Lanton Law Speaks with Drug Topics on Its Over the Counter Podcast on MFN

Ron Lanton of Lanton Law speaks with Drug Topics on their podcast episode of Over the Counter. Ron discusses developing policy expected to enact significant change in the pharmacy industry and beyond titled “Most Favored Nation: Global Benchmarking to Reimagine US Drug Distribution.” Click here to access the podcast.

Lanton Law Moderates Most Favored Nation Panel for MJH Life Sciences

Lanton Law was honored to be selected as a moderator for the MJH Life Sciences panel titled ““Most Favored Nation Order: Legal Battles, Market Shifts, and the Future of Drug Pricing Reform.”

The AJMC wrote a nice blog post on the panel. The panelists, included moderator Ron Lanton, JD, of Lanton Law; Mel Whittington, PhD, managing director and head of the Leerink Center for Pharmacoeconomics at MEDACorp, Inc.; Stephen Forster, JD, partner at the Health Care and Life Sciences Practice at Jones Day; and Peter Rubin, executive director of No Patient Left Behind. The panel discussed the voluntary Pfizer agreement, which aims to reduce prices by up to 85%, and the new TrumpRx platform, set to launch in 2026 to allow direct-to-consumer medication purchases.

The Pharmaceutical Executive story on the panel can be found here.

The AJMC article on the panel can be viewed here.

CMS Makes An Impactful Change Regarding Biosimilars

Within its final calendar year 2025 Medicare Advantage and Part D final rule seen here, the Centers for Medicare and Medicaid Servces (CMS) is allowing Part D sponsors the ability to make midyear substitutions of biosimilars for their reference products on their formularies. 

Specifically:

•  All biosimilars may be substituted as formulary maintenance changes: Part D sponsors may treat formulary substitutions of all biosimilars for their reference products as “maintenance changes” that would not require explicit prior approval by CMS.  This option has previously been available only for interchangeable biological products. Part D sponsors previously had to obtain explicit approval prior to substituting biosimilars other than interchangeable biological products, and these substitutions applied only to enrollees who began therapy after the effective date of the change — delaying enrollees’ access to cheaper options. Treating all biosimilar substitutions as maintenance changes means that midyear formulary substitutions of biosimilars for their reference products would apply to all enrollees (including those already taking the reference product prior to the effective date of the change) following a 30-day advance notice to affected enrollees. 

• New interchangeable biological products may be immediately substituted: We are finalizing additional flexibility for interchangeable biological products not on the market at the time that Part D sponsors submit their initial formulary for CMS approval. Part D sponsors meeting certain requirements have the additional option to immediately substitute a new interchangeable biological product for a reference product and provide notice of the change to affected enrollees after making such change. 

Biosimilar policy continues to evolve. It’s important to be in the know to plan accordingly. 

Lanton Law is a national boutique law and lobbying firm that focuses on healthcare/life sciences and technology. 

If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

Pharmaceutical Commerce Speaks with Lanton Law about New Drug Pricing Models

Pharmaceutical Commerce interviews Ron Lanton; Partner at Lanton Law on newly emerging pricing models such as the cost plus drug model. Ron gives his insight on what impacts these emerging models will have on the pharmaceutical industry. The interview can be seen here.

New York Proposes New PBM Regulations

The New York State Department of Financial Services has proposed new rules surrounding pharmacy benefit managers (PBMs) that deal with establishing definitions; licensing; contracting with pharmacies; acquisition of PBMs; consumer protections and audit regulations regarding PBMs.

This rulemaking is one to monitor especially with the recent events from the 10th Circuit. We have written a recent blog post on this developments surrounding this decision. 

Lanton Law is a national boutique law and lobbying firm that focuses on healthcare/life sciences and technology. Our pharmacy practice has been helping pharmacies nationwide with operational issues, mergers and acquisitions, regulatory inquiries, audits, licensure, employment issues and contracting. Our lobbying efforts help pharmacies nationwide achieve improved business climates through carefully crafted legislation as well as counseling clients on responding to relevant proposed rules.  

If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

Tenth Circuit Deals Pharmacy a Set Back Regarding Oklahoma PBM Law

In 2020 the pharmacy industry witnessed much needed relief with the U.S. Supreme Court ruling on behalf of pharmacy in the unanimous Rutledge v. PCMA case. That decision held that a federal law, the Employee Retirement Income Security Act of 1974 (ERISA), does not prevent states from enacting laws regulating the abusive payment practices of PBMs. 

