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Hospital Owned Specialty Pharmacies May be in Hot Water with the FEDS

We’ve ranted about the encroachment of hospital and health system owned specialty pharmacies more times that one can count. The growth of these organizations seemed unabated…. till recently. We’ve noticed more scrutiny of these arrangements as noted in the article below.

The article points out a number of concerns with how the specialty pharmacies are structured. As we’ve read in previous news reports, many of these entities are owned but not always operated by the hospital or heath system…. and therein lies the rub. Contracting with a third-party specialty pharmacy management company poses a set of legal and regulatory issues that hospital and health-system compliance departments will have to expertly navigate. It’s time for hospitals that are involved in these ventures to make sure that the reimbursement models they implement with third-party companies comply with both federal laws and state laws…. particularly as relates to percentage-based fee arrangements and joint ventures.

At the heart of the debate are a host of anti-kickback statutes. These have been the bane of many a health care organization from a solo physician practice to mega, integrated delivery systems that have frequently resulted in big fines. But anti-kickback is often difficult to define, especially when it is being applied to new business models such as owned but not operated specialty pharmacies.

Outsourcing Speciality Pharmacy Expertise? Warnings to Heed

As more health systems enter the specialty pharmacy space, many are using an outside third-party entity to manage their on-site specialty pharmacies. Although the arrangements offer many benefits, stakeholders need to be ready for state and federal scrutiny surrounding anti-kickback statutes, reimbursement and other compliance issues that could derail these arrangements if they are not managed proactively.

In these partnerships, the pharmacies are still owned by the hospitals, but they’re managed by outside vendors with specific expertise in specialty pharmacy operations—such as Recept, Shields Health Solutions and Trellis Rx—in exchange for fees and, sometimes, a share of the profits.

“There are core competencies that come with running specialty pharmacies, and depending on what expertise a hospital or health system already has on board, the management companies can really help with those, including access to payor networks, access to limited distribution drugs and assistance with accreditation,” said Todd Nova, JD, an attorney with Hall, Render, Killian, Heath & Lyman, an Indianapolis-based firm specializing in health law.

Jones explained that the Department of Health and Human Services Office of Inspector General (OIG) will focus on a number of factors to ensure that the arrangement between the health system and management company is compliant with key statutes.

Anti-kickback regulations are a major focus for HHS OIG, he noted. The regulators have highlighted several areas of concern that would raise red flags suggesting a questionable contracting arrangement, he said:

The owner (the hospital or health system) expands into a related line of business, which is dependent on referrals from, or other business generated by, its existing business.
The hospital or health system neither operates the new business itself nor commits substantial financial, capital or human resources to the venture—in this case, a specialty pharmacy. Instead, it substantially contracts out virtually all of the new business.

The third-party contractor is an established provider of the same services as the new line of business and, absent the contract, would be a competitor, providing items and services in its own right, billing insurers and patients in its own name, and collecting reimbursement.
The owner and third-party contractor share in the economic benefit (the profits) of the business, in the economic benefit of the owner’s new business.
Payments to the third-party management company vary by the value or volume of business generated for the specialty pharmacy by the hospital.

“Summed up, the arrangement needs to be commercially reasonable, at arm’s length and at fair market value. And the hospital has to be at risk,” Jones said. “You can’t just have a management company coming in and taking over everything and giving the hospital a fee for this contractual arrangement.”

Pay Attention to Physician Relationships
Another key issue, Jones noted, is the relationship between the hospital’s prescribing physicians and the pharmacists in the specialty pharmacy managed by the third-party company. “What, if anything, is your management company doing for those doctors?” he asked. “You have to evaluate that. Equipment and free services, for example, are a real hot-button item for the OIG with regard to the Anti-Kickback Statute. I recommend that you make sure everything is at arm’s length and at fair market value, with no free services unless directly blessed by the OIG.”

Nova also stressed the need for caution, citing this specific caveat: “The compensation methodology for the third-party management company must not create perverse incentives to overutilize the health care system, such as dispensing higher-cost drugs for no additional therapeutic benefit.”

‘Watch This Space’
To date, Nova said, OIG hasn’t scrutinized these partnerships—but watch this space. “Although there has not been a lot of affirmative movement at this point, I anticipate that will change in the near to midterm. This is care that is funded both directly and indirectly by federal payment programs, and you absolutely have to be aware of that.”

When scrutinizing contractual arrangements with a third-party specialty pharmacy management company, focus on utilization, costs and outcomes, and what the relationship does with respect to those issues, Jones said. “If you can reduce costs, keep utilization low, improve patient outcomes and not be anti-competitive, then it should be a very good arrangement under the Anti-Kickback Statute.”


FDA Approves New Infused Tx for Endometrial Cancer – Jemperli

Last week the FDA approved a new specialty therapy, Jemperli (dostarlimab) from GlaxoSmithKline, for treating patients with recurrent or advanced endometrial cancer.

Uterine cancers are the 9th leading cause of cancer in the US. Specifically, about 66,570 new cases of cancer of the uterus (uterine body or corpus) will be diagnosed this year. About 12,940 women will die from these cancers.

Jemperli is an infused therapy. Given the relatively large incidence of this disease in the US it is unlikely that the new therapy will launch through limited distribution. Rather, it will likely be available through traditional wholesaler channels.

Analysts have slotted Jemperli as a specialty therapy likely due to its cost. However, GSK has not yet released any cost information.

FDA Approves Immunotherapy for Endometrial Cancer with Specific Biomarker

April 22, 2021 — The U.S. Food and Drug Administration today granted accelerated approval to Jemperli (dostarlimab) for treating patients with recurrent or advanced endometrial cancer that has progressed on or following prior treatment with a platinum-containing chemotherapy and whose cancers have a specific genetic feature known as dMMR (which contain abnormalities that affect the proper repair of DNA inside the cell), as determined by an FDA-approved test.

“Today’s approval of Jemperli is evidence of the FDA’s progress in applying precision medicine to expand treatment options for patients with cancer,” said Richard Pazdur, M.D., director of the FDA’s Oncology Center of Excellence and acting director of the Office of Oncologic Diseases in the FDA’s Center for Drug Evaluation and Research. “This immunotherapy was specifically studied to target dMMR endometrial cancer and leverages scientific knowledge surrounding the mechanism of immunotherapy response in this unmet medical need population.”

