempt
from having to pay a copayment because the veteran has a service-
connected disability rated 50 percent or more, is a former prisoner of
war, or has an annual income at or below the maximum annual rate of VA
pension that would be payable if the veteran were eligible for pension.
VA has the authority under 38 U.S.C. 1722A(b) to increase that
copayment amount and establish a maximum annual copayment amount (a
``cap'') through regulation. We have implemented this statute in 38 CFR
17.110. Both the copayment amount for certain priority groups, as well
as an annual cap on those copayments, are addressed in 38 CFR
17.110(b).
On January 5, 2016, we proposed a new medication copayment formula,
in order to address longstanding concerns that the regulatory formula
VA had been using was not competitive with non-VA retail copayment
structures, lacked parity, may result in decreased medication
adherence, and increased the likelihood of fragmented care due to
price-shopping. 81 FR 196. The public comment period closed March 7,
2016, and we received nine comments, all of which were generally
supportive. Several commenters expressed strong support for lowering
the annual medication copayment amount. However, several commenters
urged VA to make changes to different aspects of
[[Page 89384]]
the proposed rule. The majority of the comments focused on the
definition of multi-source medication. We address those comments, and
make changes to the rulemaking as noted below.
The new regulatory formula established by this rule focuses on the
type of medication being prescribed and would remove the automatic
escalator provision, meaning that changes in copayments would only
occur through subsequent rulemakings. Veterans exempt by law from
copayments under 38 U.S.C. 1722A(a)(3) continue to be exempt. This VA
rulemaking includes a definition of ``medication'' and ``multi-source
medication.'' We also establish three classes of medications for
copayment purposes: Tier 1 medications, Tier 2 medications, and Tier 3
medications. Tiers 1 and 2 includes multi-source medications, a term
that is defined in Sec. 17.110(b)(1)(iv). Tier 3 includes medications
that retain patent protection and exclusivity and are not multi-source
medications. Copayment amounts vary depending upon the Tier in which
the medication is classified. A 30-day or less supply of Tier 1
medications has a copayment of $5. For Tier 2 medications, the
copayment is $8, and for Tier 3 medications, the copayment is $11. The
rule also changes the annual cap for medication copayments, lowering
the cap to $700 for all veterans who are required to pay medication
copayments.
On September 16, 2015, VA published a final rule maintaining,
through December 31, 2016, medication copayment amounts at the 2014
rate for certain priority groups ($8 for veterans in priority groups 2-
6 and $9 for veterans in priority groups 7 and 8). See 80 FR 55544. VA
anticipated at that time that necessary information technology (IT)
structure changes would be in place by December 31, 2016, allowing the
current rulemaking to have an effective date of January 1, 2017.
However, those changes will not be ready for a full roll-out until
February 27, 2017. The effective date of this final rule is February
27, 2017. VA published a separate rulemaking that will extend the
current copayment freeze until the effective date of the present
rulemaking. The end result is that the higher annual copayment cap of
$960 will be in effect through February 26, 2017, and the lower annual
cap of $700 will apply the following day. We believe it is unlikely
that a veteran will pay more than $700 in medication copayments during
the short period of time before the lower annual cap goes into effect.
However, in the event that any veteran exceeds the $700 cap in this
final rule, before the rule takes effect, VA will refund the amount in
excess of the $700 cap to the veteran.
Definition of the Term ``Medication''
In paragraph (a) of proposed section 17.110, we proposed that for
the purposes of this section, the term ``medication'' would mean
prescription and over-the-counter medications as determined by FDA. One
commenter noted that the term ``medication'' is not a regulatory term
of art used by FDA and FDA does not determine whether an item is
medication. The commenter stated that the rule should instead refer to
the regulatory approval authorities for drugs and biologics, section
505 of the Food Drug and Cosmetic Act (FDCA) for drugs, and section 351
of the Public Health Service Act (PHSA) for biologics. The commenter
stated that citing these authorities would clarify that the term
``medication'' does not include medical supplies, nutritional items,
and devices.
Section 505 of the FDCA is codified at 21 U.S.C. 355 (New drugs)
and 355-1 (Risk evaluation and mitigation strategies). Citing the
former would inappropriately limit the definition of ``medication'' to
new drugs, and citing the latter would address only those instances
where FDA determines that a risk evaluation and mitigation strategy is
necessary to ensure that the benefits of a new drug outweigh the risks
of the drug. While section 351 of the PHSA is applicable to the
approval of all biologics, VA believes that it would be potentially
confusing to the public if the rulemaking cited to statutory authority
related to biologics but not for drugs. However, VA agrees with the
commenter's concern that medical supplies and devices are not
specifically excluded from the definition of ``medication.'' We have
amended the definition accordingly to exclude medical supplies and
devices. We also specifically excluded oral nutritional supplements
from the definition of ``medication'' because they are exempt from
copayments. Oral nutritional supplements are commercially prepared
nutritionally enhanced products used to supplement the intake of
individuals who cannot meet nutrient needs by diet alone.
Definition of ``Multi-Source Medication'': General Comments
One commenter stated that the definition of multi-source medication
in Sec. 17.110(b)(2)(A) is inappropriately broad, misaligned with the
conventional use and understanding of the term, risks public confusion,
and poses a potential risk to patient safety. The commenter stated that
the term is typically used to describe only those drugs that FDA has
determined to be therapeutically equivalent (i.e., pharmaceutically
equivalent and bioequivalent), and that FDA's definition is also
consistent with Centers for Medicare and Medicaid Services' regulatory
use of the term ``multiple source'' for purposes of the Medicare and
Medicaid programs.