However; this week The U.S. Court of Appeals for the Tenth Circuit issued a decision agreeing with the Pharmaceutical Care Management Association (PCMA) that Oklahoma's Patient's Right to Pharmacy Choice Act (the Act) is preempted by ERISA because it interferes with central matters of plan administration by restricting ERISA plans from structuring their pharmacy networks in a particular manner. The court also held that ERISA preempted the Act's provision that would bar pharmacy benefit managers (PBMs) from denying, limiting, or terminating a pharmacy's contract because one of its pharmacists is on probation with the state pharmacy board.

This is definitely an inconsistent decision from Rutledge and should be overturned due to recent U.S. Supreme Court precedent. 

Lanton Law is a national boutique law and government affairs firm that closely monitors legislative, regulatory and legal developments in the healthcare and life science spaces. Contact us to learn about how either our legal or lobbying services can help you attain your goals.

The Pharmacy Benefit Manager Transparency Act of 2022 Introduced in Congress

The Pharmacy Benefit Manager Transparency Act of 2022 was introduced by Senate Commerce Science, and Transportation Committee Chair Maria Cantwell and Senate Judiciary Committee Ranking Member Chuck Grassley. 

The bill which can be viewed here, seeks to prevent unfair and deceptive acts or practices and the dissemination of false information related to pharmacy benefit management services for prescription drugs, and for other purposes. 

According to the Senate Commerce Committee’s announcement the proposed bill seeks to specifically do the following: 

PROHIBITS UNFAIR OR DECEPTIVE PRICING PRACTICES

The legislation would make it illegal for PBMs to engage in “spread pricing” in which they charge health plans and payers more for a prescription drug than what they reimburse to the pharmacy, and then pocket the difference – the “spread” – as profit.

The bill would also prohibit PBMs from arbitrarily, unfairly, or deceptively clawing back payments made to pharmacies, or arbitrarily, unfairly, or deceptively increasing fees or lowering reimbursements to offset reimbursement changes in federally-funded health plans.

INCENTIVIZES FAIR AND TRANSPARENT PBM PRACTICES

The bill would encourage fair and transparent PBM practices that benefit local pharmacies and consumers by making clear that a PBM would not be in violation of the Act if it:

Passes along 100 percent of any rebate to the health plan or payer; and

Provide full and complete disclosure of:

• The cost, price, and reimbursement of prescription drugs to the health plans and pharmacies;

• All fees,markups, and discounts the PBM charges or imposes on health plans and pharmacies; or

• The aggregate remuneration fees it receives from drugmakers to health plans, payers, and any federal agency.

MANDATES TRANSPARENCY

The bill would require PBMs to file an annual report with the FTC, shining a brighter light on how they charge health plans and pharmacies for prescription drugs. Specifically, it would require PBMs to disclose:

• The aggregate amount of the difference between how much each health plan paid the PBM for prescription drugs, and how much the PBM paid each pharmacy on behalf of health plans for such drugs;

• The aggregate total amount of fees the PBM charged to pharmacies and the total amount of reimbursements the PBM clawed back from pharmacies;

• Why the cost, copay, coinsurance, or deductible for a consumer increased, or why the reimbursement rate to a pharmacy decreased for a prescription drug; and

• For PBMs that control or are affiliated with a pharmacy, a description of any differences between what they reimburse or charge affiliated and nonaffiliated pharmacies.

ENFORCEMENT

The bill would authorize the FTC and state attorneys general to enforce its mandates, including by seeking civil penalties from PBM companies for each violation, plus an additional penalty of up to $1 million.

Lanton Law is a national boutique law and lobbying firm that focuses on healthcare/life sciences and technology. Our pharmacy practice has been helping pharmacies nationwide with operational issues, mergers and acquisitions, regulatory inquiries, audits, licensure, employment issues and contracting. Our lobbying efforts help pharmacies nationwide achieve improved business climates through carefully crafted legislation.  

If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

Lanton Law Micro Webinar on the Upcoming FTC Comment Period on PBMs

We have a micro webinar on the upcoming FTC comment period on pharmacy benefit managers. Click here to view the micro webinar.

Lanton Law Quoted in Law360 Article titled "High Court Gives Green Light to Regulate PBMs"

Lanton Law was quoted in law 360’s article titled "High Court Gives Green Light to Regulate PBMs". The article was written by Emily Brill.