Endometrial cancer is the most common gynecologic malignancy in the United States and its prevalence is increasing. Approximately 75% of endometrial cancers are diagnosed at an early stage and are typically curable with surgery. However, women with advanced and recurrent endometrial cancer have limited therapeutic options following front-line standard treatment with a platinum-containing chemotherapeutic regimen. Approximately 25% to 30% of patients with advanced endometrial cancer have dMMR tumors.

Jemperli works by targeting the cellular pathway known as PD-1/PD-L1 (proteins found on the body’s immune cells and some cancer cells). Jemperli helps the body’s immune system in its fight against cancer cells by blocking this pathway.

The safety and efficacy of Jemperli was studied in a single-arm, multi-cohort clinical trial. Of the 71 patients with dMMR recurrent or advanced endometrial cancer who received Jemperli in the trial, 42.3% had a complete response (disappearance of tumor) or a partial response (shrinkage of tumor) to treatment with Jemperli. For 93% of responders, the response lasted for six months or more.

Common side effects of Jemperli include fatigue, nausea, diarrhea, anemia and constipation. Jemperli can cause serious conditions known as immune-mediated side effects, including inflammation of healthy organs such as the lungs (pneumonitis), colon (colitis), liver (hepatitis), endocrine glands (endocrinopathies) and kidneys (nephritis).

Patients who experience severe or life-threatening infusion-related reactions should stop taking Jemperli. Women who are pregnant or breastfeeding should not take Jemperli because it may cause harm to a developing fetus or newborn baby. The safety and effectiveness of Jemperli in pediatric patients are not known.

Jemperli received Priority Review designation and Breakthrough Therapy designation for this indication. Priority Review designation directs overall attention and resources to the evaluation of applications for drugs that, if approved, would be significant improvements in the safety or effectiveness of the treatment, diagnosis or prevention of serious conditions when compared to standard applications. Breakthrough Therapy designation is a process designed to expedite the development and review of drugs that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on a clinically significant endpoint(s).

Jemperli was approved for this new indication using the Accelerated Approval pathway, under which the FDA may approve drugs for serious conditions where there is unmet medical need and a drug is shown to have certain effects that are reasonably likely to predict a clinical benefit to patients. Further clinical trials may be required to verify and describe anticipated clinical benefits of Jemperli and the sponsor is currently conducting these trials in additional patients with dMMR endometrial tumors.

The FDA granted approval to GlaxoSmithKline.


Does the Market Need a Specialty Pharmacy PSAO?

The article below details a new PSAO option for pharmacies, the ‘first’ PSAO for community-based specialty pharmacies from AmerisourceBergen named the Accelerate Specialty Network. Network members will include accredited health system specialty pharmacies, independent specialty pharmacies and medically integrated dispensing practices (hospitals and health systems??)

Will the Accelerate network fly?
Given the current fractional state of the specialty pharmacy channel, maybe. Why maybe? There is a lot of push on payers and PBMs to contract with hospitals and health systems that are launching owned and operated specialty pharmacies. Payers are not eager to further expand the contracting strength of their biggest contracting opponents. As such, wholesalers become a more ‘friendly’ entity with which to negotiate.

Do you know much about PSAOs?
PSAOs have been around for decades. Wholesalers recognized long ago that small pharmacies had little leverage to negotiate contracts, so they decided to contract on behalf of this group and bond with these customers for the long haul. The concept worked and has been a lifesaver for many a small pharmacy essentially offering immediate access to dozens of payer contracts.

The GAO published a comprehensive report on the status of PSAOs in the US back in 2013. While the numbers are outdated the analysis is still rock solid. If you want / need a deep dive refresher on PSAOs this is the place to go.
Click here to access the 2013 GAO Report on PSAOs.

AmerisourceBergen Launches Accelerate Specialty Network – Nation’s First Specialty-Focused Pharmacy Services Administration Organization

April 13, 2021 — CONSHOHOCKEN, Pa.–(BUSINESS WIRE)–Today, global healthcare company AmerisourceBergen launched the Accelerate Specialty Network (Accelerate), the nation’s first specialty-focused Pharmacy Services Administration Organization (PSAO) that leverages AmerisourceBergen’s proven, data-driven PSAO strategy to enhance managed care access and optimize business performance for community-based specialty pharmacies. Accelerate members include accredited health system specialty pharmacies, independent specialty pharmacies and medically integrated dispensing practices.

“As specialty pharmaceutical development continues its upward trajectory, the need for higher-touch care coordination for patients will also rise. More and more, patients want to find that care on their own terms”

“As specialty pharmaceutical development continues its upward trajectory, the need for higher-touch care coordination for patients will also rise. More and more, patients want to find that care on their own terms,” said Willis Chandler, President of Health Systems & Specialty Services at AmerisourceBergen. “Over the years, payors have narrowed their networks to contain costs and outcomes, but that has dictated where patients can go to get their specialty medications. Accelerate was built to work with payors to help promote and enable accessible community-based pharmaceutical care.”

Accelerate offers its members solutions that aim to deliver beneficial payer contracts, allowing providers to reduce the time spent on administrative responsibilities and focus on what matters most: providing the best possible care to their patients.

Using data and insights, Accelerate works proactively to expand members’ access to specialty contracts through agreements with local, regional, and national commercial payers and pharmacy benefit managers.

In addition, members can review their pharmacy’s data in conjunction with the PSAO’s experts and find ways to optimize their business.

Accelerate exists to help members navigate the intricacies of managed care networks with professional services that improve operational efficiency for the pharmacy and business overall.

“At AmerisourceBergen and Accelerate, we believe in unlocking the value of specialty medications and community-based care at a national scale,” said Angela Ward, Senior Vice President of Specialty Services, AmerisourceBergen. “Through our diverse national network of high-performing health systems, independent specialty pharmacies, and medically integrated dispensing practices, we are working with payers to achieve national coverage and consolidated contracting. No one knows a patient like their provider; that’s why we have an uncompromising focus on enabling accessible care in the communities where patients live, with the providers they know.”

For more information on the Accelerate Specialty Network visit


Is White Bagging Bad Practice or the Future of Pharmacy?

