HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, 22692-22700 [2018-10435]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Office of the Secretary

[Federal Register Volume 83, Number 95 (Wednesday, May 16, 2018)]
[Notices]
[Pages 22692-22700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10435]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

RIN 0991-ZA49


HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs

AGENCY: Department of Health and Human Services.

ACTION: Policy Statement; Request for information.

-----------------------------------------------------------------------

SUMMARY: Through this request for information, HHS seeks comment from 
interested parties to help shape future policy development and agency 
action.

DATES: Comments must be submitted on or before July 16, 2018.

ADDRESSES: You may submit comments in one of three ways (please choose 
only one of the ways listed):
    1. Electronically. You may submit electronic comments to https://www.regulations.gov. Follow the ``Submit a comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Department of Health and Human Services, 200 Independence 
Ave. SW, Room 600E, Washington, DC 20201.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Department of Health and Human Services, 
200 Independence Ave. SW, Room 600E, Washington, DC 20201.

FOR FURTHER INFORMATION CONTACT: John O'Brien, (202) 690-7886.

SUPPLEMENTARY INFORMATION: The United States is the world's leader in 
biopharmaceutical innovation. American innovation has improved health 
and quality of life for billions of people, and was made possible by 
our intellectual property system, decades of government and privately-
funded research, strong capital markets, and the world's largest 
scientific research base. By rewarding innovation through patent and 
data protection, American companies hold the intellectual property 
rights for most new, and potentially life changing, medicines. Our 
regulatory system is the most rigorous in the world, ensuring the 
safety and efficacy of drugs for American patients. Medicare, Medicaid, 
other Federal health programs, and private payers ensure Americans have 
access to medicines, from innovative new cures, to generic versions of 
medications that have markedly lowered costs for consumers.
    As part of President Trump's bold plan to put American patients 
first, the Department of Health and Human Services has developed a 
comprehensive blueprint that addresses many of the challenges and 
opportunities impacting American patients and consumers. The blueprint 
covers multiple areas including, but not limited to:
     Improving competition and ending the gaming of the 
regulatory process,
     supporting better negotiation of drug discounts in 
government-funded insurance programs,
     creating incentives for pharmaceutical companies to lower 
list prices, and,
     reducing out-of-pocket spending for patients at the 
pharmacy and other sites of care.
    HHS also recognizes that achieving the goal of putting American 
patients first will require interagency collaboration on pharmaceutical 
trade policies that promote innovation, and are transparent, 
nondiscriminatory, and increase fair market access for American 
innovators. Furthermore, HHS seeks to identify when developed nations 
are paying less for drugs than the prices paid by Federal health 
programs, and correct these inequities through better negotiation.
    HHS has already acted to increase the affordability of medicines 
for millions of our citizens, but is also going much further in 
response to President Trump's call to action. Through the work of the 
Food and Drug Administration and the Centers for Medicare & Medicaid 
Services, HHS has tremendous ability to change how drugs are developed 
and paid for in the United States.
    The status quo is no longer acceptable. Millions of Americans face 
soaring drug prices and higher out-of-pocket costs, while manufacturers 
and middlemen such as pharmacy benefit managers (PBMs) and distributors 
benefit from rising list prices and their resulting higher rebates and 
administrative fees. An unprecedented re-examination of the whole 
system and opportunities for reform is long overdue. We believe a 
national focus on lowering list prices and out-of-pocket costs has the 
potential to create new and disruptive alternatives to the current 
system, while maintaining its many virtues. It is time to realign the 
system in a way that promotes the development of affordable innovations 
that improve health outcomes and lower both out-of-pocket cost and the 
total cost of care.
    Through this request for information, HHS seeks comment from 
interested parties to help shape future policy development and agency 
action.

Table of Contents:

I. Previous Actions by the Trump Administration
    A. Increasing Competition
    B. Better Negotiation
    C. Creating Incentives to Lower List Prices
    D. Reducing Patient Out-of-Pocket Spending
II. Responding to President Trump's Call to

[[Page 22693]]

Action
    A. Increasing Competition
    B. Better Negotiation
    C. Creating Incentives to Lower List Prices
    D. Reducing Patient Out-of-Pocket Spending
III. Solicitation of Comments
    A. Increasing Competition
    B. Better Negotiation
    C. Creating Incentives to Lower List Prices
    D. Reducing Patient Out-of-Pocket Spending
    E. Additional Feedback
IV. Collection of Information Requirements

I. Previous Actions by the Trump Administration

    The President has consistently emphasized the need to reduce the 
price of prescription drugs. The Trump Administration has already taken 
a number of significant administrative steps, and proposed in the 
President's FY2019 Budget, to improve competition and end the gaming of 
regulatory processes, support better negotiation of drug discounts 
through government insurance programs, create incentives for 
pharmaceutical companies to lower list prices, and reduce consumer out-
of-pocket spending at the pharmacy and other care settings.

