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RX- Medicaid Net Drug Spend HIts Double-Digits for the First Time, Says Magellan Rx Report

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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


[MM Curator Summary]: Specialty drugs continue to drive Medicaid drug spending, and its getting faster, with 2021 being the first year an increase this size has been seen in overall Medicaid Rx spending.




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Spending on specialty drugs fueled a 11% increase in Medicaid drug spending from 2020 to 2021, says Magellan’s seventh annual Medicaid Pharmacy Trend Report.

Net Medicaid drug costs increased by 11% from 2020 to 2021, according to Magellan Rx Management’s Medicaid Pharmacy Trend Report, which was published earlier today. It is the first time during the seven-year history of Magellan’s report on Medicaid drug expenditures trend that the increase has been in the double digits, according to the report.

As is true for drug spending for almost all payers, specialty drugs — expensive drugs for rare disease — are accounting for a growing share of Medicaid drug spending and the year-to-year increases in spending, or “trend,” according to the Magellan.

Source: Magellan Rx Management Medicaid Pharmacy Trend Report, 7th edition

The report says the specialty net trend rose 2.1 percentage points from 10.9% in 2020 to 13% in 2021 while the traditional net trend rose 4.1 percentage points from 1.9% to 5.8%. In 2021, specialty drugs accounted for small fraction of drug claims — just 1.3% — but for the majority — 53.8% — of the net drug costs, according to the Magellan report. That is a 2.3 percentage point increase from 2020 when specialty drugs accounted for 51.5% of total net drug costs.

Net costs are often used analysis and calculations of Medicaid drug costs because the difference between the gross and net spending is so large. Medicaid programs receive in a mandatory 23.1% rebate from manufacturers and additional rebates for many drugs on top of that mandatory rebate. According to the Magellan’s numbers, the net cost per claim in 2021 was $58.55, or just 41% of the gross cost per claim of $142.18.

Magellan’s report is not based on drug prices and spending for all Medicaid programs. Rather, the report is based on data for the company’s fee-for-service pharmacy programs in 24 states and the District of Columbia. The report says the data set used to prepare this report included 95 million claims with a gross cost of $13.6 billion and a net cost of $5.6 billion.

Late last year, Prime Therapeutic finalized the $1.35 billion acquisition of Magellan Rx, the pharmacy division of Magellan Health, from Centene Corporation.

The report identifies the specialty drugs most responsible for the increase in spending on specialty drugs. Topping the list are Hemlibra (emicizumab), a treatment for hemophilia A treatment; Trikafta (elexacaftor, tezacaftor, and ivacaftor), a treatment for cystic fibrosis; Evrysdi (risdiplam), a treatment for spinal muscular atrophy; Biktarvy (bictegravir, emtricitabine, tenofovir alafenamide, an HIV treatment; and Stelara (ustekinumab), a treatment for plaque psoriasis, Crohn’s disease and ulcerative colitis.

The report also ranks 50 drug classes by their share of the net spend in 2021. Drugs for HIV/AIDs ranked the highest, accounting for 10% of the net Medicaid spend in 2021. They were followed by antipsychotics (8.4%), hemophilia treatment (7.2%), anticonvulsants (6.3%), oral cystic fibrosis drugs (5.6%) and cytokine and CAM (cell adhesion molecule) antagonists (4.3%), a group that includes Stelara and Humira (adalimumab).

Source: Magellan Rx Management Medicaid Pharmacy Trend Report, 7th edition

Drugs for spinal muscular atrophy, a group of inherited diseases that damage and destroy motor neurons, was further down on the list, ranking 13th and accounting for 1.5% of the net spend. But the report says that claim volume increased by 425% as prescriptions for Evrysdi increased and the market share of Spinraza (nusinersen), delivered via an intrathecal injection, shrank.

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RX- Medicaid Spending on Antiretrovirals Increased Between 2007 and 2019

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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


[MM Curator Summary]: Medicaid spent $25B on HIV drugs over a 12 year period, and the researchers try to figure out what drove increases.


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Medicaid spending on antiretroviral therapies (ARTs) used to treat human immunodeficiency virus (HIV) increased by 178% between 2007 and 2019, according to study findings published in Clinical Infectious Diseases.