White bagging is back in the news and is increasingly being used by hospitals and health systems as a weapon to demonize emerging models for specialty pharmacy channel management.

To correctly understand white bagging we first need to understand that channel management is not determined by the payer. Rather, manufacturers determine how their products will launch in the market.

But, as noted in the articles below, Hospitals accuse payers of using white bagging policies to enrich themselves through their PBMs and pharmacy business lines. The accusations go further to include purposefully delaying patient care for economic reasons.

Hospitals and health systems see the white bagging attack as the best way to beat back the trend of specialty pharmacy distribution which has cut deeply into buy and bill revenues and net margins for office administered therapies. Yet, these same hospitals are also anxious to participate in the same Limited Distribution programs they are condemning.

AHA, ASHP seek meeting with FDA to address insurer ‘white bagging’ policies

by Paige Minemyer
Fierce Healthcare

Mar 31, 2021 — The American Hospital Association and the American Society of Health-System Pharmacists are urging the FDA to meet with them to address insurer “white bagging.”

Hospitals and health system pharmacists are urging the Biden administration to review insurer “white bagging” policies.

The American Hospital Association (AHA) and the American Society of Health-System Pharmacists (ASHP) sent a joint letter to the Food and Drug Administration (FDA) Wednesday requesting an opportunity to meet with FDA officials to discuss the practice.

Payers use white bagging to dispense drugs to hospitals, requiring these medications come from select network specialty pharmacies. AHA and ASHP said in the letter that doing so circumvents hospital supply chain protocols aimed at patient safety.

The practice also “challenges” the supply chain security issues that are addressed in the 2013 Drug Supply Chain Security Act (DSCSA).

“White bagging has surged in frequency over the past decade, creating what amounts to a shadow inventory that hospitals and health systems do not legally own and which exists largely outside of the DSCSA’s track and trace requirements,” according to the letter.

“Given the growing ubiquity of payer-mandated white bagging, we are concerned that this practice threatens DSCSA’s underlying goals,” the groups said.

White bagging also increases the risk of drug diversion and waste, according to the letter.

 Article 2————–

Amendment seeks to address “white bagging” issues in Indiana

Apr 9, 2021 — INDIANAPOLIS – The battle for access to affordable drugs is ongoing at the Indiana Statehouse. Next week creates a deadline that health providers have their eye on.

An amendment could address a process called white bagging and some say it’s delaying patient care.

“It just breaks your heart,” said Chuck Goff, the Oncology Pharmacy Supervisor at Hancock Cancer Center.

He’s referring to white bagging, it’s when insurance companies require providers to use their specialty pharmacy for certain treatments a clinician needs to facilitate instead of allowing them to use their own or someone else’s supply.

“The system is very disjointed,” Goff explained.

On April 1, Anthem Blue Cross Blue Shield, Indiana’s largest health insurance provider started requiring facilities not part of their designated network to purchase certain specialty drugs from its CVS Specialty pharmacy.

Goff said so far— he has experienced issues with Anthem’s process. He said he has personally dealt with three different cancer patients where he was told the pharmacy would deliver the medication on specific dates, but they didn’t come and, in some cases, still haven’t. He said he has spent hours calling and trying to over-communicate with them.

“I’m treated as if they never heard of the patient, nothing was in process, and they say more paperwork to be done without ever communicating that to me,” said Goff. “We are not talking about Aspirin; we are talking about something that’s very critical.”

In one case, Goff said he ended up using his own supply to treat the patient so he isn’t sure if he will be reimbursed or if the hospital will have to eat the cost of that treatment.

“Why this process is so cumbersome and so difficult and why it has yet at least in our experience here at Hancock to be successful is beyond me,” said Goff.

Anthem didn’t respond to these specific claims. Senior Director of Communications Tony Felts said he would need to look into them. However, he did send a statement about this practice overall.

“The safety of our consumers is paramount as we work to provide access to quality, affordable health care. There is no question the unnecessary mark-up of specialty drugs is one of the largest drivers in the increase in health care costs, and it is the consumers who have borne the brunt of these mark-ups. Anthem Designated Specialty Rx Network addresses how a facility acquires these medications by requiring those facilities which are not part of our Designated Network to purchase certain specialty drugs from CVS Specialty Pharmacy, a national leader in the pharmacy industry. However, if facilities agree to specific terms with Anthem to participate in the Designated Network (as many hospitals have done), the facility will not be required to acquire the specialty medication through this program, and may continue acquiring the specialty medications directly from their own suppliers. This initiative is focused on the consumer to make health care more affordable and eliminate the markups that do nothing to enhance care or promote safety,” said Felts.

The Indiana Pharmacists Association said it doesn’t believe white bagging lowers the cost of care.

“We would push back against that,” said Executive Vice President Darren Covington. “Because the money that’s being quote unquote saved is really for the PBM and insurance companies. We don’t see that being passed onto the consumer.”

The association is partnering with many other health organizations to support an amendment that would give the process oversight.

“it would provide the Board of Pharmacy the ability to make rules that would be imposed upon specialty pharmacies and infusion pharmacies on how they handle white bagged products and when those kinds of products can be white bagged,” said Covington.

Anthem said providers have the option to agree to specific terms with anthem to participate in their designated network in order to use their own suppliers.

Covington said this amendment guarantees clinicians and providers have a choice.

“We hear it from our members, and I know other associations are hearing it from their members as well, these aren’t just hypothetical situations but patients’ lives are actually being impacted by this practice,” said Covington.

Lawmakers will decide whether to hear the amendment on Monday.


Time for a HIPAA Checkup? (reprise)

So, when was the last time your company looked at its protocols to safeguard Protected Health Information (PHI)? You know, all that patient-specific information that that thing called HIPAA is meant to protect. If you have an IT department the answer to that question should be ‘frequently’. If you don’t have an IT department the answer may be “ummmm….. a while ago.”

If your company is Accredited, you should recall that there is a significant section pertaining to PHI technical protocols and also another that focuses on Business Associates (BA). A BA is a third-party vendor that provides some service, directly or indirectly, for your patients. BAs come in a variety of flavors from nursing agencies, to billing services, to Rx delivery services, and beyond. Your company is responsible to work with each BA to implement protocols and technical due diligence by assessing your Business Associates’ HIPAA compliance to safeguard PHI…. or pay the penalty if PHI is breached.