A. Increasing Competition

    Since the beginning of the Trump Administration, HHS has taken a 
number of actions to increase competition and end the gaming of 
regulatory processes that may keep drug prices artificially inflated or 
hinder generic, branded, or biosimilar competition. These efforts 
include:
     Accelerating Food and Drug Administration (FDA) approval 
of generic drugs. Studies show that greater generic competition is 
associated with lower prices. FDA is publishing the names of drugs that 
have no competitors in order to spur new entrants and bring prices 
down. Over 1,000 generic drugs were approved in 2017, which is the most 
in FDA's history in a calendar year by over 200 drugs. These generic 
approvals saved American consumers and taxpayers nearly $9 billion in 
2017.
     Drug Competition Action Plan. In 2017, President Trump's 
FDA established a Drug Competition Action Plan to enable patients to 
access more affordable medications by focusing the Agency's efforts in 
three key areas: (1) Improving the efficiency of the generic drug 
development, review, and approval process; (2) maximizing scientific 
and regulatory clarity with respect to complex generic drugs; and (3) 
closing loopholes that allow brand-name drug companies to ``game'' FDA 
rules in ways that forestall the generic competition Congress intended. 
The Agency also has taken steps to prioritize its review of generic 
drug applications; issued guidance to improve efficiencies in the 
development, review, and approval processes for generic drugs, 
including complex generic drugs; and issued guidance to further 
streamline the submission and review process for shared system REMS, 
and to allow collective submissions to streamline the review of shared 
Risk Evaluation and Mitigation Strategies (REMS).
     FDA also announced it will facilitate opportunities for 
enhanced information sharing between manufacturers, doctors, patients 
and insurers to improve patient access to medical products, including 
through value-based insurance.
     Speeding Access to More Affordable Generics by Spurring 
Competition. Today, a generic manufacturer that has been awarded 180-
day exclusivity for being the first generic to file can ``park'' their 
application with FDA, preventing additional generic manufacturers from 
entering the market. The President's FY2019 Budget proposes to prevent 
companies from using their 180-day exclusivity to indefinitely delay 
real competition and savings for consumers by seeking a legislative 
change to start a company's 180-day exclusivity clock in certain 
instances when another generic application is ready for approval, but 
is blocked solely by such a first applicant's 180-day exclusivity.
     Finalizing a policy in which each biosimilar for a given 
biologic gets its own billing and payment code under Medicare Part B, 
to incentivize development of additional lower-cost biosimilars. Prior 
approaches to biosimilar coding and payment would have created a race 
to the bottom of biosimilar pricing, while leaving the branded product 
untouched, making it an unviable market that few would want to enter.

B. Better Negotiation

    Medicare Part D has been very successful since it launched in 2006. 
However, prescription drug markets are different than they were 12 
years ago, and in some cases Part D plan sponsors may be prohibited 
from doing what private payers outside the Medicare program do to 
negotiate effectively and keep costs low. More can also be done across 
the Medicare program to provide beneficiaries with the lower costs and 
greater price transparency resulting from better negotiation.
    Since the beginning of the Trump Administration, HHS has taken a 
number of actions to support better negotiation. These efforts include:
     Finalizing changes to the Medicare Prescription Drug 
Program in the 2019 Part C and Part D regulation allowing for faster 
mid-year substitution of generic drugs onto formularies.
     Proposing in the President's FY2019 Budget \1\ a 5-part 
plan to modernize the Medicare Part D program, a portion of which 
includes enhancing Part D plans' negotiating power with manufacturers 
by changing Part D plan formulary standards to require a minimum of one 
drug per category or class rather than two. We note that the 5-part 
plan is intended to be implemented together, as eliminating even one 
piece of the package significantly changes the proposal's impacts.
---------------------------------------------------------------------------

    \1\ https://www.whitehouse.gov/wp-content/uploads/2018/02/budget-fy2019.pdf.
---------------------------------------------------------------------------

     Proposing in the President's FY2019 Budget to address 
abusive drug pricing by manufacturers by: establishing an inflation 
limit for reimbursement of Medicare Part B drugs; reducing Wholesale 
Acquisition Cost (WAC)-Based Payment when Average Sales Price (ASP) 
isn't available; and improving manufacturers' reporting of Average 
Sales Prices to set accurate payment rates.
     Increasing the integrity of the Medicaid Drug Rebate 
Program, so that manufacturers pay their fair share in rebates, by 
proposing in the President's FY2019 Budget to remove ambiguity 
regarding how drugs should be reported under the program. HHS is also 
manually reviewing each new drug that has been reported in the Medicaid 
rebate system on a quarterly basis to make sure classifications are 
correct, and the United States took legal action against Mylan for 
their misclassification of EpiPen, resulting in an agreement for Mylan 
to pay back $465 million in rebate payments.
     Proposing in the President's FY2019 Budget to further 
clarify the Medicaid definition of brand drugs, which would address 
inappropriate interpretations leading some manufacturers to classify 
certain brand and over-the-counter drugs as generics for Medicaid 
rebate purposes, reducing the rebates they owe.
     Proposing in the President's FY2019 Budget to call for new 
Medicaid demonstration authority for up to five states to test drug 
coverage and financing reforms that build on private sector best 
practices. Participating states would determine their own drug 
formularies, coupled with an appeals process to protect beneficiary 
access to non-covered drugs based on medical need, and negotiate drug 
prices directly

[[Page 22694]]

with manufacturers. HHS and participating states would rigorously 
evaluate these demonstrations, which would provide states with new 
tools to control drug costs and tailor drug coverage decisions to state 
needs.
     Proposing in the President's FY2019 Budget to authorize 
the HHS Secretary to leverage Medicare Part D plans' negotiating power 
for certain drugs covered under Part B.
     Addressing price disparities in the international market. 
The Administration is updating a number of historical studies to 
analyze drug prices paid in countries that are a part of the 
Organisation for Economic Co-operation and Development (OECD).

C. Creating Incentives to Lower List Prices

    The list price of a drug does not reflect the discounts or price 
concessions paid to a PBM, insurer, health plan, or government program. 
Obscuring these discounts can shift costs to consumers in commercial 
health plans and Medicare beneficiaries. Many incentives in the current 
system reward higher list prices, and HHS is interested in creating new 
incentives to reward drug manufacturers that lower list prices or do 
not increase them.
    Since the beginning of the Trump Administration, HHS has taken a 
number of actions to create incentives to lower list prices. These 
efforts include:
     Proposing in the President's FY2019 budget a 5-part plan 
to modernize the Medicare Part D program, a portion of which includes 
the exclusion of manufacturer discounts from the calculation of 
beneficiary out-of-pocket costs in the Medicare Part D coverage gap, 
and the establishment of a beneficiary out-of-pocket maximum in the 
Medicare Part D catastrophic phase to reduce out-of-pocket spending for 
beneficiaries who spend the most on drugs. The changes in the 
catastrophic phase would shift more responsibility onto plans, creating 
incentives for plans to negotiate with manufacturers to lower prices 
for high-cost drugs. We note that the 5-part plan is intended to be 
implemented together, as eliminating even one piece of the package 
significantly changes the proposal's impacts.
     In addition, the President's FY2019 Budget proposes 
reforms to improve 340B Program integrity and ensure that the benefits 
derived from participation in the program are used to benefit patients, 
especially low-income and uninsured populations.