Researchers at Brigham and Women’s Hospital and Harvard Medical School in Boston, Massachusetts, sought to estimate Medicaid spending on ARTs to treat HIV between 2007 and 2019. They obtained publicly available data on Medicaid State Drug Utilization, and approximated Medicaid’s net spending based on average prices and Medicaid rebates for 48 available ARTs. The base Medicaid rebate ranged from 15% to 23% plus any added rebates if the medication’s price increased faster than inflation.

According to the researchers’ estimates, Medicaid spent around $25 billion for 17 million 30-day supplies of the 48 available ARTs between 2007 and 2019.

When comparing 2007 spending to 2019 spending, Medicaid’s annual net spending increased by 178% from $1.1 billion to $3.0 billion, while the average net price of ARTs increased 28% from $1432 to $1830 for every 30-day supply. Annual use of ARTs increased 118% from 700,000 to 1.6 million 30-day supplies during the same period. These increases suggest that newer ART formulations, combinations, and ingredients were more expensive, and that inflationary rebates did not effectively counteract rising costs.

Other factors may also explain the rising spending on ARTs. The population of Medicaid beneficiaries increased, particularly following the passage of the Affordable Care Act, which expanded Medicaid eligibility in 2012. Treatment advancements and improved efficacies also extended the lifespan of individuals living with HIV.

[T]he US government should be authorized to assure that launch prices for new drugs covered by Medicaid are aligned with the added benefit they offer over existing therapies.

In 2007, the most commonly used ARTs included TVD, EFV/FTC/TDF, and LPV/r. In 2019, the most commonly used ARTs consisted of single-tablet regimens, including BIC/F/TAF, E/C/F/TAF , and DOL/ABC/3TC.

Limitations of the study include possible underestimation of actual rebates, use of estimated ART prices and estimated medication usage based on 30-day supplies of medications.

“Medicaid spending on [ARTs] nearly tripled from 2007-2019, due to expanded use of [ARTs] and rising prices,” the study authors conclude. They add, “To prevent sustained high prices due to serial replacement of brand-name drugs with incrementally different products among [ARTs] and other classes of drugs, the US government should be authorized to assure that launch prices for new drugs covered by Medicaid are aligned with the added benefit they offer over existing therapies.”

Disclosures: Some study authors declared affiliations with biotech, pharmaceutical, and/or device companies. Please see the original reference for a full list of authors’ disclosures.

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MH/RX- Mental health declines as Medicaid funds record psychotropic drug use


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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


[MM Curator Summary]: The author wants to be ticked about expansion but also wants to benefit from the idea that lockdowns caused a surge in MH needs. Besides all that we get some decent data on MH drug trends in Idaho.

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Taxpayer-subsidized government healthcare is not making people healthier. 

New data shows that the use of psychotropic drugs among Medicaid beneficiaries is projected to reach an all-time high for the third consecutive year. With one in every five Medicaid prescriptions in Idaho written for these drugs, there exists a serious problem with mental health throughout the Gem State.

Psychotropic drugs are generally used to treat mental health conditions like anxiety, depression and mood disorders. In 2016, there were just under 400,000 claims for such medications. Since then, the use of these drugs has increased significantly, with claims growing 86% as of 2021.  Estimates for 2022 say that Idaho Medicaid will spend $91 million to cover just short of one million claims for psychotropics by the end of the year.

Figure 1

Medicaid expansion and the COVID-19 pandemic both started in early 2020, as did the steep increase in psychotropic use. In the previous decade, spending on psychotropic medications declined by 5% per year and the number of prescriptions declined by 1% per year, when adjusted for inflation and Medicaid enrollment. Since 2020, however, this decline suddenly became a sharp annualized increase of 6% in prescriptions and 15% in spending (see Figure 2). 

Figure 2

Medicaid expansion added to the number of people who could receive benefits. But that change alone does not explain the rapid increase in prescriptions and prescription expenses. Demographic changes played a key role.