The article below is a great reminder to conduct regular security assessments for both internal – and external – PHI. It is an easy read as it isn’t written for techies. Rather, it is written for anyone in your company that has some responsibility for PHI…. even something as elementary as the disposal of paper documents that contain PHI (how often have we heard about thousands of patient claims records being found in dumpsters??)

The article includes some valuable legal language (highlighted below) that should be included in every Business Associate Agreement (BAA). Accredited firms are likely to already have similar language in all their BAAs. But, more may be required. For example, do your BAAs carry liability insurance that would compensate you if they experience a breach? Are they required to notify you of a breach and provide a list of all patients that were impacted within the 60 day notice period? So, your BAAs should be reviewed at least annually to ensure they are keeping pace with all possible risk mitigation threats and require each BA to provide documentation that they are meeting their requirements, e.g., staff training, system firewalls, breach response drills, etc. The same should also apply to internal staff.

The number of fines for HIPAA violations is rising….. and they can be prohibitive. States have also implemented fines for privacy breaches, so the financial exposure is worth the effort to stay ahead of problems that may unexpectedly bite ya.

Key Elements for Secure Business Associate Agreements, Relationships

By Jessica Davis
The healthcare sector relies on a vast number of third-party vendors, supply chain businesses, and other business associates to ensure relatively seamless care transactions. But with each transaction and added vendor, the threat landscape continues to expand. And the onus for ensuring privacy and security of patient data falls to the covered entity…. that’s you.

Under HIPAA, all covered entities must enter into a business associate agreement with each vendor that handles or interacts with protected health information. That agreement is designed to protect the covered entity for compliance purposes – or in the event of a breach.

Last year saw a number of massive vendor-related breaches. Two of which highlight the importance of ensuring vendors adhere to their BAAs, as well as HIPAA and agreed upon security terms.

To start, the American Medical Collection Agency breach revealed in May 2019 impacted more than 25 million patients from a host of lab companies and other covered entities, such as Quest Diagnostics and LabCorp.

In the breach lawsuit filed by patients after the breach, the largest complaint highlighted was that they were not notified directly by the companies. Patients first learned about the breach through a Securities and Exchange Commission filing, well after the HIPAA-mandated 60-day time limit.

Notifications were also a struggle in the Wolverine Solutions Group security incident, stemming from a September 2018 ransomware attack. The vendor opted to send impacted patients “rolling notifications” over the course of several months, ending in early 2019.

Both shed light on difficulties in ensuring privacy and security of healthcare vendors, along with ensuring business associates are adhering to BAAs.

Unfortunately, these issues will continue to plague the healthcare sector in the coming year, with a rise in BA breaches, according to Shefali Mookencherry, principal advisor of Impact Advisors.

“Convenience is a major factor in allowing various security controls to be overlooked,” Mookencherry explained. “Covered entities may look to vendors to safeguard the covered entity’s protected health information and ePHI. “

“The actions or lack of actions of a BA could operationally impact a covered entity and increase the covered entity’s liability,” she continued. “Developing and signing a BAA is a HIPAA requirement, but does not ‘guarantee’ that a covered entity is protected from BA related breaches.”

Reducing BA Vulnerabilities
Healthcare providers must ensure their business associates and subcontractors are actively protecting all patient data, she explained. It would be impossible to police all of their actions, but risk can be reduced by leaning on an inventory of all subcontractors and business associates.

The process should begin with a BA risk assessment to plan for an attack, Mookencherry said. To start, providers should identify all business associates and vendors; review and track signed BAAs; and perform a technical due diligence by assessing your Business Associates’ HIPAA compliance.

“The actions or lack of actions of a BA could operationally impact a covered entity and increase the covered entity’s liability.”

Further, providers need to understand which of its BAs use subcontractors and the services they provide to their business associate. Organizations will also need confidentiality agreements with vendors that do not qualify as business associates.

“The above actions won’t necessarily stop a breach but if the business associate answers ‘no’ to any of the questions during a HIPAA security risk assessment, covered entities should be concerned that there is a higher chance that the business associate might fall victim to a PHI breach,” Mookencherry said.

BA Breach Implications for Providers
When a provider is notified that one of their business associates have been breached, it’s important to take immediate action, as “breach notification compliance is measurable by the development and implementation of a breach notification policy and procedure.”

However, if the covered entity and or business associate does not have such a policy in place, Mookencherry stressed each must develop and implement a plan.

First, establish a breach notification team between the BA and covered entity. It’s on the business associate to identify the appropriate staff and to work with the identified covered entity staff to understand the risks and complete those breach notification requirements.

And if a BA risk assessment wasn’t performed prior to the breach by the provider, than the covered entity should do so after being notified of the breach.

“If a breach of unsecured protected health information occurs at or by a business associate, the BA must notify the covered entity following the discovery of the breach,” Mookencherry said. It must breach reported without reasonable delay, and within 60 days of discovery.

“To the extent possible, the Business Associate should provide the covered entity with the identification of each individual affected by the breach as well as any other available information required to be provided by the covered entity in its notification to affected individuals,” she added.

Further, the covered entity is responsible for ensuring the impacted individuals are notified, but the process of individual notifications can be delegated to the business associate. Mookencherry explained that the covered entity and business associate should consider which is in the best position to provide notice to the patient

It can depend on a variety [of] situations, “such as the functions the business associate performs on behalf of the covered entity and which entity has the relationship with the individual.”

“Covered entities that experience a breach affecting more than 500 residents of a state or jurisdiction are, in addition to notifying the affected individuals, required to provide notice to prominent media outlets serving the state or jurisdiction,” Mookencherry said.

“Covered entities will likely provide this notification in the form of a press release to appropriate media outlets serving the affected area,” she added. “Follow up between the BA and covered entity is key to ensuring that breach notification requirements are satisfied. The BA and covered entity must keep copies of all documents and retain confirmation of submissions.”

The notice must be provided without reasonable delay and no later than 60 days, which include the same information for the individual notice.

Building Complete Business Associate Agreements
Under HIPAA, any individual or entity performing functions or services on behalf of a covered entity that requires the business associate to access patient health data PHI is considered a business associate and therefore must enter into a business associate contract.