D. Reducing Patient Out-of-Pocket Spending

    American patients have the right to know what their prescription 
drugs will really cost before they get to the pharmacy or get the drug. 
Too many people abandon their prescriptions at the pharmacy when they 
discover the price is too high, and too many patients are never 
informed of lower cost options.
    Since the beginning of the Trump Administration, HHS has taken a 
number of steps to lower consumer out-of-pocket spending and improve 
transparency. These efforts include:
     Finalizing Medicare Outpatient Prospective Payment System 
(OPPS) rules to reduce beneficiary out-of-pocket spending for 340B 
drugs administered in certain hospitals by an estimated $320 million in 
2018, which would equal $3.2 billion when multiplied over ten years.
     Seeking information about changes in the Medicare 
Prescription Drug Program regulations for contract year 2019 that would 
increase transparency for people with Medicare prescription drug 
coverage. The proposed rule included a Request for Information 
soliciting comment on potential policy approaches for applying some 
manufacturer rebates and all pharmacy price concessions to the price of 
a drug at the point of sale.
     Finalizing changes to the Medicare Prescription Drug 
Program in the 2019 Part C and Part D regulation allowing Medicare 
beneficiaries receiving low-income subsidies to access biosimilars at a 
lower cost.
     Proposing in the President's FY2019 Budget a 5-part plan 
to modernize the Medicare Part D program, a portion of which includes 
eliminating cost-sharing on generic drugs for low-income beneficiaries 
and requiring Medicare Part D plans to apply a substantial portion of 
rebates at the point of sale. We note that the 5-part plan is intended 
to be implemented together, as eliminating even one piece of the 
package significantly changes the proposal's impacts. We also note that 
in the months following this Part D proposed rule and the President's 
budget proposal that included this policy change explicitly, several 
major insurers and pharmacy benefit managers announced they would pass 
along a portion of rebates to individual members in their fully-insured 
populations or when otherwise requested by employers.

II. Responding to President Trump's Call to Action

    President Trump recently reaffirmed his commitment to reducing the 
price of prescription drugs, and called on the Administration to 
propose new strategies and take bold actions to improve competition and 
end the gaming of regulatory processes, support better negotiation of 
drug discounts through government insurance programs, create incentives 
for pharmaceutical companies to lower list prices, and reduce consumer 
out-of-pocket spending at the pharmacy and other care settings. HHS may 
undertake these and other actions, to the extent permitted by law, in 
response to President Trump's call to action.

A. Improve Competition

    In response to President Trump's call to action, HHS may support 
improved competition by:
     Taking steps to prevent gaming of regulatory processes: 
FDA will issue guidance to address some of the ways in which 
manufacturers may seek to use shared system REMS to delay or block 
competition from generic products entering the market.
     Promoting innovation and competition for biologics. FDA 
will issue new policies to improve the availability, competitiveness, 
and adoption of biosimilars as affordable alternatives to branded 
biologics. FDA will also continue to educate clinicians, patients, and 
payors about biosimilar and interchangeable products as we seek to 
increase awareness about these important new treatments.

B. Better Negotiation

    In response to President Trump's call to action, HHS may support 
better negotiation by:
     Directing CMS to develop demonstration projects to test 
innovative ways to encourage value-based care and lower drug prices. 
These models should hold manufacturers accountable for outcomes, align 
with CMS's priorities of value over volume and site-neutral payments, 
and provide Medicare providers, payers, and states with additional 
tools to manage spending for high-cost therapies.
     Allowing Part D plans to adjust formulary or benefit 
design during the benefit year if necessary to address a price increase 
for a sole source generic drug. Presently, Part D plans do not contract 
with generic drug manufacturers for the purchase of generic drugs, and 
generally are not permitted to change their formulary or benefit design 
without CMS approval in

[[Page 22695]]

response to a price increase. This change could ensure Part D plans can 
respond to a price increase by the only manufacturer of a generic drug.
     Providing plans full flexibility to manage high cost drugs 
that do not provide Part D plans with rebates or negotiated fixed 
prices, including in the protected classes. Presently, Part D plans are 
unable to negotiate lower prices for high-cost drugs without 
competition. This change could allow Part D plans to use the tools 
available to private payers outside of the Medicare program to better 
negotiate for these drugs.
     Updating the methodology used to calculate Drug Plan 
Customer Service star ratings for plans that are appropriately managing 
utilization of high-cost drugs. Presently, if a Part D plan issues an 
adverse redetermination decision, the enrollee, the enrollee's 
representative or the enrollee's prescriber may appeal the decision to 
the Independent Review Entity (IRE). This process may discourage Part D 
plan sponsors from appropriately managing utilization of high-cost 
drugs. This change could provide Part D plan sponsors with the ability 
to appropriately manage high-cost changes, while holding sponsors 
accountable primarily using other successful enforcement mechanisms.
     Evaluating options to allow high-cost drugs to be priced 
or covered differently based on their indication. Presently, Part D 
plans must cover and pay the same price for a drug regardless of the 
indication for which it was prescribed. This change could permit Part D 
plans to choose to cover or pay a different price for a drug, based on 
the indication.
     Sending the President a report identifying particular 
drugs or classes of drugs in Part B where there are savings to be 
gained by moving them to Part D.
     Taking steps to leverage the authority created by the 
Competitive Acquisition Program (CAP) for Part B Drugs & Biologicals. 
This program will generally provide physicians a choice between 
obtaining these drugs from vendors selected through a competitive 
bidding process or directly purchasing these drugs and being paid under 
the current average sales price (ASP) methodology. The CAP, or a model 
building on CAP authority, may provide opportunities for Federal 
savings to the extent that aggregate bid prices are less than 106 
percent of ASP, and provides opportunities for physicians who do not 
wish to bear the financial burdens and risk associated with being in 
the business of drug acquisition.
     Working in conjunction with the Department of Commerce the 
U.S. Trade Representative, and the U.S. Intellectual Property 
Enforcement Coordinator to develop the knowledge base necessary to 
address the unfair disparity between the drug prices in America and 
other developed countries. The Trump Administration is committed to 
making the appropriate regulatory changes and seeking legislative 
solutions to put American patients first.