For those that have trouble with the link we have provided the story below.

Law360 (December 10, 2020, 10:08 AM EST) -- The U.S. Supreme Court backed an Arkansas law Thursday that bans insurers' affiliates from shortchanging pharmacies, clearing the way for other states to regulate pharmacy benefit managers and throwing a lifeline to small pharmacies that said PBMs' business practices were bankrupting them.

Pharmacies' advocates celebrated Arkansas' 8-0 win as "a historic moment for pharmacies, patients and state's rights," saying the ruling allows states such as New York to move forward with long-discussed plans to regulate the industry that manages insurers' drug components.

The ruling clarifies that PBMs can't use their ties with employee benefit plans to argue that only the federal Employee Retirement Income Security Act can regulate their business dealings. ERISA only preempts states' ability to regulate employee benefit plans, leaving states free to oversee PBMs and other members of the health care supply chain, the justices said.

In an opinion authored by Justice Sonya Sotomayor and joined by all the justices except newcomer Justice Amy Coney Barrett, who sat out from considering the case, the court clarified that ERISA won't preempt a regulation simply because it could increase a benefit plan's operating costs. The regulation actually has to affect the way the plan works to trigger ERISA's preemption provision, the court wrote.

"ERISA does not preempt state rate regulations that merely increase costs or alter incentives for ERISA plans without forcing plans to adopt any particular scheme of substantive coverage," Justice Sotomayor wrote.

Justice Clarence Thomas authored a concurring opinion, saying he favors more of a textualist approach to applying ERISA's preemption provision — Section 1144 of the sprawling law — than his colleagues have applied in the past.

"I write separately because I continue to doubt our ERISA preemption jurisprudence. The plain text of ERISA suggests a two-part preemption test … but our precedents have veered from the text, transforming §1144 into a vague and potentially boundless … preemption clause," Justice Thomas wrote. "That approach … offers little guidance or predictability. We should instead apply the law as written."

The ruling overturns a 2018 decision by the Eighth Circuit, which had held that ERISA preempted Arkansas' Act 900. That law, passed in 2015, forbade PBMs from reimbursing pharmacies for drugs at rates below the drugs' acquisition costs. Arkansas passed it in response to community pharmacies' complaints that PBMs were reimbursing them less than they were shelling out to purchase drugs, while reimbursing PBM-affiliated pharmacies at significantly higher rates.

The win is significant for states, which had banded together in a bipartisan coalition to back Arkansas' position in the case. Forty-seven attorneys general told the high court in the spring that preserving states' ability to regulate PBMs was essential for curbing harmful business practices in health care and protecting consumers' access to medication. Arkansas Attorney General Leslie Rutledge called the ruling "a win for all Arkansans and Americans."

The ruling also hands a victory to local pharmacists, who say PBMs' practice of shortchanging them on drug reimbursements while overpaying PBM-affiliated pharmacies has threatened to put them out of business. The National Community Pharmacists Association cheered the high court's decision Thursday, saying it was thrilled that the Supreme Court had greenlit states to clamp down on that practice.

"This is a historic victory for independent pharmacies and their patients. And it confirms the rights of states to enact reasonable regulations in the name of fair competition and public health," said National Community Pharmacists Association CEO B. Douglas Hoey, who is a pharmacist himself.

The Pharmaceutical Care Management Association, the PBM industry lobbying group that sued over Act 900, said Thursday that it was disappointed in a decision that it claimed would "result in the unraveling of federal protections under ERISA."

"As states across the country consider this outcome, we would encourage they proceed with caution and avoid any regulations around prescription drug benefits that will result in higher health care costs for consumers and employers," the group said in a statement.

Attorneys said the decision provides much-needed clarity on the scope of ERISA's preemption provision. The ruling preserves Section 1144's broad reach in the context of benefit plan legislation but establishes that preemption can't be wielded as a weapon to knock out regulation of "middlemen somewhere in the [health care] supply chain," as James Gelfand, senior vice president of health policy at the ERISA Industry Committee, put it.

"For far too long, the PBM industry has confused both legislators and regulators with overly broad interpretations of ERISA in order to dodge oversight," said health care attorney Ron Lanton. "We have been arguing for years that ERISA should not be interpreted to where it would be virtually impossible to regulate PBMs."