Another commenter stated that the definition of ``multi-source
medication'' ``includes multiple categories of drugs defined separately
under the Medicaid Drug Rebate Program in 42 U.S.C. 1396r-8(k)(7)(A) as
`multiple source drug,' `innovator multiple source drug,' `non-
innovator multiple source drug,' and `single source drug.''' The
commenter asserts that VA's proposed definition of multi-source
medication conflicts with these statutory definitions. Another
commenter stated that the proposed definition of multi-source
medication contributes to nonuniformity in federal regulations, noting
that TRICARE regulations at 32 CFR 199.21(j) classify generic
medications as multi-source products, and specifically define that
term.
In response to these commenters, we note that our definition of
multi-source medication is intentionally broad to differentiate
medication that would fall under Tiers 1 and 2 from those in Tier 3 in
the regulation. We determined that the use of a single term to describe
medications that do not retain patent protection and exclusivity is
appropriate because veterans receiving care from VA, not drug
manufacturers, are primarily affected by this rulemaking. VA considered
several options on how to address the types of medications we include
in the definition of multi-source medications in Sec.
17.110(b)(1)(iv)(A). Our primary considerations were to ensure, first,
that the types of medications were adequately defined and, second, that
the rulemaking clearly states to which copayment tier each of these
types of medications is assigned. It became evident during the drafting
process that treating the types of medications currently described in
Sec. 17.110(b)(1)(iv)(A) as separately-defined terms was problematic,
because adding multiple definitions could lead to confusion. VA
believes that using a single term to refer to types of medication with
a shared major characteristic is less confusing than referring to
multiple separate definitions. The characteristic shared by each type
of medication in current Sec. 17.110(b)(1)(iv)(A) is that it is
available from multiple sources. VA believes that using the term
``multi-source medication'' has a lower risk of confusing the public
than does the use
[[Page 89385]]
of separate terms like those suggested by the commenter. The various
Medicaid definitions referred to by the commenters are necessary for
administration of medication payments or reimbursement by Medicaid to
states, retail or hospital pharmacies, other health care providers, and
drug manufacturers. That degree of differentiation in definitions is
unnecessary for tiered copayment purposes, and would lead to confusion
in our veteran population. Likewise, adopting definitions of similar
terms used by Medicaid would not be helpful to veterans, as the
Medicaid definitions of terms were drafted to serve another purpose and
were targeted to their specific audience. As one commenter stated,
TRICARE regulations do classify generic drugs as multi-source products.
However, as noted above, several classes of medications can properly be
described as being multi-source. As the definition of multi-source
medication in this rulemaking relates solely to determining whether a
particular medication should be in one of three tiers for purposes of
VA medication copayments, we do not anticipate that nonuniformity of VA
and other agencies' terms will be a problem. We make no changes based
on these comments.
Two commenters stated that VA should clarify that the definition of
``multi-source medication'' applies only to VA's copayment structure in
order to avoid confusion given the use of similar terminology in other
federal regulations. We specify in Sec. 17.110(b)(1)(iv) that the
definition of ``multi-source medication'' is for purposes of that
section only. We make no changes based on these comments.
Definition of ``Multi-Source Medication'': Biosimilarity and
Interchangeability
In paragraph (b)(1)(iv)(A)(1)(ii) we proposed that the term
``multi-source medication'' would include a medication that has been
and remains approved by FDA under section 351(k) of PHSA (42 U.S.C.
262), and has been granted an I or B rating in the current version of
the FDA's Lists of Licensed Biological Products with Reference Product
Exclusivity and Biosimilarity or Interchangeability Evaluations (the
Purple Book). We received multiple, highly technical comments on this
issue, which are summarized below. After the summary, we respond to the
comments.
Several commenters stated that VA should clarify that it defers to
FDA regarding both therapeutic equivalence for drugs and
interchangeability for biological products. The commenters asserted
that by defining multi-source medication to mean, in part, a medication
that has been granted an I or B rating by FDA, VA would treat both
biological products that FDA has determined to be interchangeable (I
rated) and those deemed biosimilar (B rated) exactly the same. The
commenters stated that the proposed rule erroneously conflates entirely
the two very distinct approval standards for these two very distinct
categories of biological products.
Several commenters stated that the proposed rulemaking failed to
recognize the significant differences between generic drugs and
biosimilar products. The commenters noted that biosimilar products are
not necessarily interchangeable. Whereas drugs typically have small
molecule structures that can be completely defined and entirely
reproduced, biologics are large-protein molecules that are generally
more complex, and reproductions are unlikely to be shown to be
structurally identical to the innovator product. In recognition of this
difference, the Biologics Price Competition and Innovation Act of 2009
(BPCIA) established separate approval standards for biosimilar and
interchangeable biological products, distinct from standards for
generic drugs. Generic drugs must be the same as a previously approved
Reference Product, and are approved for the same indications. In
contrast, to receive FDA approval, biosimilar products must be
demonstrated to be ``highly similar,'' but not identical, to the
innovator product. Approved B rated biosimilar products have not been
determined by FDA to be safe for substitution with the Reference
Product. Biologics must meet additional criteria established by the FDA
to be interchangeable, or I rated. One commenter urged VA to exclude
biosimilar products that FDA has not determined to be interchangeable
from the definition of multi-source medication. In the alternative, the
commenter stated that VA should clarify that a biological product
licensed by FDA as a biosimilar is not interchangeable absent an FDA
determination of such.
Commenters noted that the BPCIA sets forth criteria for a biologic
being rated as a biosimilar product, and two additional requirements
for interchangeability. Only those biosimilar products that have met
these two additional criteria are deemed by FDA to be interchangeable.