The effects of the pandemic – exacerbated by harsh government policies, including Gov. Brad Little’s statewide lockdowns – created a surge of Idahoans applying for Medicaid. For adults under 40 and those in their 60s, lockdown policies created isolation, unemployment, and economic hardship, all of which harmed their mental health significantly more than was the case for all other age groups. This likely generated a demographic shift necessary, among both existing and new Medicaid enrollees, that accounts for the sudden rise in psychotropic drug use. Despite the state’s relatively quick economic recovery touted by the governor, these concerning trends remain and are worsening.

There is cause for skepticism about the efficacy of prescribing psychotropic drugs to treat mental health conditions. One groundbreaking study asserts that the foundational theory supporting antidepressants – the chemical imbalance theory – is incorrect. Naturally, this research also calls into question whether antidepressants are effective forms of treatment. This theory has also been the basis of hesitancy for doctors and patients to stop antidepressant treatments, leading to lifelong use by people who would otherwise be able to seek better alternatives.

Despite doubts about the efficacy of some psychotropics, like antidepressants, these types of drugs are still commonly overprescribed. A national study notes that three out of every five visits where a new psychotropic drug was prescribed to a patient had no corresponding psychiatric diagnosis. Not only is this practice potentially detrimental to patient health, but the same study links this over-prescription to rising costs within the Medicaid system.

This tendency to overprescribe psychotropic drugs also made it common for patients to be taking more than one of these medications at the same time. Disturbingly, patients on Medicaid are significantly more likely to be taking multiple psychotropic drugs, despite this being an ill-advised practice that could have harmful effects on patients. This is especially concerning for the case in Idaho, as the state ranks among those with the highest incidence of this practice.

What is happening within the Medicaid system is an example of how government control negatively impacts people’s lives. The big government policies that dictated how we weathered the pandemic destroyed the livelihoods of many Idahoans and had long-term negative effects on their health and freedom. 

The entrapment of patients in chronic therapies is a common convention of modern medicine. Guaranteeing that patients continue their treatments without the hurdle of paying for them – as the Medicaid system does so well – is good for business among medical interest groups. Some healthcare professionals are beginning to notice these practices, resulting in the increasing popularity of osteopathic physicians versus their allopathic counterparts – that is, DOs rather than MDs. Scholars are finding that not only are mental health conditions not treated well with medications, but lifestyle plays a greater role in mental health than originally thought, and the medical community is beginning to take note.

Patients should be weary of those claiming to advocate for their well-being, only to call for bigger government and more social programs. Like subsidies and bailouts to support companies that are failing due to their bad business models, Medicaid is subsidizing the use of healthcare treatments and practices that may not be best for patients. However, the consequences of doing so are more severe than traditional business bailouts and the result is a worse healthcare system for everyone.

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Medicaid’s 340B has grown beyond original intent | Mississippi Politics and News


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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


[MM Curator Summary]: In which the author explains how hospitals exploit 340B to make a whole lotta cash.



Submitted by former State Senator and Senate President Pro Tem Terry Burton

“The program has been hijacked by large for-profit hospital systems that are using the program to fill their pockets without providing any additional charity care,” former State Senator Burton writes.

I would argue that most politicians have good intentions, but good intentions don’t always make for good policy. Many programs in our country that were created with good intentions have led to a culture that takes advantage of the very people they were designed to help.

One of these good intentioned programs is Medicaid’s 340B drug pricing program which is currently failing at its goals and failing the American people and the people of Mississippi.

The 340B program was established to help reduce the price of healthcare for low-income and uninsured patients. This would be achieved by providing drugs to rural hospitals and community health centers at a reduced cost, which would ideally provide these institutions with the financial freedom to provide charity care. A worthy cause indeed!

However, the program has been hijacked by large for-profit hospital systems that are using the program to fill their pockets without providing any additional charity care. In fact, 340B institutions provide less charity care on average than non-340B entities.

I cannot stomach the fact that these large entities are profiting off the neglect of the poor. Beyond my faith, my values as a conservative American are staunchly opposed to the massive growth of the program. The 340B program has inflated from $6.9 billion in 2012 to $38 billion in 2020 without any noticeable rise in charity care.

Since 1992, the program has grown five times faster than the growth rate of the overall drug market and has become the second largest federal drug program. More than two out of every five hospitals in the United States participate in 340B even though it was intended to be a small program with only 45 hospitals participating in 1992. And why wouldn’t these hospitals want to participate?! A 340B hospital or clinic may claim steep discounts on outpatient medicines dispensed to all patients, whether insured or uninsured.