Linda Clark, a health care attorney and partner at Barclay Damon LLP, seconded that notion. "The fact you have a tangential relationship with entities that are regulated by ERISA doesn't make you completely immune from state regulation of anything you do," she said, adding that PBMs need to be regulated to prevent them from "employ[ing] even more draconian practices in management of their pharmacy networks."

Michael Klenov, a benefits attorney and partner at Korein Tillery, said Thursday that the ruling will likely discourage challenges to other states' attempts to regulate PBMs. But "it may also embolden states to push the boundaries of health care-related legislation further, thus leading to new challenges that will test where the courts draw the preemption boundaries," he said.

The federal government, which weighed in as an amicus in support of Arkansas, did not respond to a request for comment Thursday.

Arkansas is represented by Attorney General Leslie Rutledge, Nicholas Jacob Bronni and Shawn J. Johnson of the Arkansas Attorney General's Office.

The federal government is represented by Kate O'Scannlain, G. William Scott, Thomas Tso, Wayne Berry and Stephanie Bitto of the U.S. Department of Labor and by Edwin Kneedler and Frederick Liu of the U.S. Department of Justice.

The Pharmaceutical Care Management Association is represented by Michael B. Kimberly, Sarah P. Hogarth and Matthew Waring of McDermott Will & Emery LLP and by Seth P. Waxman, Catherine M.A. Carroll, Paul R.Q. Wolfson, Justin Baxenberg, Claire H. Chung and Hillary S. Smith of WilmerHale.

The case is Rutledge v. Pharmaceutical Care Management Association, case number 18-540, in the Supreme Court of the United States.

--Editing by John Oudens and Haylee Pearl.

Update: This article has been updated with additional comments and more information about the case.

The Administration Releases Executive Order Targeting Insulin and Injectable Epinephrine via 340B

The White House has announced a few Executive Orders targeting healthcare. One Executive Order titled Executive Order on Access to Affordable Life-saving Medications targets insulin and injectable epinephrine by requiring federally qualified community health centers to pass through 340B program discounts to patients using insulin and epinephrine auto-injectors. 

Specifically the Executive Order outlines the following: 

“It is the policy of the United States to enable Americans without access to affordable insulin and injectable epinephrine through commercial insurance or Federal programs, such as Medicare and Medicaid, to purchase these pharmaceuticals from an FQHC at a price that aligns with the cost at which the FQHC acquired the medication.

To the extent permitted by law, the Secretary of Health and Human Services shall take action to ensure future grants available under section 330(e) of the Public Health Service Act, as amended, 42 U.S.C. 254b(e), are conditioned upon FQHCs’ having established practices to make insulin and injectable epinephrine available at the discounted price paid by the FQHC grantee or sub-grantee under the 340B Prescription Drug Program (plus a minimal administration fee) to individuals with low incomes, as determined by the Secretary, who:

(a)  have a high cost sharing requirement for either insulin or injectable epinephrine;

(b)  have a high unmet deductible; or

(c)  have no health care insurance.”

This will be interesting to see how this gets enforced. The 340B program which is where manufacturers provide outpatient drugs to eligible healthcare entities at a reduced price has been embroiled in controversy the last several years between manufacturers and hospitals over pricing. This Order does not address hospital practices. 

Lanton Law is a national boutique law and government affairs firm that focuses on healthcare/life sciences, technology and finance. If you are an industry stakeholder with questions about the current landscape or if you would like to discuss how your organization’s strategic initiatives might be impacted by either Congress, regulatory agencies or legal decisions, contact us today.

Lanton Law Quoted in New Medscape Article On Biosimilar Insulin

Lanton Law was quoted in a new Medscape article on biosimilar insulin. Click here to read the article

If you are having trouble accessing the link we have included the article for you below:

A new US Food and Drug Administration (FDA) policy may help get novel biosimilar insulins to market more quickly, but it will be no guarantee that the products will be significantly less expensive than branded insulins, say analysts.

The FDA recently issued new draft guidance for insulin biosimilar manufacturers.

The recommendations "may result in a more efficient development program that could ultimately bring biosimilar or interchangeable insulin products to the market more quickly," said Brett P. Giroir, MD, acting FDA commissioner, in a statement by the agency. 

"The availability of approved biosimilar and interchangeable insulin products is expected to increase access and reduce costs of insulin products," he added.

Meanwhile, the Republican leaders of the US House Energy and Commerce Committee have written to the nation's largest insurers to demand that they provide information on their involvement in the rising price of insulin.