Two commenters stated that FDA sets a higher standard for
interchangeability of biological products and other related biosimilar
products than it does for biosimilarity or therapeutic equivalence for
smaller molecule drugs. The commenters stated that, in the absence of
the robust data that FDA requires to make a determination regarding
biosimilarity or interchangeability, VA could potentially place
patients at significant risk.
One commenter stated that the proposed rulemaking encourages the
use of the lowest cost biosimilar regardless of interchangeability and
whether the biosimilar has been tested for the indication for which it
is prescribed.
One commenter noted that there are some smaller molecule drugs that
have not been determined by FDA to be therapeutically equivalent. The
commenter stated that VA should consider the unique safety questions
surrounding substitution of biological products, including those that
have been determined to be biosimilar, especially with regard to
immunogenicity.
One commenter stated that VA should clarify that B rated biological
products have not been approved as interchangeable with the reference
Product. FDA approval as an interchangeable biological product (I
rated) requires the successful demonstration of an entirely separate
and more rigorous set of standards. The commenter states that VA should
clarify that the inclusion of B rated biologics in the definition of
multi-source medication does not imply that B rated biologics have been
determined by FDA to be interchangeable.
We appreciate the complete analyses provided by the commenters on
the topic of biosimilarity and interchangeability, and we have made
changes to the regulation responsive to their concerns. Our reasoning
follows.
The Purple Book lists biological products, including any biosimilar
and interchangeable biological products licensed by FDA under the PHSA.
The lists include the date a biological product was licensed under
351(a) of the PHSA and whether FDA evaluated the biological product for
reference product exclusivity under section 351(k)(7) of the PHSA. The
Purple Book enables a user to see whether a biological product licensed
under section 351(k) of the PHSA has been determined by FDA to be
biosimilar to or interchangeable with a reference biological product
(an already-licensed FDA biological product). Biosimilar and
interchangeable biological products licensed under section 351(k) of
the PHSA are listed under the reference
[[Page 89386]]
product to which biosimilarity or interchangeability was demonstrated.
The BPCIA was enacted as part of the Patient Protection and
Affordable Care Act (Affordable Care Act) (Pub. L. 111-148) on March
23, 2010. The BPCIA amends the PHSA and other statutes to create an
abbreviated licensure pathway for biological products shown to be
biosimilar to or interchangeable with an FDA-licensed biological
reference product (see sections 7001 through 7003 of the Affordable
Care Act). Section 351(k) of the PHSA, added by the BPCIA, sets forth
the requirements for an application for a proposed biosimilar product
and an application or a supplement for a proposed interchangeable
product. There are three relevant definitions in this statute.
Section 351(i) defines biosimilarity to mean that the biological
product is highly similar to the reference product notwithstanding
minor differences in clinically inactive components and that there are
no clinically meaningful differences between the biological product and
the reference product in terms of the safety, purity, and potency of
the product.
To meet the standard for interchangeability, an applicant must
provide sufficient information to demonstrate that the biological
product is biosimilar to the reference product and can be expected to
produce the same clinical result as the reference product in any given
patient. Additionally, if the biological product is administered more
than once to an individual, the risk in terms of safety or diminished
efficacy of alternating or switching between the use of the biological
product and the reference product is not greater than the risk of using
the reference product without such alternation or switch (see section
351(k)(4) of the PHSA). Interchangeable products may be substituted for
the reference product by a pharmacist without the intervention of the
prescribing health care provider (see section 351(i)(3) of the PHSA).
Reference product means the single biological product licensed
under section 351(a) of the PHSA against which a biological product is
evaluated in a 351(k) application (section 351(i)(4) of the PHSA).
The definition of multi-source medication in this rulemaking was
crafted for only one purpose--to differentiate several classes of
medication (including drugs and biologics) that can be termed either
Tier 1 or 2 for medication copayment purposes. This definition does not
equate an I rated product with one that is B rated by FDA. Nor does it
conflict with or supersede a determination by FDA that a particular
drug is the therapeutic equivalent of another, or that two biologics
are biosimilar. The Purple Book lists biological products, including
any biosimilar and interchangeable biological products licensed by FDA,
and the definition of multi-source medication at paragraph
(b)(1)(iv)(A)(1)(ii) recognizes that fact and categorizes those
already-licensed products for VA's purposes. We have added clarifying
language to indicate that VA defers to FDA regarding both therapeutic
equivalence for drugs and interchangeability for biological products.
We do not agree with the commenter concerned that the rulemaking
encourages the use of the lowest cost biosimilar regardless of
interchangeability and whether it has been tested for the indication
for which it is prescribed. A VA health care provider makes decisions
on prescribing specific medications based on the clinical need of the
individual patient being treated for a given illness or condition.
Prescribing decisions are generally limited to those medications
included in the VA National Formulary, which is discussed in greater
detail below. If a particular medication is not available, sound
clinical practice is for the health care provider to select an
alternate medication that is interchangeable or otherwise approved by
the FDA for treatment of the illness or medical condition. Cost is only
one of several factors considered when VA determines which medications
are on the National Formulary. In general, individual prescribing
choices are influenced by medication copayment charges only when the
issue is raised by the veteran, and only in those instances where a
clinically justifiable alternative is available. We make no changes
based on this comment.
Definition of ``Multi-Source Medication'': Substitutability
In paragraph (b)(1)(iv)(A)(3) we proposed that the term ``multi-
source medication'' would include a medication that has been and
remains approved by the FDA pursuant to FDCA section 505(b)(1) or PHSA
section 351(a); and has the same active ingredient or active
ingredients, works in the same way and in a comparable amount of time,
and is determined by VA to be substitutable for another medication that
has been and remains approved by the FDA pursuant to FDCA section
505(b)(1) or PHSA section 351(a).