In 2010, Health Resources and Services Administration’s contract pharmacy guidance allowed all 340B entities to have an unlimited number of contract pharmacy arrangements. This allowed for-profit corporations to expand the 340B program with no clear benefit to patients. Currently, hospitals have created expansive networks of contract pharmacies, where they can obtain the 340B discounts and share in the profits but do not have to share any savings with patients.

To make matters worse, because drug manufacturers have smaller profit margins on 340B drugs, drug prices are rising for everyone due to 340B and the greed of large hospitals. This program simply does not align with my conservative or Christian values I hold dear to my heart.

While 340B was created for good, the program has suffered from poor legislative drafting, overly broad administrative guidance and poor Congressional oversight and has lost its intended focus. I urge our Senators to keep fighting for Mississippians by reforming this failed government initiative.


Submitted by former State Senator and Senate President Pro Tem Terry Burton



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Rx- NYOH calls on NYSDOH to reverse Medicaid policy change

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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


[MM Curator Summary]: A move to mail-order pharmacy for oncology drugs has very few fans.



Save Our Access, Save Our Lives Rally takes place on October 12

ALBANY, N.Y. (NEWS10) — There will be a Save Our Access, Save Our Lives rally on October 12 at 2 p.m. where The New York Oncology Hematology (NYOH) will call on the New York State Department of Health (NYSDOH) and state leaders to reverse a policy that has left Medicaid patients without access to life-saving cancer care medication.

NYOH will be joined by partner organizations, community leaders, and elected officials as they advocate for Medicaid recipients to regain access to life-saving oral cancer care medications through physician dispensaries. The rally is asking for support from legislators and representatives that can help resolve this problem for patients. Director of Pharmacy & Admixture Services for NYOH, Nancy Egerton comments on the situation by saying she’s “glad to have such a diverse group of people attending this rally.” Egerton hopes the outcome of this event is a positive resolution.

The New York State Department of Health (NYSDOH) made a policy change to their Medicaid Pharmacy Program that prevents Medicaid patients from obtaining their oral medications through their physician dispensary. This forces patients to receive their oral cancer medication prescriptions from a mail-order pharmacy, adversely affecting cancer patients’ care. According to the NYSDOH website, beginning in April 2023, all Medicaid consumers enrolled in Mainstream Managed Care will receive their prescription drugs through the Medicaid Fee-For-Service (FFS) Pharmacy Program. The FFS Program will allow NYS to pay pharmacies directly for the drugs and supplies of Medicaid consumers. The NYSDOH notified patients on September 1 leaving patients under Medicaid-managed care to try and go to an alternate source than their physician. The mail-order pharmacy creates problems and long waits for needed medication.

The NYOH are not considered a pharmacy but a dispensary not allowing patients to get their prescriptions filled at NYOH. The NYOH approached the NYSDOH about two years ago asking to be enrolled as a dispensary and allowing patients to get their prescriptions. August of 2022, the NYOH was informed that this enrollment was not going to happen.

Biden will order HHS to consider using Medicaid to support women seeking abortions across state lines

The rally will take place on October 12 at 2 p.m. at the West Capitol Park, 85 Swan Street, Albany. Many people such as Sabrina Mosseau, Executive Director, New York Oncology Hematology; Nancy Egerton, pharmacy manager, New York Oncology Hematology; representative from National Community Oncology Dispensing Association (NCODA); representative for Assemblymember Jake Ashby; representative for Senator Zellnor Myrie will be in attendance.


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Rx- HCA delays Medicaid drug payment change – Washington State Hospital Association

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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


[MM Curator Summary]: Managing drug costs in Medicaid sounds good until you have to actually walk it out. The planned MCO rx-carve out in WA may be “evolving.”