To protect themselves in the event of a breach, Mookencherry explained that organizations need to add specific language to their contracts.

For example, under the “recitals section” cover entities should add:
“Department of Health and Human Services issued and adopted regulations under the HIPAA Act of 1996, the privacy standards adopted by HHS, 45 C.F.R. parts 160 and 164, subparts A and E (the “Privacy Rule”), the security standards adopted by HHS, 45 C.F.R. parts 160, 162, and 164, subpart C (the “Security Rule”), and the Privacy provisions (Subtitle D), and Breach Notification Rule, 45 CFR §§ 164.400-414 of the HITECH Act, Division A, Title XIII of Pub. L. 111-5 (“Breach Notification Rule”), and its implementing regulations (the “HITECH Act”). The HIPAA Privacy, Security, Omnibus, and Breach Notification Rules under the HITECH Act are collectively referred to as “HIPAA” and/or “HIPAA Standards” for the purposes of this Agreement.

Under the “Implement Safeguards” section:
“Business Associate shall implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic protected health information that it creates, receives, maintains, or transmits on behalf of the Covered Entity.

Business Associate shall further ensure that any agent, including a subcontractor, to whom Business Associate provides PHI agrees to implement reasonable and appropriate safeguards to protect PHI. Unsecured protected health information is protected health information that has not been rendered unusable, unreadable, or indecipherable to unauthorized persons through the use of a technology or methodology specified by the Secretary in guidance.

Business Associate agrees to reasonably participate in Covered Entity’s PHI security risk assessment process to safeguard electronic PHI.”

Lastly, under “insurance” section, organizations should ensure the following language is incorporated into the contract:

“Business Associate shall obtain and maintain during the term of any Arrangement(s) between Business Associate and Covered Entity, liability insurance covering claims based on a violation of the federal laws, Privacy Standards, any applicable state law or regulation concerning the privacy and security of patient information and claims based on its obligations as a Business Associate pursuant to this Agreement (‘claims’).”

“The HIPAA Breach Notification Rule, 45 CFR §§ 164.400-414, requires HIPAA covered entities and their business associates to provide notification following a breach of unsecured PHI,” Mookencherry explained. “For a BA and a covered entity, failure to comply with BA breach notification requirements may result in an Office of Civil Rights investigation, fines and corrective action plans.”

“Also, the covered entity has the ‘ultimate responsibility’ for breaches related to their own PHI/ePHI,” she continued. “Hence, both the covered entity and BA should work together to satisfy breach notification requirement.


Biologics Are Going Through an Identity Crisis (reprise)

So, can you easily explain the differences between a chemically synthesized drug and a biologic?
You might be surprised how difficult that has become.

The article below should be thought provoking for those in the specialty pharmacy industry as it goes to the core of what exactly SPs actually sell….. chemically synthesized drugs and biologics. But…. if you were asked to list which column your drugs should be listed you would likely be stumped.

Here’s why….. the Consolidated Appropriations Act of 2020 included new guidance on how drugs can be classified. Specifically, the change states that the purpose of the amendment is to allow for the possibility that a manufacturer may chemically synthesize a biologic product. Huh??

Here’s an example…. Vondys 53, a biologic analog made through synthetic chemistry – not by any biologic process – is considered a biologic. The author of the (somewhat ‘tongue in cheek) article below polled pharma colleagues for their opinion as to whether similar drugs – are or aren’t biologic drugs.
The results:
41% agreed that these new drugs were biologics, 39% disagreed, 20% responded “Confused”
….. so am I.

Non-pharmacists may be a bit intimated by the technical references in the article…. just skip over them as that’s not the point of this Alert. The real purpose is to alert those working in the specialty pharmacy industry that today’s crop of new biologics ‘ain’t your grandfather’s biologics’. If you are going to be selling both chemically synthesized drugs and biologics you should have, at a minimum, a basic understanding of these developments.

What is a Biologic Drug Anyway?

Or, How I Learned to Stop Worrying and Love My Own Definition

January 19, 2020 — Recently I posted on “biologic drugs” which were approved in 2019. All was well in my little scientific universe, until I received this in an email:

“You recently reported on “14 novel biologic drugs,” referring to ‘novel’ biopharmaceuticals approved through CDER. But, … You also include several synthetic drugs, which are clearly not biopharmaceutical/biologics.”

Wait, what? Synthetic drugs are clearly not biopharmaceutical/biologics? Sure, the siRNA drug, Givlaari, and the antisense oligonucleotide, Vyondis 53, are both technically made by chemical synthesis. But, not considering these RNA-based drugs “biologic drugs” just felt… wrong.

It got me thinking – what is the definition of a biologic drug, anyway? I immediately started my research the way any good, card-carrying scientist does — I punched it into the Google:

GOOGLE: A biopharmaceutical, also known as a biologic medical product, or biologic, is any pharmaceutical drug product manufactured in, extracted from, or semisynthesized from biological sources. [source] Wikipedia

Though Wikipedia delivers good answers to probably 90% of my questions, I knew this definition was incomplete – nobody considers natural products like penicillin “biologic drugs.” Not wanting to spend the rest of my Sunday night reading FDA guidance documents, I did instead what any good millennial does – I asked social media.

As one comment pointed out, the term “biologic” itself is anachronistic, coming from a time when chemistry and biology were considered distinct (i.e. before chemists started getting upset about Nobel Prizes in Chemistry going to “biologists”). The Biologics Control Act, which first gave the US government control over the processes to make biological products, was passed in 1902 – long before it was clearly established that proteins are polymers of amino acids and that genetic information is stored chemically in nucleobases.

Digging Deeper
Based on the lack of strong consensus, I decided this was a topic worth diving further into.

Readers likely remember that “biologic” became a charged term in the 2000’s, due to expensive biologic products like filgrastim and epoetin alfa, approved under Biologic License Applications (BLAs) rather than New Drug Applications (NDAs). Since the abbreviated generic drug approval process (ANDA) only applied to originals filed under NDAs, there was no way to create a “generic” biological product without repeating expensive and lengthy clinical trials. This loophole led to the creation of the abbreviated follow-on biologicals approval pathway (aBLA) through the 2009 Biologics Price Competition and Innovation Act (BPCI).