One commenter expressed concerns that the proposed rule gives VA
total discretion to determine whether two approved drugs or biological
products are ``substitutable.'' The commenter stated that VA should
defer to FDA's determination of therapeutic equivalence and
interchangeability when making decisions regarding substitutability of
products.
The commenter also expressed concern that VA's determination that
products are substitutable may be misconstrued by the public as
indicating that the products have been determined by FDA to be
interchangeable or therapeutically equivalent when they are not.
One commenter stated that the portion of the proposed rulemaking
addressing substitutability is written in a manner to suggest that
there may be more treatment options, and thus there are competitive
forces at play, when certain drugs and biologics have the ``same active
ingredient or ingredients, work . . . in the same way, and in a
comparable amount of time.'' The commenter argued that it is outside
VA's authority to determine when products are ``substitutable'' with
one another. The commenter stated that it is FDA's scientific
determinations about therapeutic equivalence (for small molecule drugs)
and interchangeability (for biologic products) that impact
substitutability determinations.
VA agrees that FDA determinations regarding therapeutic equivalence
and interchangeability are important considerations. However,
substitutability is not the same as therapeutic equivalence or
interchangeability. Whether one medication can be substituted for
another is a clinical decision made by a health care provider, based on
sound clinical judgment, and the decision should be evidence-based. A
health care provider may decide to substitute one medication for
another to treat a given medical condition for several reasons
including, but not limited to, a comparison of relative side effects,
contraindications, and potential adverse reactions; patient tolerance
of one medication over another; a request by the patient; or an effort
to decrease costs for the patient while achieving the same or similar
benefits. Therapeutic equivalence and interchangeability may play a
part in the decision-making process, dependent upon the range of
treatment options available to the health care provider. When
therapeutic equivalence and interchangeability are considerations, FDA
determinations on these issues are highly relevant. We make no changes
based on this comment.
[[Page 89387]]
Definition of ``Multi-Source Medication'': Authorized Generics
In paragraph (b)(1)(iv)(A)(4) we state that the term ``multi-source
medication'' would also include a medication that is a listed drug, as
defined in 21 CFR 314.3, that has been approved under FDCA section
505(c) and is marketed, sold, or distributed directly or indirectly to
retail class of trade with either labeling, packaging (other than
repackaging as the listed drug in blister packs, unit doses, or similar
packaging for use in institutions), product code, labeler code, trade
name, or trademark that differs from that of the listed drug. The
definition in paragraph (b)(1)(iv)(A)(4) is substantively identical to
the definition of ``authorized generic drug'' found in FDA regulations
at 21 CFR 314.3.
One commenter stated that this definition unfairly precludes drugs
approved as brand drugs and marketed as generics (authorized generics)
from being included as a multiple-source medication at the Tier 1 or 2
copayment amount if there is no generic source rated in the Orange Book
or if a drug approved as a brand drug is not lower in cost than other
generic sources.
For clarification, the FDA publication ``Approved Drug Products
with Therapeutic Equivalence Evaluations'' is commonly known as the
Orange Book. The Orange Book identifies drug products approved on the
basis of safety and effectiveness by the FDA under the FDCA. The
publication does not include drugs on the market approved only on the
basis of safety covered by the ongoing Drug Efficacy Study
Implementation review or pre-1938 drugs. The main criterion for the
inclusion of any product is that the product is the subject of an
application with an effective approval that has not been withdrawn for
safety or efficacy reasons. In addition, the Orange Book contains
therapeutic equivalence evaluations for approved generic drugs.
Finally, the Orange Book lists patents that are purported to protect
each drug.
The commenter stated that it is unfair to charge veterans more for
an authorized generic drug simply because there is no marketed generic
drug approved under section 505(j), or when VA's cost for a drug
approved as a brand drug is only slightly higher than another generic
source.
Nothing in this rulemaking precludes an authorized generic drug
from inclusion in either Tier 1 or 2. Authorized generics are
prescription drugs produced by brand pharmaceutical companies and
marketed under a private label, at generic prices. Authorized generics
compete with generic products in that they are identical to their brand
counterpart in both active and inactive ingredients, while generic
drugs are required to contain only the same active ingredient as the
brand name. Pharmaceutical manufacturers typically launch an authorized
generic when patent protection and exclusivity have expired, and the
authorized generic competes in the marketplace against any generic
equivalents approved by FDA.
The three classes of medications defined for copayment purposes,
Tier 1, Tier 2, and Tier 3, are found in paragraph (b)(1)(iv)(B)-(D).
Multi-source medications generally fall under either Tier 1 or 2;
placement in either tier being governed by whether the medication meets
all the criteria found at paragraph (b)(2) for Tier 1 placement. The
only medications that would fall under Tier 3 are those approved by the
FDA under a New Drug Application (NDA) or a biological product approved
by the FDA pursuant to a biologics license agreement (BLA) that retains
its patent protection and exclusivity. The definition of multi-source
medication specifically includes authorized generic drugs at paragraph
(b)(1)(iv)(A)(4). There is nothing in the criteria for inclusion in
Tier 1 or 2 that would disqualify an authorized generic because no
other generic equivalent had yet been approved by FDA.