Following WSHA’s and other stakeholders’ advocacy, the Washington State Health Care Authority (HCA) announced it would delay implementation of a plan to remove coverage of certain prescription drugs, including HIV antiviral drugs, oncology drugs, and Cystic Fibrosis drugs from Medicaid managed care contracts. WSHA advocated for HCA to rescind the proposed change, citing concerns about the impact on organizations’ ability to provide these specialized services to vulnerable populations. WSHA recommended HCA pursue alternatives to carving out the drugs from  managed care contracts that would not have as much impact on providers. HCA is in the process of submitting its managed care contracts and capitation rates to the Centers for Medicare and Medicaid Services for review.

The change, which was scheduled to be effective January 1, 2023, would have significantly reduced payment to providers that provide these drugs under the federal 340B program. These include disproportionate share hospitals, children’s hospitals, cancer centers, federally qualified health centers, and Ryan White clinics.  WSHA appreciates HCA’s attention and response to our advocacy.  (Andrew Busz,


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Washington State plan aimed to lower Medicaid pharmacy payments is rescinded

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[MM Curator Summary]: The state will not be allowed to set rates for dispensing fees pharmacists can charge, even though a state plan amendment was approved to do just that.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.



Washington State Pharmacy Association | Jul 6, 2022 | Washington

CMS rescinded approval of a Washington State Medicaid amendment that aimed to dramatically lower pharmacy reimbursement rates.



The Washington State Pharmacy Association (WSPA), the National Community Pharmacists Association (NCPA), and the National Association of Chain Drug Stores (NACDS) voiced support for the CMS decision that they say will help maintain reliable patient access to care and pharmacy viability in Washington. 

“Pharmacies provide essential care and access to medications,” WSPA CEO Jenny Arnold said. “Adequate reimbursement for safe patient care is essential. Our pharmacies should not have to choose between taking care of their patients and keeping their doors open, so we are relieved by this outcome.”

On Jan. 19, 2021, the last day of the Trump administration, the acting CMS administrator approved a plan to reimburse pharmacies for Medicaid patients far below the actual cost of dispensing prescriptions. The decision was a sharp departure from CMS’ previous position, which was that the state’s reimbursement was unlawful primarily because it failed to consider the cost of dispensing. 

WSPA, NCPA, and NACDS sued CMS, accusing CMS of violating its own rules. As a result, the Department of Justice—which represented CMS in the case—filed a motion to remand the matter back to CMS, agreeing with the pharmacy groups that the final decision approving the amendment was unsupported by the administrative record before CMS and would not survive the legal challenge. 

“This is a win for patients and pharmacies not only in Washington, but around the country,” NCPA CEO Brian Douglas Hoey said. “Unfair pharmacy reimbursement rates must not stand. We are celebrating the outcome of this fight and will continue working to protect essential health care services provided by pharmacy teams.”

CMS reconsidered the Jan. 19, 2021, decision and determined that the amendment—which would have reimbursed pharmacies of all sizes well-below cost—would be disapproved. Specifically, CMS determined that the amendment is inconsistent with the requirement that “States have a State plan that provides such methods and procedures to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to the general population of the geographic area.” 

CMS also found that the amendment was inconsistent with federal regulations “which provide that payments for drugs are to be based on combined examination of the ingredient cost of the drug and a professional dispensing fee.” 

“Pharmacies have a vital role to play in health care delivery, and CMS’ decision will go a long way in helping to ensure that the most vulnerable Americans continue to have access to the pharmacy-based services they rely on and expect,” NACDS President and CEO Steven C. Anderson said. “We commend CMS for doing the hard but necessary work to reverse its approval of Washington State’s flawed pharmacy reimbursement plan, which has for many years jeopardized the ability of pharmacies to meet patients’ health and wellness needs. This is not only a victory for Washington pharmacies and their patients, but also for pharmacies and the vulnerable patients they serve across the nation.”

This press release was provided by the Washington State Pharmacy Association.

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Dept. of Justice: DOJ announces Mallinckrodt to pay $230 million agreement in underpayment of Medicaid drug rebates lawsuit

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[MM Curator Summary]: The Questcor rebate scandal is winding down as states start to get their payout checks.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


MADISON, Wis. – Wisconsin Department of Justice (DOJ) announced today that Wisconsin has joined with 49 other states, Washington, D.C., Puerto Rico, and the federal government to settle allegations of fraud against Mallinckrodt ARD, LLC (formerly known as Questcor Pharmaceuticals, Inc.), a U.S. subsidiary of the Irish pharmaceutical company Mallinckrodt plc (collectively Mallinckrodt), which sells and markets pharmaceutical products throughout the nation. The total value of the agreement is $233,707,865.18, plus interest, to be paid over a period of seven years. Of this amount, Wisconsin will receive $1,391,803.20, plus applicable interest.