C. Lowering List Prices

    In response to President Trump's call to action, HHS may:
     Call on the FDA to evaluate the inclusion of list prices 
in direct-to-consumer advertising.
     Direct the Centers for Medicare & Medicaid Services to 
make Medicare and Medicaid prices more transparent, hold drug makers 
accountable for their price increases, highlight drugs that have not 
taken price increases, and recognize when competition is working with 
an updated drug pricing dashboard. This tool will also provide 
patients, families, and caregivers with additional information to make 
informed decisions and predict their cost sharing.
     Develop proposals related to the Affordable Care Act's 
Maximum Rebate Amount provision, which limits manufacturer rebates on 
brand and generic drugs in the Medicaid program to 100% of the Average 
Manufacturer Price.

D. Reduce Patient Out-of-Pocket Spending

    In response to President Trump's call for action, HHS may:
     Prohibit Part D plan contracts from preventing pharmacists 
from telling patients when they could pay less out-of-pocket by not 
using their insurance--also known as pharmacy gag clauses.
     Require Part D Plan sponsors to provide additional 
information about drug price increases and lower-cost alternatives in 
the Explanation of Benefits they currently provide their members.

III. Solicitation of Comments

    Building on the ideas already proposed, HHS is considering even 
bolder actions to bring down prices for patients and taxpayers. These 
include new measures to increase transparency; fix the incentives that 
may be increasing prices for patients; and reduce the costs of drug 
development. HHS is interested in public comments about how the 
Department can take action to improve competition and end the gaming of 
regulatory processes, support better negotiation of drug discounts 
through government insurance programs, create incentives for 
pharmaceutical companies to lower list prices, and reduce consumer out-
of-pocket spending at the pharmacy and other care settings. HHS is also 
interested in public comments about the general structure and function 
of the pharmaceutical market, to inform these actions. Proposals 
described in this section are for administrative action, when within 
agency authority, and legislative proposals as necessary.
    In this Request for Information, HHS is soliciting comments on 
these and other policies under active consideration.

A. Increasing competition

    Underpricing or Cost-Shifting. Do HHS programs contain the correct 
incentives to obtain affordable prices on safe and effective drugs? 
Does the Best Price reporting requirement of the Medicaid Drug Rebate 
Program pose a barrier to price negotiation and certain value-based 
agreements in other markets, or otherwise shift costs to other markets? 
Are government programs causing underpricing of generic drugs, and 
thereby reducing long-term generic competition?
    Affordable Care Act Taxes and Rebates. The Affordable Care Act 
imposed tens of billions of dollars in new taxes and costs on drugs 
sold in government programs through a new excise tax, an increase in 
the Medicaid drug rebate amounts, and an extension of these higher 
rebates to commercially-run Medicaid Managed Care Organizations. How 
have these changes impacted manufacturer list pricing practices? Are 
government programs being cross-subsidized by higher list prices and 
excess costs paid by individuals and employers in the commercial 
market? If cross-subsidization exists, are the taxes and artificially-
depressed prices causing higher overall drug costs or other negative 
effects?
Access to Reference Product Samples
    Distribution restrictions. Certain prescription drugs are subject 
to limitations on distribution. Some of these distribution limitations 
are imposed by the manufacturer, while others may be imposed in 
connection with an FDA-mandated Risk Evaluation and Mitigation Strategy 
(REMS). Some manufacturers may be gaming these distribution limitations 
to prevent generic developers from accessing their drugs to conduct the 
tests that are legally required for a generic drug to be brought to 
market, thereby limiting

[[Page 22696]]

opportunities for competition that could place downward pressure on 
drug prices. In some instances, for products that are subject to REMS 
that impact distribution, manufacturers continue to restrict access to 
generic developers even after the FDA issues a letter stating that it 
has favorably evaluated the developer's proposed safety protections for 
testing and would not consider the provision of drug samples to this 
developer for generic development to violate the applicable REMS. 
Should additional steps be taken to review existing REMS to determine 
whether distribution restrictions are appropriate? Are there terms that 
could be included in REMS, or provided in addition to REMS, that could 
expand access to products necessary for generic development? Are there 
other steps that could be taken to facilitate access to products that 
are under distribution limitations imposed by the manufacturer?
    Samples for biosimilars and interchangeables. Like some generic 
drug developers, companies engaged in biosimilar and interchangeable 
product development may encounter difficulties obtaining sufficient 
samples of the reference product for testing. What actions should be 
considered to facilitate access to reference product samples by these 
companies?
Biosimilar Development, Approval, Education, and Access
    Resources and tools from FDA: FDA prioritizes ongoing efforts to 
improve the efficiency of the biosimilar and interchangeable product 
development and approval process. For example, FDA is working to 
identify areas in which additional information resources or development 
tools may facilitate the development of high quality biosimilar and 
interchangeable products. What specific types of information resources 
or development tools would be most effective in reducing the 
development costs for biosimilar and interchangeable products?
    Improving the Purple Book. In the Purple Book, FDA publishes 
information about biological products licensed under section 351 of the 
Public Health Service Act, including reference products, biosimilars, 
and interchangeable products. The Purple Book provides information 
about these products that is useful to prescribers, pharmacists, 
patients, and other stakeholders. FDA is committed to the timely 
publication of certain information about reference product exclusivity 
in the Purple Book. How could the Purple Book be more useful to health 
care professionals, patients, manufacturers, and other stakeholders? 
What additional information could be added to increase the utility of 
the Purple Book?
    Educating providers and patients. Physician and patient confidence 
in biosimilar and interchangeable products is critical to the increased 
market acceptance of these products. FDA intends to build on the 
momentum of past education efforts, such as the launch of its 
Biosimilars Education and Outreach Campaign in 2017, by developing 
additional resources for health care professionals and patients. What 
types of information and educational resources on biosimilar and 
interchangeable products would be most useful to heath care 
professionals and patients to promote understanding of these products? 
What role could state pharmacy practice acts play in advancing the 
utilization of biosimilar products?
    Interchangeability. How could the interchangeability of biosimilars 
be improved, and what effects would it have on the prescribing, 
dispensing, and coverage of biosimilar and interchangeable products?