The comment does highlight two elements of the Tier 3 definition
that may cause confusion: Patent protection and exclusivity. Tier 3
medication includes medications approved by FDA under a NDA that
retains exclusivity. An authorized generic medication is manufactured
by the original patent holder under a NDA, but is not marketed under
the brand name. While an authorized generic medication may not retain
exclusivity for patent purposes, the term ``exclusivity'' does come
into play. Authorized generic medications are typically brought to the
market during the 180-day exclusivity period during which a first filer
of an Abbreviated New Drug Application (ANDA) under the Drug Price
Competition and Patent Term Restoration Act (Pub. L. 98-417) can bring
to market a generic version of the brand name drug. During this 180 day
period no other manufacturer may market a generic version of the
medication, other than the original patent holder who can market the
authorized generic. To clarify the scope of Tier 3, we will amend the
definition of Tier 3 to explicitly state that Tier 3 does not include
authorized generic medications defined in paragraph (b)(1)(iv)(A)(4).
The commenter further stated that if the concern is that multiple
source drug prices be competitive, the requirement should be that a
drug approved as a brand drug be equivalent in cost to a generic
version not lower in cost, particularly given generic drug pricing
volatility. As noted above, the comment is based on an incorrect
analysis of the definition of multi-source medication and what is
included in each tier for copayment purposes. Authorized generic
medications (which are generic versions of a medication that is
marketed by the brand drug manufacturer) are not included in Tier 3. By
definition, authorized generic medications are considered multi-source
medication at paragraph (b)(1)(iv)(A)(4). A drug approved by the FDA as
a brand drug is considered under this rule in one of two ways,
dependent on whether the drug is marketed as both a brand drug and
authorized generic medication, or solely as a brand drug. In the latter
case, the brand drug would be considered a Tier 3 medication, while in
the former case the authorized generic medication would be either a
Tier 1 or 2, and the brand drug would be Tier 3. This differentiation
between an authorized generic medication and a brand drug is consistent
with how many non-VA health insurers categorize these products. The
commenter correctly states that generic drug pricing can be volatile.
However, VA has been successful at stabilizing generic drug acquisition
prices through a variety of government contract vehicles and therefore
has minimized generic price volatility. Generic price volatility is not
the primary determining factor in whether an authorized generic
medication is Tier 1 or 2. We do not agree with the commenter that VA
should require brand drug to be equivalent to either the authorized
generic version of that drug, or other generic versions of that drug.
Finally, the description of authorized generic medication in paragraph
(b)(1)(iv)(A)(4) does not include a requirement that the medication be
lower in cost; that requirement is in (b)(1)(iv)(A)(2)(iii) and is not
applicable to authorized generic medication. We make no change based on
this comment.
Tier Structure
One commenter stated that, while the proposed rule is intended to
align medication copayments charged by VA with commercial practice, the
three-tiered system deviates further from established commercial
practice than
[[Page 89388]]
the current two-tiered system. The commenter stated that the proposed
three-tiered model will lead to confusion, and veterans may be less
likely to fill needed prescriptions.
The primary purpose of this rulemaking is not to strictly align
VA's medication copayment structure with commercial practice. Rather,
it is to make medication copayments more affordable to the greatest
number of affected veterans, while recognizing differences in costs of
those medications to VA and the effect of that differential for
veterans who may exercise a non-VA retail option. The previously
utilized two-tiered system was inflexible and nonresponsive to changing
conditions, and resulted in some veterans bearing a heavy financial
burden to obtain necessary medication. We make no changes based on this
comment.
One commenter was concerned that a single source drug or biologic
for which there is no generic version is precluded from Tier 2, even
where there is a therapeutic alternative that is also a single source
drug or biologic. The commenter noted that single source drugs on the
VA National Formulary may be clinically effective and cost effective
compared to alternative treatments. The VA National Formulary is a
listing of products (drugs and supplies) that must be available for
prescription at all VA facilities. Only those products that actually
have been approved by FDA under a NDA, ANDA, or biologics license, may
be added to the National Formulary.
The commenter stated that many high use medications, such as
oncology drugs and biologics, are for conditions for which no drug is
available under another tier and which may not be on the VA formulary.
The commenter asserted that the proposed tier structure will increase
costs of these medications for veterans.
One commenter did not support the tiered copayment model,
specifically Tier 3. The commenter argued that requiring higher
copayments for Tier 3 medication penalizes veterans who benefit from
newer medication, those who have no other option than using medication
that retain patent protection and exclusivity to treat their medical
condition. The commenter further stated that raising copayment amounts
may force veterans to pick and choose which of several medications they
will fill.
A medication is considered a therapeutic alternative if that
medication differs chemically from the medication prescribed, but has
the same therapeutic effect as the prescribed medication. An example is
the various classes of calcium channel blockers that are prescribed to
treat hypertension. One calcium channel blocking medication could be
considered a therapeutic alternative to another, dependent upon case-
specific factors. Placement of a medication into any of the three
copayment tiers is not dependent on whether a therapeutic alternative
exists. Rather, the issue is whether a particular medication is a
multi-source or single source medication, and whether (in the case of a
multi-source medication) the medication qualifies for Tier 1. The
primary criteria for determining whether a medication is single source
or multi-source is if it is a medication approved by the FDA under a
New Drug Application (NDA) or a biological product approved by the FDA
pursuant to a biologics license agreement (BLA) that retains its patent
protection and exclusivity and is not a multi-source medication
identified in paragraph (b)(1)(iv)(A)(3) or (4). Using ``therapeutic
alternative'' as the touchstone to determine whether a medication is
single source would not be consistent with the common usage of that
term, and would be difficult to administer since medications may
sometimes be prescribed to treat several different medical conditions.
For one indication, medication X may be the therapeutic alternative to
medication Y, and for another indication would be the therapeutic
alternative to medication B.