“When companies break the rules of the Medicaid system, the Wisconsin Department of Justice works to hold them accountable and get restitution for taxpayers,” said AG Kaul. “Thank you to the team in our Medicaid Fraud Control and Elder Abuse Unit whose work ensured that Medicaid dollars will be recouped.”

The agreement resolves allegations that from January 1, 2013, through June 30, 2020, Mallinckrodt knowingly underpaid Medicaid rebates due for its drug H.P. Acthar Gel (Acthar). The government alleges that Mallinckrodt’s conduct violated the Federal False Claims Act, the Wisconsin False Claims Act, Wis. Stat. § 20.931 (repealed 2015), the Wisconsin Medical Assistance Act, Wis. Stat. § 49.49(4m), and resulted in the submission of false claims to the Wisconsin Medicaid program.

Under the Medicaid Drug Rebate Program, when a manufacturer increases the price of a drug faster than the rate of inflation, it must pay the Medicaid program a per-unit rebate of the difference between the drug’s current price and the price of the drug if its price had gone up at the general rate of inflation since 1990 or the year the drug first came to market, whichever is later.

However, the government alleges that Mallinckrodt and its predecessor Questcor began paying rebates for Acthar in 2013 as if Acthar was a “new drug” just approved by the U.S. Food and Drug Administration (FDA), rather than a drug that was first introduced to market in 1952. Allegedly, this practice meant the companies ignored all pre-2013 price increases when calculating and paying Medicaid rebates for Acthar from 2013 until 2020. In particular, the government alleges that Acthar’s price had already risen to over $28,000 per vial by 2013; therefore, ignoring all pre-2013 price increases for Medicaid rebate purposes significantly lowered Medicaid rebate payments for Acthar. Under the settlement agreement, Mallinckrodt admitted that Acthar was not a new drug as of 2013 but rather was approved by the FDA and marketed prior to 1990. Mallinckrodt agreed to correct Acthar’s base date AMP and that it will not change the date in the future.

As part of the settlement, Wisconsin will receive $1,391,803.20 in restitution and other recoveries. This settlement results from a whistleblower lawsuit originally filed in the United States District Court for the District of Massachusetts. The federal government, twenty-six states, the District of Columbia, and Puerto Rico intervened in the civil action in 2020. The settlement, which is based on Mallinckrodt’s financial condition, required final approval of the U.S. Bankruptcy Court for the District of Delaware, which approved the settlement on March 2, 2022.

The Wisconsin Medicaid Fraud Control and Elder Abuse Unit, within the Wisconsin Department of Justice Division of Legal Services, receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $1,617,392 for the fiscal year 2022. The remaining 25 percent, totaling $539,126 for fiscal year 2022 is funded by the State of Wisconsin.

A team from the National Association of Medicaid Fraud Control Units participated in the litigation and conducted settlement negotiations on behalf of the states. The team included representatives from the Offices of the Attorneys General for the states of California, Florida, Massachusetts, Michigan, Nevada, New York, Texas, and Wisconsin. Wisconsin Assistant Attorney General Katie M. Wilson served as the co-team lead for the states.

The requirements of 2017 Wisconsin Act 369 do not apply because this resolution is part of a bankruptcy proceeding and is not a “compromise or discontinuance of a civil action.”


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Judge strikes down CMS’ Medicaid copay rule, handing PhRMA major win

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[MM Curator Summary]: No, you can not include co-pay assistance to members in best price calculations (says the judge).


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.





A federal judge struck down a controversial rule that requires drug companies to include copay assistance like coupons into Medicaid rebates, handing the pharmaceutical industry a major win. 

The ruling, delivered Tuesday in the U.S. District Court for the District of Columbia, deals a major blow to insurers and pharmacy benefit managers (PBMs) that have adopted copay accumulator programs that limit the impact of drugmaker assistance from counting toward the deductible and out-of-pocket caps, arguing that the assistance is meant to drive patients to more expensive drugs. 

