The White Bagging War Heats Up Reprise

The public relations battle surrounding White Bagging is heating up. Who’s on each side?

Depends on who you ask….!

  • On one side, hospitals are claiming that their very existence is being threatened due to White Bagging policies.
  • On the other side are the PBMs and the payers.

But, is there yet a third side? We will get to that. 

First, what is White Bagging?

As defined by the hospitals in the article link below….. White Bagging consists of “policies that require hospitals administering certain high-cost medications in an outpatient setting [actually inpatient as well] to receive those medications from third parties contracted with the health plan, instead of providing those medications directly from the hospital pharmacy inventories.” Increasingly, those third parties are specialty pharmacies acting as specialty distributors, under a distributor’s license (no prescription required) or as the pharmacy (with a prescription). 

What’s at stake? Money and control.

The number of rare therapies approved over the past two years has mushroomed. Most of the therapies have been $HUGE$ dollar meds that are hospital administered, often at leading national medical centers. These providers are very concerned about money and control. If they can buy directly and bill under often outdated, traditional contract terms (which never envisioned meds costing in the hundreds of thousands of dollars for a one-time infusion and may still pay them at U&C rates) then chances are they will realize a larger Net profit. If a specialty pharmacy is inserted into that scenario, they may not be able to realize any profit if the SP directly bills the PBM as a pharmacy claim or payer via a medical claim. 

It is no surprise that the hospitals are now upping the ante and turning to the courts and even state legislatures, where they may have significant influence, to seek relief and regain control. 

But…. who is the third party to this battle? Manufacturers.The pharmaceutical manufacturers proliferated the “White Bagging” war by selecting one or a handful of specialty pharmacies to be their preferred distributor(s) for these new infused therapies. Traditional distributors can’t perform all the functions of a specialty pharmacy as they are prohibited from making direct patient contact. Manufactures realized that SPs can help them out with managing patient care, ensuring compliance, tracking outcomes for FDA reporting, in addition to all the traditional SP patient stuff such as clearing prior authorizations and financial assistance. When payers and PBMs realized what was happening they got creative and saw a way to insert utilization review and tighter benefits management into the mix, things that SPs are also adept at juggling. 

It is also noteworthy to mention that SPs are also inventorying their meds for distribution. Traditional distributors charge manufacturers a percentage for their limited services…. better to pay an SP for the full-service package vs. just “park, pack, and ship.” 

So, it is surprising that the hospital lobby is focusing its ire only on the payers and PBMs, allowing the manufacturers off the hook. Then again, there are a lot of big research dollars that flow from manufacturers to the same big medical centers in new drug trials….. just sayin’. 

So, read the article below for a good update on what the leading payers are doing related to “White Bagging”.

Payers Attempt to Impose “White-Bagging” Policies on Hospitals



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