B. Better Negotiation

    The American pharmaceutical marketplace is built on innovation and 
competition. However, regulations governing how Medicare and Medicaid 
pay for prescription drugs have not kept pace with the availability of 
new types of drugs, particularly higher-cost curative therapies 
intended for use by fewer patients. Drug companies, commercial 
insurers, and states have proposed creative approaches to financing 
these new treatments, including indication-based pricing, outcomes-
based contracts, long-term financing models, and others. Value-based 
transformation of our entire healthcare system is a top HHS priority. 
Improving price transparency is an important part of achieving this 
aim. What steps can be taken to improve price transparency in Medicare, 
Medicaid, and other forms of health coverage, so that consumers can 
seek value when choosing and using their benefits?
    Value-Based Arrangements and Price Reporting. What benefits would 
accrue to Medicare and Medicaid beneficiaries by allowing manufacturers 
to exclude from statutory price reporting programs discounts, rebates, 
or price guarantees included in value-based arrangements? How would 
excluding these approaches from Average Manufacturer Price (AMP) and 
Best Price (BP) calculations impact the Medicaid Drug Rebate program 
and supplemental rebate revenue? How would these exclusions affect 
Average Sales Price (ASP) and 340B Ceiling Prices? What benefits would 
accrue to Medicare and Medicaid beneficiaries by extending the time for 
manufacturers to report restatements of AMP and/or BP reporting, as 
outlined in 42 CFR 447.510, to accommodate adjustments because of 
possible extended VBP evaluation timeframes? Is there a timeframe CMS 
should consider that will allow manufacturers to restate AMP and BP 
without negative impact on state rebate revenue? What modifications 
could be made to the following regulatory definitions in the current 
Medicaid Drug Rebate Program that could facilitate the development of 
VBP arrangements: (1) Bundled sale; (2) free good; (3) unit; or (4) 
best price? Would providing specific AMP/BP exclusions for VBP pricing 
used for orphan drugs help manufacturers that cannot adopt a bundled 
sale approach? What regulatory changes would Medicaid Managed Care 
organizations find helpful in negotiating VBP supplemental rebates with 
manufacturers? How would these changes affect Medicare or the 340B 
program? Are there particular sections of the Social Security Act 
(e.g., the anti-kickback statute), or other statutes and regulations 
that can be revised to assist with manufacturers' and states' adoption 
of value-based arrangements? Please provide specific citations and an 
explanation of how these changes would assist states and manufacturers 
in participating in VBP arrangements.
    Indication-Based Payments. Prescription drugs have varying degrees 
of effectiveness when used to treat different types of disease. Though 
drugs may be approved by the FDA to treat specific indications, or used 
off-label by prescribers to treat others, they are typically subject to 
the same price. Should Medicare or Medicaid pay the same price for a 
drug regardless of the diagnosis for which it is being used? How could 
indication-based pricing support value-based purchasing? What lessons 
could be learned from private health plans? Are there unintended 
consequences of current low-cost drugs increasing in price due to their 
identification as high value? How and by whom should value be 
determined?? Is there enough granularity in coding and reimbursement 
systems to support indication-based pricing? Are changes necessary to 
CMS's price reporting program definitions or how the FDA's National 
Drug Code numbers are used in CMS price reporting programs? Do 
physicians, pharmacists, and insurers have access to all the 
information they

[[Page 22697]]

