Formulary guidance and transparency from P&T to point of care

Perspectives on Healthcare Oversight & Regulation

Posted by Matt Breese on Oct 13, 2015

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These days, government and healthcare go hand-in-hand. Although pharmaceutical executives battle against increasing regulation on Capitol Hill and providers change procedures to cope with new coding mandates ofICD-10, governmental oversight is a necessary evil within the pharma, provider and payer industries.

The release of the Omnibus Guidance for the 340B Drug Pricing Program reveals an example of the mandates on pharmaceutical manufacturers. Drug Channels calls out that this legislation gives the HRSA (Health Resources and Services Administration) aggressive oversight over pharma’s specialty channel strategy through the façade of compliance audits. This change could result in a loss of competitive advantage for some manufacturers, as their strategies will be reviewed and published by the HHS (U.S. Department of Health and Human Services).

On another governmental front, the FDA approval process can significantly increase costs of development. According to a recent piece from the American Enterprise Institute, it costs a staggering $2.5 billion to get a product over the FDA’s regulative hurdles. Although the majority of pharmaceuticals are designed to compete with existing drugs, the research and development costs rival those of new cures. In order to maintain profitability, many companies increase their prices on generic and patented drugs, much to the chagrin of consumers and the government.

Recent payer trends reveal a potentially more-advantageous relationship between government and healthcare. CMS (Centers for Medicare & Medicaid Services) leverages Medicare “Star Ratings” to score health plans and their corresponding formularies, which are publicly available online. This practice enables patients to select the most appropriate plans based on their needs and provides payers with strong incentives for providing higher quality care. According to the Congress Blog from The Hill, CMS proposes that Medicare payments will be directly tied to quality and health benefits by 2018 through alternative delivery models like ACOs (Accountable Care Organizations).

For payers participating in federally managed and facilitated Health Exchanges (HIX) during the 2016 plan year, meeting the new reporting requirement established by CMS is a top priority. Starting in October 2015, health plans are required to submit plan, drug and provider data using the JSON (Java Script Object Notation) file format to CMS. Additionally, plans must make this information available on a publicly accessible website. This new requirement promotes complete transparency of formulary data.

Two major trends in provider oversight include changes in Stage 3 meaningful use and in the ICD-10 coding requirements. Positioned as the most challenging and detailed stage by Healthcare IT News, the most recent meaningful use update focuses on elements like quality reporting and clinical decision support. Oversight agencies encourage open provider feedback to help influence policymakers as the third stage of meaningful use continues to develop. After one week of the transition to ICD-10, the latest version of disease code classification, several health leaders share their thoughts via Becker’s Healthcare. Many compare this mandate to the Y2K scare in a particularly uneventful week. This potentially reveals the willingness of healthcare stakeholders to work alongside regulatory agencies.

With an evolving healthcare landscape, one development is clear: new regulations affect pharma, payers and providers together as real-time feedback and integrated healthcare permeates the industry.

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Topics: Industry Trends, Market Access