Medicare P&T Committees Draw Attention Of Justice Department
This article was originally published in The Pink Sheet Daily
Executive Summary
Pharmacy & therapeutics committee members may be targets of corruption by pharma companies because they make binding decisions about placement on a Medicare plan’s formulary, Boston federal prosecutor Loucks says. Manufacturers are advised to keep Medicare, commercial formulary negotiations separate.
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Medicare prescription drug plan pharmacy & therapeutic committees will be an area of scrutiny for federal prosecutors when Part D takes effect Jan. 1, 2006, Boston U.S. Attorney's Office White Collar Crime Section Chief Michael Loucks said. P&T committees are "going to be an area of law enforcement activity over the next four or five years," Loucks said Jan. 31 at CBI's Pharmaceutical Marketing Compliance Congress in Washington, D.C. Loucks was promoted to the new white collar crime post from his previous position of health care fraud unit chief effective Jan. 31. A plan's P&T committee will make binding decisions about which products should be included on formulary. Under the Medicare drug benefit, "the decision makers are the members of the P&T committees," therefore, "if you're going to corrupt a decision maker, that's who you corrupt," Loucks explained. "That's where you'll go, and that's where we will go," he said. Because Part D plans are only required to cover two drugs in each of the U.S. Pharmacopeia's recommended classes, the benefit "is going to bring out the best and potentially the worst in your marketing people," Sepracor VP-Legal Affairs Mark Wanda told the conference Feb. 1. USP's final Medicare formulary guidelines include 146 unique pharmacologic categories and classes, in which each plan must cover at least two drugs (1 (Also see "USP's Finalized Model For Medicare Rx Formularies Retains 146 Drug Groups" - Pink Sheet, 3 Jan, 2005.)). If there are "more than two products in a given category, you're competing for those two slots with a participating drug plan," Wanda said. It will be particularly important for a drug manufacturer to separate Medicare and commercial formulary negotiations, the Sepracor exec said. "You're competing for those slots at the same time that you're also probably negotiating with that drug plan for a commercial benefit. You have to be careful not to blur those lines." A drug manufacturer could potentially offer deeper discounts to a plan on the commercial side in exchange for placement on the plan's Medicare formulary. "How you manage those relationships and how you manage your approach to negotiating a slot in a prescription drug plan is going to be the crux of the issue" of any potential investigation, Wanda said. "It's important that you get your ducks in a row right now in terms of how you're going to negotiate, who's going to be part of the team, what are the parameters for those negotiations, how do you keep them separate and apart from any commercial negotiations with that plan." Negotiations between pharmaceutical companies and Medicare prescription drug plans should be guided by pharmacy benefit manager standards outlined in Medco's settlement with federal prosecutors and 20 states, Philadelphia Assistant U.S. Attorney Virginia Gibson told the conference. (2 (Also see "Medco Settlement Will Become PBM "Gold Standard," Prosecutors Say" - Pink Sheet, 26 Apr, 2004.)). The Medco settlement included transparency provisions for rebates, fees and discounts, as well as conditions for drug switches. "If there's some problem with placement, a drug plan's agreement to favor a drug in a particular way, the financial consequences of this will be billions," Hogan & Hartson Partner Steve Immelt observed. - Andrew Kasper, Elizabeth Walker |