Medication copayment amounts paid in non-VA pharmacies vary
dependent upon whether the prescription is for a generic or brand name
medication. The tiered copayment structure in this rulemaking follows
the same pattern. What is commonly referred to as a brand name
medication is equivalent to a medication that would fall under Tier 3.
VA estimates that approximately 15 percent of billable prescriptions
dispensed in a year will be in Tier 3, and that the total copayments
for veterans prescribed Tier 3 medications will remain the same for
many veterans and will decrease for a sizable portion. A reduction in
the copayment cap provides a unique benefit to veterans who exclusively
use Tier 3 medications. The total annual copayment costs for these
veterans will not exceed $700, whereas under the prior regulations the
costs would be $960, or more for those veterans in priority groups 7 or
8 that are not currently subject to a cap. So, while some veterans may
still decide not to fill all of their prescriptions, we estimate that
fewer will do so for financial reasons as a result of these changes.
We note that a veteran may request a waiver of medication copayment
charges, as provided for in 38 CFR 17.105(c). That section states that
the veterans must submit a form requesting a waiver, and that a hearing
may be requested. We make no changes based on these comments.
Copayment Amounts
Two commenters stated that this rule will still result in veterans
being subject to copayments higher than they would have to pay in a
non-VA pharmacy. One commenter argued that VA should offer the same
copayment rates available in non-VA pharmacies.
In the impact analysis published concurrently with the proposed
rule, VA considered the potential costs or savings to veterans as a
result of this rulemaking. Based on a comparison of the current and
proposed copayment amounts, we anticipate that most veterans would
realize between a 10 and 50 percent reduction in their overall pharmacy
copayment liability each year based on historic utilization patterns.
By our estimates, 94 percent of copayment eligible veterans would
experience no cost increase, and 80 percent would realize a savings of
between $1 and $5 per 30-day equivalent of medications. While a small
percentage of veterans may experience a small increase in medication
copayments, a large majority will encounter no cost increase, or will
realize savings, as a result of this rulemaking.
Medication copayment amounts vary widely between different non-VA
pharmacies and under commercial health insurer policies, due to many
factors. There is no standard non-VA medication copayment rate
structure that can be used as a model for creating a copayment
structure in VA. Uniformly adopting the lowest level of copayments
found outside of VA would result in a copayment system that is not
sustainable in the long term, and could possibly violate statutory
requirements in 38 U.S.C. 1722A(a), which requires VA to charge a
minimum copayment, with certain limited exceptions. VA believes that
this rulemaking will result in copayment amounts that will benefit the
greatest number of veterans. We make no changes based on these
comments.
One commenter stated that manufacturers may be providing VA with
competitive prices to increase market share of a single source drug
within a therapeutic class, and the lower cost to VA should be passed
along to veterans through a lower tier copayment amount. Given the
number of pharmaceutical manufacturers and suppliers VA contracts with,
and the varying terms and lengths of these
[[Page 89389]]
contracts, determining copayments amounts on an individual contract
basis would be difficult from an administrative standpoint and could
lead to uncertainty as to the amount an individual veteran would pay
for a medication copayment. In addition, this could result in different
copayments for the same medication where more than one manufacturer or
supplier provides that medication. Under this rulemaking, VA does
include acquisition cost as an element considered in determining
whether a medication will be included in Tier 1. See paragraph (b)(2).
We make no changes based on this comment.
Exemption From Copayments
One commenter stated that if a large number of veterans are
diagnosed with any one medical condition such as hypertension,
medication to treat that condition should be considered service-
connected and exempt from copayments. Another commenter stated that any
veteran who has served in the military over 20 years, or served in a
war or conflict, should be exempt from medication copayments. The
commenter also stated that a pool of emergency funds should be set
aside for use by veterans who are unable to afford medication
copayments.
Exemptions from the medication copayment are controlled by statute.
Under 38 U.S.C. 1722A(a)(3), the following veterans are exempt from the
medication copayment: A veteran with a service-connected disability
rated 50 percent or more; a veteran who is a former prisoner of war;
and, a veteran whose annual income (as determined under 38 U.S.C. 1503)
does not exceed the maximum annual rate of pension which would be
payable to such veteran if such veteran were eligible for a VA pension.
VA does not have the statutory authority to exempt other veterans from
the medication copayment. While VA does not have the statutory
authority to exempt other veterans from medication copayment charges,
as noted above a veteran may request a waiver of such charges under 38
CFR 17.105(c). Service connection is not determined by whether a
certain number of veterans have been diagnosed with a particular
disease or condition. ``Service-connected'' means that the disability
was incurred or aggravated in the line of duty while in active
military, naval, or air service. 38 CFR 3.1(k). A finding that a
disability is service connected means that the facts, shown by
evidence, establish that a particular injury or disease resulting in
disability was incurred coincident with service in the Armed Forces, or
if preexisting such service, was aggravated therein. 38 CFR 3.303(a).
Likewise, VA does not have the statutory authority to set aside
appropriated funds for the use of individual veterans. We make no
changes based on these comments.
Miscellaneous
One commenter stated that, unlike the Department of Defense, VA
provides no opportunity for veterans, manufacturers, or the public to
address the comparative clinical benefits, and cost benefits or
effectiveness of a drug or biologic under consideration for addition to
the National Formulary. The commenter stated that VA should make the
formulary decision-making process more transparent. The process VA
utilizes to consider changes to the National Formulary is beyond the
scope of the rulemaking, and we make no changes based on this comment.
One commenter asked for a clarification on how this rulemaking will
impact contracting decisions for the National Contract covering short
acting and human insulins, along with future contracting processes.
