Part D Drug Discount Data Is Not Commercial Tool, CMS' Blum Says

The Centers for Medicaid and Medicare Services is wary about drug industry requests for detailed, claims-level information to support invoices on the drug discounts given to Medicare Part D beneficiaries who have reached the coverage gap.

As CMS develops its policies around a new drug industry responsibility in Part D, the agency is taking a cautious approach to the amount of drug purchasing information it will release, CMS Deputy Administrator and Medicare Center Director Jonathan Blum said during a June 1 public workshop on the discount program.

The agency is concerned about industry using the data for marketing purposes. "CMS intends to provide only the necessary data for drug manufacturers and Part D sponsors to implement the program. We want to make sure that data doesn't serve other commercial purposes," Blum said. "Our goal is to make sure that beneficiary information is protected."

The workshop focused on the agency's development of a formal contract for manufacturer participation in the discount program ¹ (Also see "CMS Open To Discussion On Manufacturer Payment Time For Part D Discounts" - Pink Sheet, 31 May, 2010.)). Beginning in 2011, manufacturers will be required to enter into agreements with CMS to provide discounts equal to 50 percent off the negotiated price of drugs approved under an NDA that are provided to certain beneficiaries in the coverage gap.

The program calls for Part D plans to provide discounts to beneficiaries at the point of sale. As CMS envisions it, a third party administrator will send invoices to drug firms to recoup the discounts. Drug firms will pay the invoiced amounts directly to the Part D plans, under current CMS guidance.

The invoices will draw from data submitted by Part D sponsors to CMS in prescription drug event reports. CMS has not yet determined what specific data elements will be released; that will be set in a future guidance, the agency said.

Blum addressed industry arguments that a broad range of data is needed to detect potential errors in the invoices.

"I understand there are concerns about the validity and the accuracy of CMS' PDE data, but I want to assure everybody this is the same data that CMS uses to pay Part D sponsors. It has gone through a very rigorous review. The [Inspector General] certifies it, CMS certifies it, and as a policy official I have to sign a financial statement to certify the accuracy of the data," he said.

During the workshop, a panel of drug industry representatives unanimously recommended that CMS release enough data to allow companies to validate claims and if needed, pursue a formal dispute to correct for errors or duplicate invoices.

"It's really important for us that we have sufficient data so that we and our regulators and investors can be confident we're paying the right amount," Merck Executive Director for Public Policy Jane Horvath said. "Our experience in working on the commercial side teaches us that mistakes happen."

"We heard ... that CMS feels that the way you've got the data is bullet-proof but we have no way of knowing that," Horvath pointed out. "There needs to be a good-faith agreement between all of us that we have what we need so that we don't bother you with unnecessary disputes."

Models In the Commercial Market

Several members of the panel recommended CMS release the type of data currently provided by health insurers and pharmacy benefit managers in other rebate and discount arrangements.

"Part D plan sponsors, commercial health plans and PBMs provide the level of data we are requesting for the coverage gap discount program under commercial and Part D rebate agreements and other discount arrangements between manufacturers and purchasers," Genzyme VP Government Relations Sara Froelich said.

The "Medicaid rebate program can also provide manufacturers with similar data," she pointed out.

Specifically, Froelich recommended CMS release data identifying the pharmacy, specific product, quantity dispensed, number of days supplied, the 11-digit national drug code, the prescription number, date of service, patient pay amount, fill number, dispensing status, amounts provided by other payers and the dispensing fee.

Industry also would seek detailed data on all elements of the negotiated price and information on the beneficiary's status in the coverage gap, Froelich added. She and other panelists emphasized that drug firms would not request beneficiary or prescriber identification.

A 30-Day Payment Window Instead Of 14?

The drug representatives also were unanimous in urging CMS to allow more than 14 days from the date of invoice to pay discount amounts. CMS proposed 14 days in the draft model agreement for the program, but has said it is open to changing the timeframe. In the draft agreement, invoices would go out on a quarterly basis.

Teva Customer Administration Senior Director John Wodarczyk suggested, as a "compromise," that invoices be sent to drug firms each month but that companies would have 30 days to pay them.

Wodarczyk also suggested CMS consider modifying its current plan that disputes would be handled on a "pay and chase" basis, in which manufacturers make payments before filing disputes on invoice amounts. If a dispute is upheld, CMS would correct for the error in a later invoice.

CMS could make exceptions in cases where the dispute appears to be egregious, Wodarczyk said, such as "if we receive an entire bill that isn't ours or, from a plan that we normally pay $10,000, we get a claim for $20 million. It seems unreasonable to pay the claim and ask for a refund later."

CMS is hoping to have the 2011 discount program contracts signed by Sept. 15. Manufacturers also will be expected to sign a contract with the third-party administrator, according to CMS.

The first contract will cover 2011 and 2012; subsequent contracts will cover just one year. Contracts must be signed by an annual deadline and no mid-year changes will be permitted.

- Cathy Kelly ( ² [email protected] )