The ruling focuses on a Centers for Medicare & Medicaid Services rule finalized in December 2020 under the Trump administration. The regulation, which goes into effect next year, said that any copay assistance like coupons or other cost-sharing help must be included in the calculation of the best price of the drug. 


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Drug companies agree to offer rebates to Medicaid to get their products covered by the program. The rebate must be 23.1% of the average sales price of a brand-name drug and 13% for a generic. 

But how that average sales price is calculated has caused a major stir among payers and PBMs. 

Insurers and PBMs charge that the drug manufacturers rely on coupons and other assistance to steer patients toward more expensive and unnecessary drugs as opposed to more affordable options, according to the PBM industry group Pharmacy Care Management Association (PCMA).

“Since the use of copay coupons reduces the utilization of more affordable medication options, overall prescription drug costs will continue to increase dramatically,” PCMA said on its website. 

But the pharmaceutical industry counters the assistance is vital to ensure financial assistance for patients who may not afford certain products.

The industry group Pharmaceutical Research and Manufacturers of America (PhRMA) sued the Department of Health and Human Services (HHS) back in May 2021 over the rule, claiming it contradicts federal rebate law. HHS argued that PhRMA lacked the legal standing to sue over the regulation.

But District Court Judge Carl Nichols found that PhRMA does have the standing to sue as the rule would affect its member companies. The Trump appointee also found that HHS did not have the statutory authority to impose the rule. 

“A manufacturer’s financial assistance to a patient does not qualify as a price made available from a manufacturer to a best-price-eligible purchaser,” the ruling said. “Rather, a manufacturer’s financial assistance is available from the manufacturer to a best-price-eligible purchaser. And a patient is not a best-price-eligible purchaser.”

Nichols was also concerned that the rule would make the calculation of the best price turn on information that only insurers possess.

“Under the proposed rule, manufacturers would need to conduct transaction-by-transaction investigations into the operations of accumulator adjustment programs even though manufacturers have no control (and sometimes no information concerning) those programs,” the ruling said. 

It would make it difficult under such circumstances for drugmakers to report the best price to the federal government as the manufacturers would have to complete such investigations.

Because the rebate statute only refers to the best price made to the insurer and not the patient, the final rule contradicts the federal law and must be struck down, Nichols ruled.

HHS did not immediately return a request for comment on whether it will appeal the ruling.


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OR- New Cancer Drug Access at Risk in Oregon Medicaid Proposal

[MM Curator Summary]: You can have faster cancer drugs or cost management. Not both.


The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.




An Oregon proposal to exclude expensive drugs that received FDA fast-track approval from Medicaid coverage is alarming advocates for patients with cancer and other life-threatening diseases.

If approved, the proposal could limit access in Medicaid to promising treatments for patients with deadly conditions, and could encourage other states to similarly attempt to restrict access to get relief from rising drug costs, advocates say.

At issue are drugs approved under the Food and Drug Administration’s accelerated approval pathway, which emerged in the 1990s during the AIDS crisis as a way of speeding access to medications for patients with serious conditions and few, if any, treatment options. The pathway has gained renewed attention from lawmakers after the FDA approved Biogen Inc.’s Alzheimer’s drug Aduhelm against the recommendation of its scientific advisers.

Accelerated approval drugs can be very expensive—many of them over $10,000 per month—and many more are in the pipeline, according to Matt Salo, executive director of the National Association of Medicaid Directors. The Oregon proposal is a sign that states are worried about how they’ll pay for such treatments, he said.

Other states will be watching the response of the Centers for Medicare & Medicaid Services to the Oregon proposal “very closely,” Salo said.

Annual Medicaid spending on accelerated approval drugs increased from $728 million in 2015 to $1.44 billion in 2020, and the percentage of program spending that went to such drugs increased from 2.3% to 4.2%, according to a 2021 study in Health Affairs.

Confirmatory Trials

Drugmakers ordinarily must show that their products produce a benefit through lengthy and costly clinical trials to win approval—meaning a favorable effect on how a patient feels, functions, or survives.