need to support indication-based payments?
    Long-term Financing Models. States and other payers typically 
establish budgets or premium rates for a given benefit year. As such, 
their budgets may be challenged when a new high-cost drug unexpectedly 
becomes available in the benefit year. Long-term financing models are 
being proposed to help states, insurers, and consumers pay for high-
cost treatments by spreading payments over multiple years. Should the 
state, insurer, drug manufacturer, or other entity bear the risk of 
receiving future payments? How should Medicare or Medicaid account for 
the cost of disease averted by a curative therapy paid for by another 
payer? What regulations should CMS consider revising to allow 
manufacturers and states more flexibility to participate in novel 
value-based pricing arrangements? What effects would these solutions 
have on manufacturer development decisions? What current barriers limit 
the applicability of these arrangements in the private sector? What 
assurances would parties need to participate in more of these 
arrangements, particularly with regard to public programs?
    Part B Competitive Acquisition Program. HHS has the authority to 
operate a Competitive Acquisition Program for Part B drugs. What 
changes would vendors and providers need to see relative to the 2007-
2008 implementation of this program in order to successfully 
participate in the program? Has the marketplace evolved such that there 
would be more vendors capable of successfully participating in this 
program? Are there a sufficient number of providers interested in 
having a vendor selected through a competitive bidding process obtain 
these drugs on their behalf, and bear the financial risk and carrying 
costs? How could this program be implemented in a way that ensures a 
competitive market among multiple vendors? Is it necessary that the 
vendors also hold title to the drugs and provide a distribution channel 
or are there other ways they can provide value? What other approaches 
could lower Part B drug spending for patients of providers choosing not 
to participate, without restricting their access to care?
    Part B to D. The President's Budget requested the authority to move 
some Medicare Part B drugs to Medicare Part D. Which drugs or classes 
of drugs would be good candidates for moving from Part B to Part D? How 
could this proposal be implemented to help reduce out-of-pocket costs 
for the 27% of beneficiaries who do not have Medicare prescription drug 
coverage, or those who have Medicare supplemental benefits in Part B? 
What additional information would inform how this proposal could be 
implemented and operated?
    Part B drugs are reportedly available to OECD nations at lower 
prices than those paid by Medicare Part B providers. HHS is interested 
in receiving data describing the differences between the list prices 
and net prices paid by Medicare Part B providers, and the prices paid 
for these same drugs by OECD nations. Though these national health 
systems may be demanding lower prices by restricting access or delaying 
entry, should Part B drugs sold by manufacturers offering lower prices 
to OECD nations be subject to negotiation by Part D plans? Would this 
lead to lower out-of-pocket costs on behalf of people with Medicare? 
How could this affect access to medicines for people with Medicare?
    Fixing Global Freeloading. U.S. consumers and taxpayers generally 
pay more for brand drugs than do consumers and taxpayers in other OECD 
countries, which often have reimbursements set by their central 
government. In effect, other countries are not paying an appropriate 
share of the necessary research and development to bring innovative 
drugs to the market and are instead freeriding off U.S. consumers and 
taxpayers. What can be done to reduce the pricing disparity and spread 
the burden for incentivizing new drug development more equally between 
the U.S. and other developed countries? What policies should the U.S. 
government pursue in order to protect IP rights and address concerns 
around compulsory licensing in this area.
    Site neutrality for physician-administered drugs. Currently under 
Medicare Part B and often in Medicaid, hospitals and physicians are 
reimbursed comparable amounts for drugs they administer to patients, 
but the facility fees when drugs are administered at hospitals and 
hospital-owned outpatient departments are many times higher than the 
fees charged by physician offices. What effect would a site neutral 
payment policy for drug administration procedures have on the location 
of the practice of medicine? How would this change affect the 
organization of health care systems? How would this change affect 
competition for health care services, particularly for cancer care?
    Site neutrality between inpatient and outpatient setting. Medicare 
payment rules pay for prescription drugs differently when provided 
during inpatient care (Part A) or administered by an outpatient 
physician (Part B). Beneficiaries also have different cost-sharing 
requirements in Part A and Part B. Some drugs can be administered in 
either the inpatient or outpatient setting, while others are currently 
limited to inpatient use because of safety concerns. Do the differences 
between Medicare's Part A and Part B drug payment policies create 
affordability and access challenges for beneficiaries? What policies 
should CMS consider to ensure inpatient and outpatient providers are 
neither underpaid nor overpaid for a drug, regardless of where it was 
administered? Which elements of the inpatient or outpatient setting 
lead to naturally differential payments, and why? If a drug can be used 
safely in the outpatient setting, and achieve the same outcomes at a 
lower cost, how should Medicare encourage the shift to outpatient 
settings? In what instances would inpatient administration actually be 
less costly?
    Accuracy of national spending data. Are annual reports of health 
spending obscuring the true cost of prescription drugs? What is the 
value of better understanding the difference between gross and net drug 
prices? How could the Medicare Trustees Report, annual National Health 
Expenditure publications, Uniform Rate Review Template, and other 
publications more accurately collect and report gross and net drug 
spending in medical and pharmacy benefits? Should average Part D rebate 
amounts be reported separately for small molecule drugs, biologics, and 
high-cost drugs? What innovation is needed to maximize price 
transparency without disclosing proprietary information or data 
protected by confidentiality provisions?

C. Create Incentives To Lower List Prices

    Government programs, commercial insurers, and individual consumers 
pay for drugs differently. The price paid at the pharmacy counter or 
reimbursed to a physician or hospital is the result of many different 
complex financial transactions between drug makers, distributors, 
insurers, pharmacy benefits managers, pharmacies and others. Public 
programs are also subject to state and Federal regulations governing 
what drugs are covered, who can be paid for them, and how much will be 
paid. Too often, these negotiations do not result in the lowest out-of-
pocket costs for consumers, and may actually be causing higher list 
prices.
    Fiduciary duty for Pharmacy Benefit Managers. Pharmacy Benefit 
Managers (PBMs) and benefits consultants help buyers (insurers, large 
employers) seek rebates intended to lower net drug prices, and help 
sellers (drug

[[Page 22698]]