The committee wrote to Anthem, Blue Cross Blue Shield, CVS Health, Cigna Corporation, Kaiser Permanente, and UnitedHealth Group seeking transparency on rebate programs with pharmacy benefit managers (PBMs); detailed information on how they design their benefit plans and formularies; how much enrollees in high-deductible plans pay out of pocket for insulin; and whether the insurers offer patient assistance programs to help defray the cost of insulin.

"Unfortunately, even though the average net price that manufacturers are receiving for many insulin products is decreasing and PBMs are working with health plans to help reduce the cost of insulin for health plans, many Americans are facing increased out-of-pocket costs for their insulin at the pharmacy counter," the members of Congress wrote.

"Floodgates Opening": Clearer Path to Market for Biosimilar Insulins 

Analysts and one industry group applauded the FDA draft guidance, stating that it gives a much clearer picture of how products can be developed and approved.

The new guidance — which will be made final once the agency takes public comments into account — has been expected for some time. The FDA issued final guidance on interchangeability of biosimilars in May and held a public hearing specifically on interchangeability of insulin biosimilars not long after.

The Association for Accessible Medicines (AAM) said it was continuing to review the draft guidance but believes it reflects much of the concerns and feedback it gave the agency at the May hearing.

"We find FDA's flexibility on the implementation of statutory interchangeability requirements to be particularly positive," Christine Simmon, AAM senior vice president for policy and executive director of the Biosimilars Council told Medscape Medical News.

"This really was the floodgates opening," said Ron Lanton, III, a Washington, DC-based attorney who studies regulatory policy and has represented primarily small pharmacy chains.

"The United States is not an easy place for doing business when you're talking about biosimilars," he told Medscape Medical News.

The FDA has approved 26 biosimilars, including two insulins which, to date, have been labeled "follow-ons", Basaglar (insulin glargine, Lilly) and Admelog(insulin lispro, Sanofi), as they were brought to market under a different regulatory pathway, but are considered to be copycat or biosimilar versions of the respective branded insulin products.

The guidance "is one step forward for manufacturers" to say, "now that we know what the rules are, we can start to compete," said Lanton.

He believes the draft guidance, if ultimately adopted, will get biosimilars to market faster.

Dave Clissold, a food and drug lawyer with Washington, DC-based Hyman Phelps McNamara, which has represented biosimilar and branded insulin manufactures, also believes the policy will speed up new product development.

Also important, said Clissold, is the FDA's decision that manufacturers won't necessarily have to conduct studies that compare immunogenicity to the reference product.

That goes further than what had been expected but will be welcomed by biosimilar makers, Clissold told Medscape Medical News.

The FDA is communicating that "insulins are special biologics. They're small, they're not very complicated, we know a lot about them. There are all different types of insulins on the market right now, so we've got a ton of clinical experience with these things," he added.

Skipping those comparative studies won't be automatic, he said.

"But there is a path forward" that manufacturers can take to justify why they think they don't need to conduct what are usually costly and long studies, he explained.

Price Still a Question Mark

Clissold continued by noting that the FDA cannot dictate pricing, but ideally, "more competition will drive prices down."

"We've certainly seen that for the big blockbuster generic drugs," he said.

Lanton said that although the agency is attempting to harness competition to lower prices, that's not a given in the US market.

"We really don't know what the pharmacy benefit managers are going to do," he said.

Lanton pointed out the lack of transparency in the rebate scheme between PBMs and drug makers.

"What's going to prevent an innovator from coming in, talking to a PBM, and giving a steeper discount?" he said.

"Even if the price is lower, with the rebate still not being addressed, is that going to have an effect on anything?" Lanton wondered.

New Administration Rules Seek Healthcare Cost Transparency

With the release of the Administration’s American Patient’s First Blueprint in May 2018, price transparency was shown to be a centerpiece of the Administration’s governing agenda. Last week, the Administration released two rules, each at different points of the rulemaking process. 

The first is a final rule effective 1/1/21 targeting hospitals that will require them to display their negotiated rate to patients. The second is a proposed rule which according to CMS  “includes two approaches to make health care price information accessible to consumers and other stakeholders, allowing for easy comparison-shopping.” The proposal has a 60 day comment period. At this point in time there is no anticipated effective date.  

Pricing transparency continues to be a re-emerging theme that shows no signs of slowing down. If you need strategic advice or lobbying where price transparency is concerned, contact us at Lanton Strategies. If you need legal advice with regulatory or compliance concerns, contact us at Lanton Law.