So how are the adjectives, “biologic” or “biological,” legally defined in the US Code of Laws after BPCI in 2009? Turns out, they’re not. The term “biological product,” is legally defined only with examples, not properties:

“The term “biological product” means a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein (except any chemically synthesized polypeptide), or analogous product, or arsphenamine or derivative of arsphenamine (or any other trivalent organic arsenic compound), applicable to the prevention, treatment, or cure of a disease or condition of human beings.”
42 U.S. Code § 262. Regulation of biological products.

With no basis in the text for determining what an “analogous product” is, no definition of what exactly makes a product “biologic” or “biological,” and with, of all things, arsphenamine (or any other trivalent organic arsenic compound) being the only exemplified exception, no wonder everyone is confused. The FDA and the industry spend an enormous amount of resources deciding new registrants on a case-by-case basis, which was part of the justification for a recent change in the definition.

A Legal Update on Synthetic Processes
It gets better. The Further Consolidated Appropriations Act, 2020, signed into law in December 2019, amended this definition by removing the phrase “except any chemically synthesized polypeptide”:

“The term “biological product” means a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein (deleted: except any chemically synthesized polypeptide), or analogous product, or arsphenamine or derivative of arsphenamine (or any other trivalent organic arsenic compound), applicable to the prevention, treatment, or cure of a disease or condition of human beings.”

New legal definition of “biological product” after the Further Consolidated Appropriations Act.
The recent FDA press release on the change states that the purpose of the amendment is to allow for the possibility that a manufacturer may chemically synthesize a biologic product. Under the old definition, if an original biologic product was licensed under a BLA, a new chemically synthesized biologic follow-on could not be licensed through an abbreviated aBLA pathway, since it was made by a synthetic process, but also could not be licensed through an ANDA, since the original was not filed under an NDA.

In the end, what this demonstrates is that there are at least two simultaneous uses of the term “biologic” in the industry – an arbitrary regulatory definition to decide what drugs are licensed under BLAs vs. NDAs, and a scientific colloquialism which most of us use on a day-to-day basis. Neither definition is clear and unambiguous, and no single criterion (e.g. chemical process) universally captures all cases.

Biolognas, Anybody?
Having both uses at the same time is confusing enough to make you want to give “synthetic biologics” a different name without “biologic” in it. But what would we call them? Biologishes? Biolognas? I guess I have a year to think about it before 2020’s Biologic Drug Approvals post.

But back to my original question– since oligonucleotide drugs are all filed under NDAs, they’re regulated more like most small molecules than most biologics. But just because they’re filed under NDAs, doesn’t mean we can’t still call them biologics (e.g. insulins are all filed under NDAs). Anyway, all this makes me very glad that we have a lot of brilliant professionals working in our very important Regulatory Affairs departments, though I’m glad it doesn’t include me!


Are FDA Exclusivity Regulations Hamstringing the Market?

We dog eared the article below some time ago but never got around to including it in a weekly Anton Rx Report. It is insightful making the point that regulatory policies are creating legal log jams slowing the approval of new, competing therapies.

Specialty pharmacies historically benefited from new brand products coming to market. In most cases they were 5-10% or more costly than the last generation product…. so revenues benefited. These days, however, most of the new approvals are uber costly orphan drugs and are launched through limited distribution. As such, the majority of specialty pharmacies don’t enjoy any measurable benefit.

To keep the revenue pipeline robust, specialty pharmacies would actually benefit from access to new generic and biosimilar products. Hey, some revenue is better than NO revenue. So, when older brands lock out new. lower priced products the market can stagnate. And, those patients facing hefty out-of-pocket costs for the new wonder drug might be happy to access a last generation product or biosimilar that might now be available on a lower cost benefit tier.

New Biologics Are Skewing Exclusivity Periods Longer, Study Says

The rise of biologics as a class of prescription spending is fueling a trend toward longer exclusivity periods, which ultimately makes access more remote, authors of a new study said.

More new drugs tend to be biologics, approximately 1 in 4, which is a concern because biologics tend to command higher prices and enjoy longer market exclusivity, thereby fending off competitors such as biosimilars that would bring prices down and improve access, authors of a new study wrote.

They studied exclusivity periods for a range of generic and biologic products to understand the changes that are occurring and spot important trends.

“High drug prices charged during exclusivity periods allow drug manufacturers to recoup returns on earlier investment in drug development. However, unnecessarily lengthy exclusivity periods contribute to excess health care spending, and it is not clear whether the current system is financially incentivizing clinically important innovations,” investigators wrote.

Current marketing exclusivity periods for drugs range from 13 to 17 years, although biologics tend to have longer exclusivity, they found. “Policymakers should consider options to encourage timely competition, particularly among biologic drugs.”

The authors used claims data to estimate market exclusivity for 264 small molecule and 4 biologic drugs that faced new generic or biosimilar competition from 2012 to 2018. The exclusivity periods for biologics averaged 21.5 years versus 14.4 years for small molecule drugs (P = .02).

Investigators also found that drugs with lower annual revenues tended to have longer exclusivity periods:
< $75 million = 16.6 years
≥ $500 million = 14.2 years
(P = .006)

Investigators found that versions of existing drugs that had been modified (eg, administration route, therapeutic area) or gained approval via use of expedited approval pathways had shorter exclusivities than new drugs (9.9 vs 14.5 years; P < .01).

Periods of exclusivity make it possible for manufacturers to charge high prices for their innovator drugs, which is partly why brand-name products account for 80% of US prescription drug spending. Once competitor products enter the market, prices may drop substantially, leading to lower-out-of-pocket spending, improved medication adherence, and patient outcomes, authors said.

Therefore, market exclusivity periods are an important factor to consider in the patient-access equation, they said.

The study drew upon records from 17 million commercial and Medicare Advantage patients in 50 states, as well as FDA lists of generic and biosimilar approvals from 2012 to 2018. The study encompassed 109 new products and 159 modified products.

Modified drugs approved under an expedited FDA pathway had longer exclusivity than regular pathway drugs (15.1 vs 9.7 years; P = .01).

Therapeutic area and route of administration also correlated with exclusivity length, with longer periods for new products in the hematology/oncology (14.3 years), infectious disease (16.1), and dermatology (17.0) arenas, and longer periods also for topical (27.6), inhaled or intranasal (17.1 [modified drugs only]) or injected products (15.4).