manufacturers) pay rebates to secure placement on health plan 
formularies. Most current PBM contracts may allow them to retain a 
percentage of the rebate collected and other administrative or service 
fees.
    Do PBM rebates and fees based on the percentage of the list price 
create an incentive to favor higher list prices (and the potential for 
higher rebates) rather than lower prices? Do higher rebates encourage 
benefits consultants who represent payers to focus on high rebates 
instead of low net cost? Do payers manage formularies favoring benefit 
designs that yield higher rebates rather than lower net drug costs? How 
are beneficiaries negatively impacted by incentives across the benefits 
landscape (manufacturer, wholesaler, retailer, PBM, consultants and 
insurers) that favor higher list prices? How can these incentives be 
reset to prioritize lower out of pocket costs for consumers, better 
adherence and improved outcomes for patients? What data would support 
or refute the premise described above?
    Should PBMs be obligated to act solely in the interest of the 
entity for whom they are managing pharmaceutical benefits? Should PBMs 
be forbidden from receiving any payment or remuneration from 
manufacturers, and should PBM contracts be forbidden from including 
rebates or fees calculated as a percentage of list prices? What effect 
would imposing this fiduciary duty on PBMs on behalf of the ultimate 
payer (i.e., consumers) have on PBMs' ability to negotiate drug prices? 
How could this affect manufacturer pricing behavior, insurance, and 
benefit design? What unintended consequences for beneficiary out-of-
pocket spending and Federal health program spending could result from 
these changes?
    Reducing the impact of rebates. Increasingly higher rebates in 
Federal health care programs may be causing higher list prices in 
public programs, and increasing the prices paid by consumers, 
employers, and commercial insurers. What should CMS consider doing to 
restrict or reduce the use of rebates? Should Medicare Part D prohibit 
the use of rebates in contracts between Part D plan sponsors and drug 
manufacturers, and require these contracts to be based only on a fixed 
price for a drug over the contract term? What incentives or regulatory 
changes (e.g., removing the discount safe harbor) could restrict the 
use of rebates and reduce the effect of rebates on list prices? How 
would this affect the behavior of drug manufacturers, PBMs, and 
insurers? How could it change formulary design, premium rates, or the 
overall structure of the Part D benefit?
    Incentives to lower or not increase list prices. Should 
manufacturers of drugs who have increased their prices over a 
particular lookback period or have not provided a discount be allowed 
to be included in the protected classes? Should drugs for which a price 
increase has not been observed over a particular lookback period be 
treated differently when determining the exceptions criteria for 
protected class drugs? What should CMS consider doing, under current 
authorities, to create incentives for Part D drug manufacturers 
committing to a price over a particular lookback period? How long 
should the lookback period be?
    The Healthcare Common Procedure Coding System (HCPCS) codes for new 
Part B drugs are not typically assigned until after they are 
commercially available. Should they be available immediately at launch 
for new drugs from manufacturers committing to a price over a 
particular lookback period? What should CMS consider doing, under 
current authorities, to create incentives for Part B drugs committing 
to a price over a particular lookback period? How long should the 
lookback period be?
    How could these incentives affect the behavior of manufacturers and 
purchasers? What are the operational concerns to implementing them? Are 
there other incentives that could be created to reward manufacturers of 
drugs that have not taken a price increase during a particular lookback 
period?
    Inflationary rebate limits. The Department is concerned that 
limiting manufacturer rebates on brand and generic drugs in the 
Medicaid program to 100% of calculated AMP allows for excessive price 
increases to be taken without manufacturers facing the full effect of 
the price inflationary penalty established by Congress. This policy, 
implemented as part of the ACA, may allow for runaway price increases 
and cost-shifting. When is this limitation a valid constraint upon the 
rebates manufacturers should pay? What impacts would removing the cap 
on the inflationary rebate have on list prices, price increases over 
time, and public and private payers?
    Exclusion of certain payments, rebates, or discounts from the 
determination of Average Manufacturer Price and Best Price. The 
Department is concerned that excluding pharmacy benefit manager rebates 
from the determination of Best Price, implemented as part of the ACA, 
may allow for runaway price increases and cost-shifting. The Department 
is also interested in learning more about the effect of excluding 
payments received from, and rebates or discounts provided to pharmacy 
benefit managers (PBMs) from the determination of Average Manufacturer 
Price.
    What impacts would these changes have on list prices, price 
increases over time, and public and private payers? What data would 
support or refute the premise described above?
    Copay discount cards. Does the use of manufacturer copay cards help 
lower consumer cost or actually drive increases in manufacturer list 
price? Does the use of copay cards incent manufacturers and PBMs to 
work together in driving up list prices by limiting the transparency of 
the true cost of the drug to the beneficiary? What data would support 
or refute the premise described above?
    CMS regulations presently exclude manufacturer sponsored drug 
discount card programs from the determination of average manufacturer 
price and the determination of best price. What effect would 
eliminating this exclusion have on drug prices?
    Would there be circumstances under which allowing beneficiaries of 
Federal health care programs to utilize copay discount cards would 
advance public health benefits such as medication adherence, and 
outweigh the effects on list price and concerns about program 
integrity? What data would support or refute this?
The 340B Drug Discount Program
    The 340B Drug Pricing Program was established by Congress in 1992, 
and requires drug manufacturers participating in the Medicaid Drug 
Rebate Program to provide covered outpatient drugs to eligible health 
care providers--also known as covered entities--at reduced prices. 
Covered entities include certain qualifying hospitals and Federal 
grantees identified in section 340B of the Public Health Service Act 
(PHSA). The Health Resources and Services Administration (HRSA) 
administers and oversees the 340B program, and the discounts provided 
may affect the prices paid for drugs used by Medicare beneficiaries, 
people with Medicaid, and those covered by commercial insurance.
    Program Growth. The 340B program has grown significantly since 
1992--not only in the number of covered entities and contract 
pharmacies, but also in the amount of money saved by covered entities. 
HRSA estimates that covered entities saved approximately $6 billion on 
approximately $12 billion in discounted purchases in Calendar Year

[[Page 22699]]

(CY) 2015 by participating in the 340B program.\2\ It is estimated that 
discounted drug purchases made by covered entities under the 340B 
program totaled more than $16 billion in 2016--a more than 30 percent 
increase in 340B program purchases in just one year.\3\ How has the 
growth of the 340B drug discount program affected list prices? Has it 
caused cross-subsidization by increasing list prices applicable in the 
commercial sector? What impact has this had on insurers and payers, 
including Part D plans? Does the Group Purchasing Organization (GPO) 
exclusion, the establishment of the Prime Vendor Program, and the 
current inventory models for tracking 340B drugs increase or decrease 
prices? What are the unintended consequences of this program? Would 
explicit general regulatory authority over all elements of the 340B 
Program materially affect the elements of the program affecting drug 
pricing?
---------------------------------------------------------------------------

    \2\ 340B Drug Pricing Program Ceiling Price and Manufacturer 
Civil Monetary Penalties Regulation, 82 FR 1210, 1227 (Jan. 5, 
2017).
    \3\ Aaron Vandervelde and Eleanor Blalock, Measuring the 
Relative Size of the 340B Program: 2012-2017, BERKELEY RESEARCH 
GROUP (July 2017), available at https://www.thinkbrg.[com/media/
publication/928]_Vandervelde_Measuring340Bsize-July-
2017_WEB_FINAL.pdf.
---------------------------------------------------------------------------

    Program Eligibility. Would changing the definition of ``patient'' 
or changing the requirements governing covered entities contracting 
with pharmacies or registering off-site outpatient facilities (i.e., 
child sites) help refocus the program towards its intended purpose?
    Duplicate Discounts. The 340B statute prohibits duplicate 
discounts. Manufacturers are not required to provide a discounted 340B 
price and a Medicaid drug rebate for the same drug. Are the current 
mechanisms for identifying and preventing duplicate discounts 
effective? Are drug companies paying additional rebates over the 
statutory 340B discounts for drugs that have been dispensed to 340B 
patients covered by commercial insurance? What is the impact on drug 
pricing given that private insurers oftentimes pay commercial rates for 
drugs purchased at 340B discounts? Do insurers, pharmacy, PBM, or 
manufacturer contracts consider, address, or otherwise include language 
regarding drugs purchased at 340B discounts? What should be considered 
to improve the management and the integrity of claims for drugs 
provided to 340B patients in the overall insured market? What 
additional oversight or claims standards are necessary to prevent 
duplicate discounts in Medicaid and other programs?