Accelerated approval removes the requirement to run clinical trials upfront. Instead, drugs are approved based on their effect on a “surrogate endpoint,” an objective indication thought likely to lead to a clinical benefit.

The result has been quicker approval of promising drugs. But Oregon’s proposal zeroes in on a frequent criticism of the accelerated approval pathway: that it removes pressure on drugmakers to run the clinical trials that are needed to show that their products do, in fact, produce a clinical benefit.

The Oregon proposal is part of the state’s application to renew and amend its Section 1115 waiver, referring to special conditions under which it runs its Medicaid program.

Section 1115 is a part of the Social Security Act that deals with Medicaid and allows the secretary of the Department of Health and Human Services to waive program requirements to allow states to test new approaches to coverage and payment.

Oregon’s current waiver is set to expire June 30. The federal comment period on the renewal proposal closed April 7.

Current Medicaid regulations generally require states to cover all drugs that have been approved by the FDA, including where the drugmaker subsequently fails to show clinical efficacy within the timelines that were imposed as a condition of accelerated approval, the Oregon renewal application said.

In return for guaranteed Medicaid coverage for their FDA-approved drugs, drugmakers are required to pay large rebates to the states. Medicaid spent about $64 billion on outpatient prescription drugs in 2017, and collected $34.9 billion in rebates, resulting in net spending of $29.1 billion, according to the Medicaid and CHIP Payment and Access Commission.

Allowing Oregon to exclude accelerated approval drugs would give drugmakers an additional incentive to complete the required clinical trials, and would ensure that states are paying only for drugs that have been proven to provide a clinical benefit, Oregon said.

That is not always the case under the current system, said Rachel Sachs, a professor at the Washington University School of Law.

“There are cases where a drug manufacturer completes the confirmatory trial on a drug that has received accelerated approval, the trial fails, and the drug stays on the market,” Sachs said. “And the FDA either can’t or won’t remove it. And that raises an important question: should the states and the taxpayers have to spend their limited resources on a product that has no demonstrated evidence of clinical benefit?”

Cancer Drugs

But those who look at the issue of accelerated approval drugs from the standpoint of patients rather than of the Medicaid program as a whole ask a different question: whether it makes sense to allow states to restrict access to lifesaving drugs for low-income patients in the name of cost savings.

“This is a matter of incredible importance for cancer patients,” said Mark Fleury, a principal on the policy development team at the American Cancer Society. “Oncology makes up the lion’s share of accelerated approvals for all drug types, and within oncology, the majority of new molecular entities that have been approved over the past three years have been via accelerated approval.”

The impact on drug availability for patients who have no other treatment options have been dramatic, he said. The accelerated approval process has reduced the time for drugs to hit the market by 3.4 years on average.

“For cancer patients, that can make all the difference,” he said. “This process really is working. It really is granting patients earlier access to life-extending and lifesaving treatments.”

Policy Proposals

The problem with the Oregon proposal is that its target is the drug companies but its victims are Medicaid enrollees in need of accelerated approval drugs, said Wayne Turner, a senior attorney in the National Health Law Program.

“This isn’t a problem for the individual states to handle through the Section 1115 waiver program,” Turner said. “This is a matter for Congress.”

A variety of policy proposals have surfaced in Congress aimed at reforming the accelerated approval pathway and pressuring drug companies to complete confirmatory clinical trials.

These include allowing the FDA to take quicker action to remove drugs from the market once they have failed to demonstrate clinical benefit, requiring drugmakers to provide a plan for confirmatory trials before obtaining accelerated approval, increasing reporting requirements related to confirmatory trials, and imposing fines on drugmakers that fail to complete the trials.

A proposal floated by MACPAC would require drugmakers to pay increased rebates for accelerated approval drugs.

But looming in the background is a more fundamental issue for Congress to address, said Salo: how to help state Medicaid programs pay for an expected flood of expensive new treatments in the coming years.

“There’s a whole world of new therapies coming our way, we’ve really made it a national priority to go ‘all in’ on innovation, but we haven’t had the follow on conversation about the cost of innovation, and how we’ll pay for it,” he said.

“You’d find a lot of agreement from the states about this: we’re probably going to need help from our federal partners to spread the cost out more broadly.”


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