Authors of the study said they did not find evidence that exclusivity periods lengthened for new small molecule drugs between 2012 and 2018. But longer exclusivity periods were noted “among the first 4 biologic drugs to face biosimilar competition, which is notable because biologics account for a rising proportion of new drug approvals.”

The lack of automatic substitution of biosimilars at the pharmacy counter has the potential to limit competition for innovator drugs, but biosimilars can still make an important difference via their lower prices, the authors said. “Since biosimilar competition can still lead to modestly lower prices even without automatic substitution, timely biosimilar competition is still important for improving patient access to lower-cost treatments and limiting unnecessary spending on these expensive products.”

Investigators found that a generic pathway created via the Hatch-Waxman Act appears to have succeeded in incentivizing earlier generic competition. Hatch-Waxman was designed to encourage generic competition by allowing 180 days of exclusivity to the first generic product to gain tentative FDA approval and go to market against an established brand-name drug. Shorter exclusivity periods resulted from this policy, but for almost 50% of new drugs, the first generics did not qualify for the 180-day exclusivity period, investigators found.

They said it remains to be seen whether the FDA’s 2017 Drug Competition Action Plan is able to encourage generic competition and increase generic approvals. “It will be critical to examine whether exclusivity length eventually shortens,” they said.

A recent study emphasized the importance of improving access to biosimilars as a way to generate better outcomes and lower costs for medicine.
Tony Hagen, AJMC


Vaccine Clinical Guidelines for MS Patients on DMTs

Patients on complex specialty therapies always have lots of questions. Lately they have been asking lots of questions about the Covid-19 vaccines and whether they are safe for given that they many are immune compromised. The good news… as detailed below, currently approved vaccines are safe for MS patients. But…..

We recently sent a report on this question pertaining to patients on inflammatory therapies. It included detail on the timing of vaccine administration and temporary pausing the specialty therapy. Today we are spotlighting MS patients. Their Disease Modifying Therapies (DMTs) can diminish immune response to the vaccines since they are designed to suppress the body’s immune system.

So, how long after the DMT is paused is it advised to receive vaccine and how long after the vaccine is administered is it advised before restarting or starting each DMT? See the list of drugs below.
Yes, there will be a quiz!

A specialty pharmacy usually has detailed clinical protocols for all its therapies. The vaccines present a great opportunity for targeted protocols…. by therapy. Manufacturers should be able to provide this information, so you don’t need to do all the heavy lifting.

National MS Society Offers Guidelines for Timing of COVID-19 Vaccines

March 29, 2021 — Vaccines for COVID-19 are safe and strongly recommended for all patients with multiple sclerosis (MS), according to new guidance from the National MS Society.

The guidance urges all MS patients to get vaccinated as soon as possible. Those in high-risk groups whether due to having progressive MS or any other reason “are especially encouraged to get vaccinated as soon as it becomes available,” the guidance states.

“A question that does come up, though, is whether to consider timing the vaccination relative to some of the disease-modifying therapies (DMTs) to maximize the immune response to the vaccine,” Dr. Bar-Or said. The guidance notes that some DMTs might diminish patients’ immune response to the vaccines, precisely because they are designed to tamp down the body’s immune system.

Specialists should consider how long after the DMT they should start vaccine and how long after the vaccine they might wait prior to restarting or starting DMT, Dr. Bar-Or said.

For some DMTs, it is enough to wait two weeks, for others it would be probably better to wait four weeks between completed vaccines and (re)starting DMT, he said, adding, “This may warrant a case-by-case discussion between the person living with MS and their provider, since settings and circumstances can differ.”

For example, Dr. Bar-Or said, a patient who is prescribed ocrelizumab for active relapsing MS, who is younger, not disabled and without comorbidities, could get the COVID-19 vaccine when it is offered, or plan to complete the vaccination several weeks prior to the next regularly scheduled ocrelizumab infusion.

“In contrast,” he said, “a patient prescribed ocrelizumab for primary progressive MS—who may also be older, more disabled and have one or more co-morbidities, and therefore at higher risk of severe COVID-19,—is unlikely to lose much ground if his ocrelizumab infusion is delayed by up to two or three months, potentially allowing for more robust vaccine response. That’s why it’s important for patients to discuss any timing adjustments with their neurologist.”

Guidance for Specific MS Drugs
No adjustment in timing is necessary, the guidance states, for MS patients taking beta interferons, any glatiramer acetate, teriflunomide, monomethyl fumarate generic dimethyl fumarate, diroximel fumarate, or natalizumab.

For patients whose MS is stable, neurologists and patients can consider the following adjustments in the administration of the DMT to maximize the vaccine’s effectiveness. Such scheduling is not always possible, however, and the guidance emphasizes that getting the vaccine when it becomes available may be more important than coordinating timing of the vaccine with the DMT dose.

  • Sphingosine 1 phosphate receptor modulators: If a patient is about to start taking one of these medicines for the first time, they and their physician can consider waiting two to four weeks or more after getting fully vaccinated. If they are already on these therapies, they should continue taking them as prescribed and get vaccinated as soon as the vaccine is available to them.
  • Alemtuzumab: If a patient is about to start alemtuzumab for the first time, they and their physician should consider waiting four weeks or more after being fully vaccinated. If they are already taking alemtuzumab, they should consider getting vaccinated 24 weeks or more after the last alemtuzumab dose. If they are due for their next treatment course, when possible, they should resume the therapy four weeks or more after getting fully vaccinated.
  • Oral cladribine: If a patient is about to start cladribine, they and their physician should discuss waiting two to four weeks after getting fully vaccinated. If they are already taking cladribine, the currently available limited data does not suggest that timing of the vaccine in relation to the dosing is likely to make a significant difference in vaccine response. If they are due for their next treatment course, when possible, they should resume cladribine two to four weeks after getting fully vaccinated.
  • Anti-CD20 monoclonal infusions (ocrelizumab, rituximab, and biosimilars): Patients who are about to start infusions of these therapies should discuss with their neurologist if it would be safe to wait two to four weeks or more after getting fully vaccinated. If they are already taking ocrelizumab or rituximab, they can consider getting vaccinated 12 weeks or more after the last DMT dose. When possible, ocrelizumab or rituximab should be resumed four weeks or more after getting fully vaccinated.
  • Ofatumumab: Patients about to start ofatumumab for the first time should consider, in consultation with their physician, waiting two to four weeks or more after getting fully vaccinated. If they are already taking ofatumumab there is no data to currently guide timing of the vaccine in relation to their last DMT injection. When possible, the guidance recommends, patients should resume these injections two to four weeks after getting fully vaccinated.
  • High-dose steroids: Patients and physicians should consider waiting at least three to five days after the last dose of steroids to begin the vaccine injection(s).

