WASHINGTON — Although the prospects appear dim now for passage in Congress of the Build Back Better Act in its current form, a pared-down version may survive and is likely to include some health provisions, a policy expert said at a webinar sponsored by Avalere, a healthcare consulting firm.
“The legislation passed in the House is likely not to advance in its current form,” especially after Sen. Joe Manchin (D-W.Va.) said that he wouldn’t support the bill, Matt Kazan, MPP, principal at Avalere, said during Thursday’s webinar. “However, right now Democrats remain very motivated to get something done, and many have already talked about a more scaled-back or ‘skinny’ version of that legislation. That certainly could include healthcare, so provisions like [Medicare] Part D benefit redesign, inflation rebates, even Medicare [drug price] negotiation — those policies are certainly on the table going forward.”
Even if the Build Back Better Act doesn’t advance, “Democrats are still going to have to act on healthcare because of a variety of deadlines related to the Affordable Care Act (ACA),” he added.
Drug pricing policies are one area of healthcare emphasis in proposed Build Back Better Act provisions, but “there are a set of other separate drug pricing-related changes that have already been finalized or enacted, and are scheduled to be implemented over the coming months and years,” said Megan Olsen, MPH, principal at Avalere. “So it’s important that stakeholders are not losing sight of these upcoming changes, particularly as there could be some interesting interaction effects.”
Olsen highlighted four upcoming changes:
- Removal of the 100% average manufacturer price (AMP) cap on Medicaid rebates in 2024. “This will allow Medicaid rebates for some products to exceed 100% of AMP for the drugs’ cost,” she said.
- Changes to the calculation of AMP and “best price” — the requirement that drugmakers must offer their lowest price to Medicaid plans — in the context of copay accumulators. Accumulators are health insurers’ way of keeping track of the drug company coupons and copay cards that patients use to help afford their drugs; often, the insurers don’t allow the value of the coupons and cards to count toward a patient’s deductible. “This will require manufacturers to ensure the full value of financial assistance is going to patients; otherwise they must reflect that in the reporting of best price,” she said.
- New flexibilities associated with value-based purchasing arrangements. “This will allow manufacturers to report multiple best prices in connection with a value-based purchasing arrangement, and this is intended to facilitate growth and adoption of new and innovative contracting arrangements across Medicaid and commercial markets,” said Olsen. “This could be particularly interesting as we think about rare disease drugs, cell and gene therapies, and the like.”
- Inclusion of U.S. territories in the Medicaid drug rebate program in 2023. “That will have some implications for manufacturer rebate liability overall,” she said. “The combination of these changes with the potential for additional drug pricing changes via the Build Back Better Act certainly yield a complex outlook as we think about drug pricing moving forward.”
One aspect missing from the Build Back Better Act is provisions to address prices of drugs just being launched or entering the market, said Rebecca Yip, MS, principal at Avalere. “How will the government participate in negotiating or setting these prices? I think we can anticipate the administration using CMMI [the Center for Medicare and Medicaid Innovation] as a vehicle to test out some of these models.”
For example, a model might involve value-based pricing, which could be developed using an “HTA [health technology assessment]-like” entity or independent board, she said. Although Obama- and Trump-era demonstration projects along those lines were rescinded, “if and when the BBBA [Build Back Better Act] passes or some separate drug pricing package passes, we can expect the focus to turn to launch prices to round out meeting the objectives of drug pricing,” said Yip.
Health equity and social determinants of health also are high priorities for the Biden administration, said Kazan. To address those issues, “Medicare Advantage does seem like a natural program that one could focus on, given its large number of low-income enrollees and large number of racial minority enrollees.” The administration would have a lot of policy levers to choose from in that program, including supplemental benefits that address non-health-related factors, risk adjustment payments that vary reimbursement based on the characteristics of each enrollee, and quality ratings, he said.
However, Kazan added, “Democrats historically … have been reluctant in the past years to give Medicare Advantage a lot of flexibility. I think the Biden administration has a really interesting choice to make as to whether or not they want to buck the previous trends and and focus on the Medicare Advantage program” as a way to improve health equity and social determinants of health.
State-level drug pricing reforms also are something to watch for in 2022, according to Olsen. “Over the past couple years we’ve seen states move from more drug price transparency and manufacturer reporting measures to more aggressive drug price control measures, and [they are] also looking at additional aspects of transparency, including PBM [pharmacy benefit manager] reporting requirements,” she said. “I’d also look out for additional activity around drug price affordability review boards at the state level.”