NH Prescription Drug Affordability Board Must Get the Rules Right!

Donald J. Pfundstein
Published on : 2022-07-18

America’s Health Insurance Plans (AHIP) believes everyone should be able to get the medications they need at a cost they can afford.  Don’t you?

The Prescription Drug Price Threat

The root cause of our universal struggle to get the medications we need at an affordable cost is the Price.   

As AHIP recently commented to the Federal Trade Commission:

It is clear drug prices are out of control, and the problem is the price that Big Pharma, and Big Pharma alone, controls. While Big Pharma can choose to lower those prices for every American, they instead continue to raise prices year after year – even several times a year – which makes health care less affordable and accessible for everyone.  See AHIP public comments here.

Importantly, New Hampshire is attacking outrageous prescription drug prices head on.  The Prescription Drug Affordability Board (PDAB) was created with enactment of RSA 126-BB during the first Covid dominated session and became effective July 1, 2020.  The PDAB’s lynchpin duty is setting “annual spending targets” for prescription drugs purchased by New Hampshire’s “public payors” (the state, counties, cities and towns).  RSA 126-BB: 5 I (a).

The PDAB is in the process of adopting administrative rules to implement the spending targets (among other duties).  The Initial Proposal was filed with the Joint Legislative Committee on Administrative Rules (JLCAR) and was subject to a public hearing conducted on June 16, 2022.  The PDAB is reported to be working hard on its Final Proposal.  While I congratulate the PDAB on its hard work to date, much more on the rules needs to be done to lower prescription drug costs.  Getting it right is so much more important than “racing to send” a Final Proposal to the printer.

Follow the Money – Specialty Pharmacy

PDAB 102.07 (e) (1) (c) & (e)    Physician/Hospital/Facility Administered Prescription Drugs.

We have strongly encouraged the PDAB to specifically include physician or hospital/facility administered prescription drugs in its development of the Final Proposal and accordingly include it in the calculation of spending targets.

Why Care About the Rules?  

Physician-administered or hospital/facility-administered prescription drugs are those that cannot be self-administered by the patient or a caregiver.  These drugs are typically infused or injected by a health care provider in a physician’s office, clinic, infusion center, or hospital.  These tend to be specialty drugs – high-priced medications that treat complex, chronic, or rare conditions (e.g., cancer, multiple sclerosis, and rheumatoid arthritis) that commonly have special handling and/or administration requirements.  The number and prices of specialty drugs have rapidly increased in recent years.  The price of a specialty drug can range from thousands to many tens of thousands of dollars per regimen. 

 In New Hampshire

As the New Hampshire Insurance Department’s most recent Report of Health Care Premium and Claim Cost Drivers in New Hampshire (“Report”) found, the rate of increase in specialty pharmacy trends decreased from 12.7% to 10.1% (a relatively good thing– due to changes with pharmacy benefit managers or rebate contracts, per data responses filed with the Department by the insurers).  However, the specialty drug trend “continued to significantly outpace trends for generic non-specialty and brand non-specialty.  In addition, specialty drugs have become the major contributor to pharmacy spending, contributing 53% of total pharmacy spending in 2020.  The Report also shows the pharmacy spend under the medical benefit: …  ”which include(s) prescription drugs that are administrated at a physician’s office or in a hospital setting.  In many cases these are high-cost injectables. “, or specialty pharmacy.    (emphasis added, Report, page 45, left, then to right margins).

The Board’s duty under RSA 126-B: 5 I (a) and PDAB 102.07 (b) is to determine annual spending targets for prescription drugs purchased by public payors.  The statute does not exclude physician / hospital administered prescription drugs from its reach nor from the Board’s obligation to establish spending targets.  Additionally, numerous studies have shown that the physician and hospital “buy and bill” methodology of seeking reimbursement for prescription drugs can be enormously expensive and inflated by the provider’s huge mark ups.  Mark ups on the price of the drug are in addition to the amounts physicians / hospitals separately bill insurance providers for the professional services required to administer the drugs.[1]
An alternative approach to PDAB 102.07 (e) (1) (c ) & (e) which includes these very expensive physician and hospital administered prescription drugs might read something like the following:   “…..to the extent practicable using the all payors claims database, all prescription drug spending whether billed under the prescription drug or medical benefit, or any other method of billing prescription drugs for reimbursement.“  Spending targets should be based on the universe of prescription drug spending, not a subset that excludes the fastest growing specialty pharmacy category and the most expensive, richest margin, provider administered prescription drugs purchased by New Hampshire public payors.  Excluding this critical category from the review and spending target process would be like saying inflation is low as long as you ignore food, medicine, gasoline and housing.  

Should the PDAB exclude the physician and hospital administered drugs from the rules and spending target methodology, PDAB 102.07 (b) and related provisions would be subject to objection as “Contrary to Legislative Intent”.  The everyday harm would be the lost opportunity to make a difference in the fight to lower prescription drug costs.  Ignoring half of total drug spending in New Hampshire while working to lower prescription drug costs would not make sense…

Let’s hope the PDAB gets it right.  We all want lower prescription drug costs!

[1] JAMA Internal Medicine (2021): The median negotiated prices for the 10 drugs studied ranged from 169% to 344% of the Medicare payment limit.47 The largest variation in markup came from Remicade, an IV drug that treats a range of autoimmune conditions – the median rate paid by commercial insurers at Mayo Clinic’s hospital in Phoenix was more than 800% of the Medicare rate.

Bernstein (2021): This analysis found that some hospitals mark up prices on more than two dozen medicines by an average of 250%.48 For example, hospitals were found to charge up to five times the purchase price for Epogen, which is used to treat anemia caused by chronic kidney disease for patients on dialysis, and 4.6 times the price for Remicade, a rheumatoid arthritis medication. According to the analysis, administering treatments to commercially insured patients is 20 times more profitable than administering the same drugs to Medicare patients. The analysis also showed hospitals have been slow to begin using biosimilars, which are nearly identical to brand-name biologic treatments and produce the same health outcome, but at a much lower cost.

Health Affairs (2021): This study examined the 2019 prices paid for by Blue Cross Blue Shield plans for certain drugs administered in hospital clinics versus provider offices. The study found the prices paid for hospital outpatient departments were double those paid in physician offices for biologics, chemotherapies, and other infused cancer drugs (99-104% higher) and for infused hormonal therapies (68% higher). Blue Cross Blue Shield plans would have saved $1.28 billion, or 26 percent of what they actually paid, if the insurance provider had all patients receive their infusions in a provider’s office instead of hospital clinics.

AHIP (2022): This analysis comparing drug claims data for drugs in specialty pharmacies, physician offices and hospitals found that costs per single treatment for drugs administered in hospitals (2018-2020) were an average of $7,000 more than those purchased through pharmacies. Drugs administered in physician offices had costs on average $1,400 higher than those from pharmacies. 

Attorney Pfundstein is admitted in the state and federal courts of New Hampshire.