COVID-19 Vaccine Guidance for People Living With MS.


Should Patients be Paid to Move Their Tx?

Curiouser and curiouser…….
The pharmacy management rabbit hole seems to be getting curiouser by the day. The article below details a very new and provocative tactic to pull patients off one therapy and onto another, one that has clear benefits for the PBM and questionable clinical benefits for the patient.

Like all PBMs lately, changes to drug formularies have seen drugs moved to non-preferred status or even to ‘no longer covered’ in favor of another that is now preferred. What is unique is that Express Scripts is offering a cash bonus to certain patients on specialty therapy to drop their established therapy in favor of the new, preferred drug. Sure, $500 is enough to catch a patient’s attention and perhaps grease the skids to force a change. But the article points out that there may be unexpected clinical consequences with making the switch.

Also, the program isn’t offered across therapies or even across therapeutic categories. The article below notes that the current program only targets psoriasis patients. That raises the question….. Who benefits most? We all know that rebates are behind every preferred formulary decision so the answer can be easily construed that the PBM could be the bigger winner.

This may be a trial balloon, but it is noteworthy. Will we see similar deals offered to prompt more patients to move their specialty therapy? Will PBMs that use this technique also get blow back from other members who are not offered similar incentives?

“It takes all the running you can do just to keep in the same place.”
— Lewis Carroll

Express Scripts Dangles $500 to Persuade Patients to Switch Psoriasis Drugs

March 26, 2021 — As the first quarter of 2021 ends, patients choosing to keep using secukinumab may be offered an inducement by their pharmacy benefit manager to switch to another biologic, ixekizumab.

Is a $500 debit card from a pharmacy benefit manager (PBM) the new carrot in patient incentives in annual formulary changes?

Every year, PBMs change what’s covered and what’s not, often in specialty drug categories but also in older classes of drugs.

This year, one of the more notable switches was the removal of secukinumab from the formulary for Express Scripts, owned by Cigna. Patients are being given the option of switching to another inhibitor of interleukin (IL)-17A, ixekizumab.

Both drugs are used for psoriasis and psoriatic arthritis. Secukinumab (Cosentyx) is sold by Novartis and ixekizumab (Taltz) is sold by Eli Lilly. In some plans, secukinumab was removed entirely; in others, it was moved to a higher-priced tier.

Now, nearly 3 months into 2021, patients who choose to keep using the therapy may see communications about the offer, according to one dermatologist who shared the letter with The American Journal of Managed Care® (AJMC®).

The letter, sent this month to clinicians, advises them of patients who are still using secukinumab and offers alternatives, including older biologics, in addition to ixekizumab. Patients would receive the debit card if they fill the first prescription before August 31 and the second before December 31, with the card to follow 6 to 8 weeks after that.

The practice, known as non-medical switching, “is a very hot topic right now,” said Mark G. Lebwohl, MD, a professor of dermatology at the Icahn School of Medicine at Mount Sinai, where he is also dean of clinical therapeutics.

“A standard thing in medicine is, if you are doing very well on a treatment, why would you stop it?” said Lebwohl, who is also on the medical advisory board of the National Psoriasis Foundation (NPF).

In a statement to AJMC®, Cigna, which owns ExpressScripts, said patients were “offered several alternative medications that are equally effective and more affordable.”

“In rare occasions when a patient is not able to use the preferred option, we recommend that our clients offer an efficient review process to assist those patients in obtaining a non-formulary medication in these instances.”

Lebwohl disagreed, saying, “They say there is an appeals process, but everything they do is onerous.”

With the rise of specialty drugs, usually biologics, non-medical switching has become more of an issue. Specialty drugs make up a little more than 2% of US prescriptions, but account for half of drug spending, and that share is expected to rise.

Dermatology and rheumatology are 2 of the specialties most often affected.

“They pick on dermatology for sure, because they figure no one’s going to die,” said Lebwohl.

Indeed, a paper led by the Institute for Clinical and Economic Review (ICER) and published in the Journal of Comparative Research, referenced that idea, noting that, “Many economic-step therapy policies involve dermatologic, antihypertensive and gastrointestinal motility drugs that treat conditions for which short-term failure with the first-step drug poses extremely little risk of any significant long-term harm.”

The paper proposes a set of what is calls “ethical goals for access and fair design criteria” that could be used to spur “transparent and accountable drug coverage,” including points that should be satisfied if required switching is to take place.

However, the authors also note that their ideas will likely leave everyone unhappy.

“It will leave some patient advocates and clinician representatives feeling that too much weight has been given to the importance of managing limited health care dollars, and that too much discretion has been allowed to payers to construct policies that put patients at risk,” the authors conclude. “Conversely, many payers will feel that this paper questions unfairly their moral compass; that their commitment to evidence is discounted, while their efforts to make sure that patients are not hurt by inappropriate prescribing lie undefended from misplaced suspicions that the bottom line drives their actions.”

The NPF is having conversations with payers and PBMs about these issues, said Leah McCormick Howard, chief operating officer of the NPF. Part of that conversation is education about the systemic nature of psoriasis, she said.

“From an NPF perspective we’re always concerned about policies that require or would encourage an individual in our community who’s stable on a therapy to switch to another therapy,” she said.

Neither she nor a pharmacy professor had ever heard of an incentive set that high.

“A lot of time patients get really attached to that drug because it is working for them and it can take them 1 to 2 years to adjust to a new product,” said Nicole Henry, PharmD, assistant professor at The College of Pharmacy at The University of Arizona.

Both Henry and Howard noted that the list of exclusions by PBMs have been growing in recent years.

Lebwohl suggested that the issue has more to do with the rebate system that exists between drug companies and PBMs. Both biologics are priced similarly.

Allison Inserro

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