Although changes in the prices of certain medications may affect
certain future contracting actions, VA will continue to follow all
federal contracting requirements and will make purchases accordingly.
Finally, we make a technical edit to paragraph (b)(1). This
paragraph establishes the medication copayment amounts for each tier of
medication. As drafted, each clause in paragraph (b)(1)(i) through
(iii) reads ``[f]or a 30-day supply or less of . . . medication, the
copayment amount is . . .'' This language could be misinterpreted to
mean that no medication copayment is charged for medication amounts
greater than 30 days. This would be inconsistent with the statutory
mandate at 38 U.S.C. 1722A(a), that VA must require certain veterans to
pay at least a $2 copayment for each 30-day supply of medication
furnished on an outpatient basis for the treatment of a non-service-
connected disability or condition. In prior rulemakings we used the
phrase ``for each 30-day or less supply of medication'' when
establishing copayment amounts. Paragraph (b)(1) is edited to reflect
that same language.
Based on the rationale set forth in the proposed rule and in this
document, VA is adopting the provisions of the proposed rule as a final
rule with changes as noted above.
Effect of Rulemaking
Title 38 of the Code of Federal Regulations, as revised by this
final rulemaking, represents VA's implementation of its legal authority
on this subject. Other than future amendments to this regulation or
governing statutes, no contrary guidance or procedures are authorized.
All existing or subsequent VA guidance must be read to conform with
this rulemaking if possible or, if not possible, such guidance is
superseded by this rulemaking.
Paperwork Reduction Act
This final rule contains no provisions constituting a collection of
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).
Regulatory Flexibility Act
The Secretary hereby certifies that this final rule will not have a
significant economic impact on a substantial number of small entities
as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). This final rule will generally be small business neutral. The
rule will not affect pharmaceutical manufacturers, as it does not
change the amount VA pays for medications to supply its pharmaceutical
benefits program, only the amount VA collects from veterans as
copayments. To the extent there are effects on pharmaceutical
companies, we believe it will most likely have a positive affect if VA
is purchasing more medications and supplies from them. Similarly, VA
does not believe that this rule will have a significant economic impact
on small pharmacies. It is possible that some veterans will choose to
fill their prescriptions within VA rather than from a community
pharmacist, but we anticipate such a shift will not result in a
significant economic impact on a substantial number of such entities.
Therefore, under 5 U.S.C. 605(b), this rulemaking is exempt from the
initial and final regulatory flexibility analysis requirements of
sections 603 and 604.
Executive Order 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, when
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, and other advantages; distributive impacts;
and equity). Executive Order 13563 (Improving Regulation and Regulatory
Review) emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
Executive Order 12866 (Regulatory Planning and Review) defines a
``significant regulatory action,'' requiring review by
[[Page 89390]]
the Office of Management and Budget (OMB), unless OMB waives such
review, as ``any regulatory action that is likely to result in a rule
that may: (1) Have an annual effect on the economy of $100 million or
more or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities; (2) Create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) Materially alter
the budgetary impact of entitlements, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or (4)
Raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in this Executive
Order.''
The economic, interagency, budgetary, legal, and policy
implications of this final rule have been examined, and it has been
determined to be a significant regulatory action under Executive Order
12866 because it is likely to result in a rule that may have an annual
effect on the economy of $100 million or more or adversely affect in a
material way the economy, a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local, or tribal governments or communities. VA's impact analysis can
be found as a supporting document at https://www.regulations.gov,
usually within 48 hours after the rulemaking document is published.
Additionally, a copy of the rulemaking and its impact analysis are
available on VA's Web site at https://www.va.gov/orpm/, by following the
link for ``VA Regulations Published From FY 2004 Through Fiscal Year to
Date.''
Congressional Review Act
This final rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information.
The required report and this rule have been submitted to Congress and
the Comptroller General for review.
Unfunded Mandates
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C.
1532, that agencies prepare an assessment of anticipated costs and
benefits before issuing any rule that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year. This final rule will have no such effect on
State, local, and tribal governments, or on the private sector.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers and titles for
the programs affected by this document are 64.007, Blind Rehabilitation
Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical
Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans
Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans
Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015,
Veterans State Nursing Home Care; 64.018, Sharing Specialized Medical
Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence;
64.022, Veterans Home Based Primary Care; and 64.024, VA Homeless
Providers Grant and Per Diem Program.
Signing Authority
The Secretary of Veterans Affairs, or designee, approved this
document and authorized the undersigned to sign and submit the document
to the Office of the Federal Register for publication electronically as
an official document of the Department of Veterans Affairs. Gina S.
Farrisee, Deputy Chief of Staff, Department of Veterans Affairs,
approved this document on October 3, 2016, for publication.
List of Subjects in 38 CFR Part 17
Administrative practice and procedure, Alcohol abuse, Alcoholism,
Claims, Day care, Dental health, Drug abuse, Government contracts,
Grant programs--health, Grant programs--veterans, Health care, Health
facilities, Health professions, Health records, Homeless, Medical and
Dental schools, Medical devices, Medical research, Mental health
programs, Nursing homes, Reporting and recordkeeping requirements,
Travel and transportation expenses, Veterans.
Dated: December 2, 2016.
Michael Shores,
Acting Director, Regulation Policy & Management, Office of the
Secretary, Department of Veterans Affairs.
For the reasons set out in the preamble, VA amends 38 CFR part 17
as follows:
PART 17--MEDICAL
0
1. The authority citation for part 17 continues to read as follows:
Authority: 38 U.S.C. 501, and as noted in specific sections.
0
2. Amend Sec. 17.110 by:
0
a. Revising paragraph (a).