D. Reduce Patient Out-of-Pocket Spending

    Part D end-of-year statement on drug price changes and rebates 
collected. Part D plans presently provide their members with an 
explanation of benefits, which includes information about the 
negotiated price for each of their dispensed prescriptions, and what 
the plan, member, and others paid. What additional information could be 
added about the rate of change in those prices over the course of the 
benefit year? Alternatively, could pharmacists could be empowered to 
inform beneficiaries when prices for their drugs have changed? Would 
this information be best distributed by pharmacists at the point of 
sale, by Medicare as an annual report, or by the health plan on a more 
regular basis, or some combination of these approaches? Could CMS 
improve transparency for Medicare beneficiaries without violating the 
Part D program's confidentiality protections? What operational 
challenges or concerns about burden exist with this approach, and how 
could CMS measure compliance with this approach?
    Federal preemption of contracted pharmacy gag clause laws. Right 
now, some contracts between health plans and pharmacies do not allow 
the pharmacy to inform a patient that the same drug or a competitor 
could be purchased at a lower price off-insurance. What purpose do 
these clauses serve other than to require beneficiaries pay higher out-
of-pocket costs? What other communication barriers are in place between 
pharmacists and patients that could be impeding lower drug prices, out-
of-pocket costs, and spending? Should pharmacists be required to ask 
patients in Federal programs if they'd like information about lower-
cost alternatives? What other strategies might be most effective in 
providing price information to consumers at the point of sale?
    Inform Medicare beneficiaries with Medicare Part B and Part D about 
cost-sharing and lower-cost alternatives. Health plans and pharmacy 
benefit managers have found new ways to inform prescribers and 
pharmacists, when prescribing or dispensing a new prescription, about 
the formulary options, expected cost-sharing, and lower-cost 
alternatives specific to individual patients. How could these tools 
reduce out-of-pocket spending for people with Medicare? Is this 
technology present in all or most electronic prescribing or pharmacy 
dispensing systems? Should Medicare require the use of systems that 
support providing this information to patients? What existing systems, 
tools, or third-party applications could support the creation of these 
tools? Does the technology exist for this approach to be quickly and 
inexpensively implemented? Would this increase costs for the Medicare 
program? Does this create unreasonable burden for prescribers or 
pharmacists?

E. Additional Feedback

    We are interested in all suggestions to improve the affordability 
and accessibility of prescription drugs, including reflections and 
answers to questions not specifically asked above. Whenever possible, 
respondents are asked to draw their responses from objective, 
empirical, and actionable evidence and to cite this evidence within 
their responses.
    What other regulations or government policies may be increasing 
list prices, net prices, and out-of-pocket drug spending? What other 
policies or legislative proposals should HHS consider to lower drug 
prices while encouraging innovation? What data or evidence should HHS 
consider when developing proposals to lower drug prices?
    HHS is actively working to reduce regulatory burdens. To what 
extent do current regulations or government policies related to 
prescription drug pricing impose burden on providers, payers, or 
others? To what extent do the planned actions described in this 
document impose burden, and do these burdens outweigh the benefits?
    This is a request for information only. Respondents are encouraged 
to provide complete but concise responses to the questions outlined 
above. We note that a response to every question is not required. This 
request for information is issued solely for information and planning 
purposes; it does not constitute a notice of proposed rulemaking or 
request for proposals, applications, proposal abstracts, or quotations. 
This request for information does not commit the United States 
Government (``Government'') to contract for any supplies or services or 
make a grant award. Further, HHS is not seeking proposals through this 
request for information and will not accept unsolicited proposals. 
Respondents are advised that the Government will not pay for any 
information or administrative costs incurred in response to this 
request for information; all costs associated with responding to this 
request for information will be solely at the interested party's 
expense.

[[Page 22700]]

Not responding to this request for information does not preclude 
participation in any future rulemaking or procurement, if conducted. It 
is the responsibility of the potential responders to monitor this 
request for information announcement for additional information 
pertaining to this request. We also note that HHS may not respond to 
questions about the policy issues raised in this request for 
information. HHS may or may not choose to contact individual 
responders. Such communications would only serve to further clarify 
written responses. Contractor support personnel may be used to review 
request for information responses. Responses to this notice are not 
offers and cannot be accepted by the Government to form a binding 
contract or issue a grant. Information obtained as a result of this 
request for information may be used by the Government for program 
planning on a non-attribution basis. Respondents should not include any 
information that might be considered proprietary or confidential. This 
request for information should not be construed as a commitment or 
authorization to incur cost for which reimbursement would be required 
or sought. All submissions become Government property and will not be 
returned. HHS may publicly post the comments received, or a summary 
thereof. While responses to this request for information do not bind 
HHS to any further actions related to the response, all submissions 
will be made publicly available on https://www.regulations.gov.

IV. Collection of Information Requirements

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. This request for information constitutes a general 
solicitation of comments. In accordance with the implementing 
regulations of the Paperwork Reduction Act (PRA) at 5 CFR 1320.3(h)(4), 
information subject to the PRA does not generally include ``facts or 
opinions submitted in response to general solicitations of comments 
from the public, published in the Federal Register or other 
publications, regardless of the form or format thereof, provided that 
no person is required to supply specific information pertaining to the 
commenter, other than that necessary for self-identification, as a 
condition of the agency's full consideration of the comment.'' 
Consequently, this document need not be reviewed by the Office of 
Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

    Dated: May 11, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-10435 Filed 5-14-18; 11:15 am]
 BILLING CODE 4150-03-P