P&T Committees May Be Redefined By Medicare Regs

The Medicare implementing regulations will have a profound impact on the operations of pharmacy and therapeutics committees, Medco Government Affairs Consultant Terry Latanich told the P&T Society's recent annual conference.

The Medicare rules are "going to radically transform the way P&T committees operate and the scrutiny under which they operate," Latanich said.

"I think you'll see a lot of guidance coming out, a lot of regulations coming, about exactly the way P&T committees need to operate with respect to what financial information we have."

"The regulations will provide a lot more clarity and a lot of protection to make sure that people will want to serve on these committees," Latanich said.

The Medicare Part D (Title 1) and Medicare Advantage (Title 2) implementing regs are expected to be issued in draft form during June (see ¹ (Also see "Medicare Part D Regs Coming Soon; CMS Plans To Finalize Regions In 2004" - Pink Sheet, 17 May, 2004.)).

"I expect that those [regs] will be measured in thousands of pages, not hundreds of pages," Latanich said, "given what they have to do."

The P&T process is viewed with some suspicion by the federal government, Latanich noted.

"Within the law enforcement community, within the inspector general's office, there's a fair amount of skepticism about what P&T committees do, the processes they use, whether they are in fact fronts for the business organization," he said.

In particular, "there's a great deal of concern in some of the federal prosecutors' offices and at the inspector general's level about the amount of" drug cost information available to P&T committees while making clinical decisions.

The P&T process is one focus of a consent decree negotiated by Medco with the U.S. Attorney's Office in Philadelphia and 20 state attorneys general (² (Also see "Medco Pays $29.3 Mil. To 20 States; Buys Chance To Write PBM Rules" - Pink Sheet, 3 May, 2004.), p. 22).

The Medco injunction is likely to serve as a model for PBM practice regulations under Medicare. However, the approach to P&T committees may not match up with the directives of the Medicare statute.

Under the Medicare law, plans that choose to deviate from a model formulary defined by CMS will face higher scrutiny, Latanich noted.

The U.S. Pharmacopeia is developing a list of therapeutic categories and classes to serve as a standard formulary template under Medicare.

"If you don't use [the USP] structure, you have no safe harbor and you're....going to have a lot of people looking over their shoulder to see whether it's being used to cherry-pick the better risks in the population," Latanich said.

The new Medicare law will also change the legal liability facing P&T committees, Latanich said. "You're now to be subject - if you're working with a plan that offers a Medicare Part D program - to the civil and criminal liabilities under the Medicare fraud and abuse statutes."

The scrutiny will only be heightened by the lack of experience at CMS with a "market-based program" like the Part D drug benefit, Latanich added.

Pharmaceutical manufacturers will also be "looking over the shoulders of the P&T committees very, very hard," Latanich predicted.

"You're going to be subject to a lot of manufacturer scrutiny over the decisions you make, because if they lose, they have a couple of choices: team up with somebody else in that market or go after your decisions."

"If they can challenge your decision successfully based on some kind of failure to look at certain criteria, then maybe your decision would get overturned." Furthermore, "there may be some legal exposure," such as violations of the False Claims Act, he warned.

Latanich noted that the Medicare law specifies that P&T committees can base decisions on information beyond safety and efficacy, including "pharmacoeconomic studies, outcomes research data, and on other information as the committee determines is appropriate."