0
b. Revising paragraphs (b)(1)(i) through (iii).
0
c. Adding paragraph (b)(1)(iv).
0
d. Revising paragraphs (b)(2) and (3), and adding a heading to
paragraph (b)(4).
0
e. Adding paragraph (b)(5).
The revisions and additions read as follows:
Sec. 17.110 Copayments for medications.
(a) General. This section sets forth requirements regarding
copayments for medications provided to veterans by VA. For purposes of
this section, the term ``medication'' means prescription and over-the-
counter medications, as determined by the Food and Drug Administration
(FDA), but does not mean medical supplies, oral nutritional
supplements, or medical devices. Oral nutritional supplements are
commercially prepared nutritionally enhanced products used to
supplement the intake of individuals who cannot meet nutrient needs by
diet alone.
(b) * * *
(1) * * *
(i) For each 30-day or less supply of Tier 1 medications, the
copayment amount is $5.
(ii) For each 30-day or less supply of Tier 2 medications, the
copayment amount is $8.
(iii) For each 30-day or less supply of Tier 3 medications, the
copayment amount is $11.
(iv) For purposes of this section:
(A) Multi-source medication is any one of the following:
(1) A medication that has been and remains approved by the FDA--
(i) Under sections 505(b)(2) or 505(j) of the Food, Drug, and
Cosmetic Act (FDCA, 21 U.S.C. 355), and that has been granted an A-
rating in the current version of the FDA's Approved Drug Products with
Therapeutic Equivalence Evaluations (the Orange Book); or
(ii) Under section 351(k) of the Public Health Service Act (PHSA,
42 U.S.C. 262), and that has been granted an I or B rating in the
current version of the FDA's Lists of Licensed Biological Products with
Reference Product Exclusivity and Biosimilarity or Interchangeability
Evaluations (the Purple Book). FDA determines both therapeutic
equivalence for drugs and interchangeability for biological products.
[[Page 89391]]
(2) A medication that--
(i) Has been and remains approved by the FDA pursuant to FDCA
section 505(b)(1) or PHSA section 351(a);
(ii) Which is referenced by at least one FDA-approved product that
meets the criteria of paragraph (b)(1)(iv)(A)(1) of this section; and
(iii) Which is covered by a contracting strategy in place with
pricing such that it is lower in cost than other generic sources.
(3) A medication that--
(i) Has been and remains approved by the FDA pursuant to FDCA
section 505(b)(1) or PHSA section 351(a); and
(ii) Has the same active ingredient or active ingredients, works in
the same way and in a comparable amount of time, and is determined by
VA to be substitutable for another medication that has been and remains
approved by the FDA pursuant to FDCA section 505(b)(1) or PHSA section
351(a). This may include but is not limited to insulin and
levothyroxine.
(4) A listed drug, as defined in 21 CFR 314.3, that has been
approved under FDCA section 505(c) and is marketed, sold, or
distributed directly or indirectly to retail class of trade with either
labeling, packaging (other than repackaging as the listed drug in
blister packs, unit doses, or similar packaging for use in
institutions), product code, labeler code, trade name, or trademark
that differs from that of the listed drug.
(B) Tier 1 medication means a multi-source medication that has been
identified using the process described in paragraph (b)(2) of this
section.
(C) Tier 2 medication means a multi-source medication that is not
identified using the process described in paragraph (b)(2) of this
section.
(D) Tier 3 medication means a medication approved by the FDA under
a New Drug Application (NDA) or a biological product approved by the
FDA pursuant to a biologics license agreement (BLA) that retains its
patent protection and exclusivity and is not a multi-source medication
identified in paragraph (b)(1)(iv)(A)(3) or (4) of this section.
(2) Determining Tier 1 medications. Not less than once per year, VA
will identify a subset of multi-source medications as Tier 1
medications using the criteria below. Only medications that meet all of
the criteria in paragraphs (b)(2)(i), (ii), and (iii) will be eligible
to be considered Tier 1 medications, and only those medications that
meet all of the criteria in paragraph (b)(2)(i) of this section will be
assessed using the criteria in paragraphs (b)(2)(ii) and (iii).
(i) A medication must meet all of the following criteria:
(A) The VA acquisition cost for the medication is less than or
equal to $10 for a 30-day supply of medication;
(B) The medication is not a topical cream, a product used to treat
musculoskeletal conditions, an antihistamine, or a steroid-containing
medication;
(C) The medication is available on the VA National Formulary;
(D) The medication is not an antibiotic that is primarily used for
short periods of time to treat infections; and
(E) The medication primarily is used to either treat or manage a
chronic condition, or to reduce the risk of adverse health outcomes
secondary to the chronic condition, for example, medications used to
treat high blood pressure to reduce the risks of heart attack, stroke,
and kidney failure. For purposes of this section, conditions that
typically are known to persist for 3 months or more will be considered
chronic.
(ii) The medication must be among the top 75 most commonly
prescribed multi-source medications that meet the criteria in paragraph
(b)(2)(i) of this section, based on the number of prescriptions issued
for a 30-day or less supply on an outpatient basis during a fixed
period of time.
(iii) VA must determine that the medication identified provides
maximum clinical value consistent with budgetary resources.
(3) Information on Tier 1 medications. Not less than once per year,
VA will publish a list of Tier 1 medications in the Federal Register
and on VA's Web site at www.va.gov/health.
(4) Veterans Choice Program. * * *
(5) Copayment cap. The total amount of copayments for medications
in a calendar year for an enrolled veteran will not exceed $700.
* * * * *
[FR Doc. 2016-29515 Filed 12-9-16; 8:45 am]
BILLING CODE 8320-01-P