Videos,
ADVI Expert Shares Insight on Recent Policy Developments: OBBA, IRA Negotiation, and HRSA
ADVI Health’s senior director of federal agency engagement and co-lead of ADVI’s IRA center of excellence, John Coster, PhD, RPh, sat down to share his insights on recent policy developments around the One Big Beautiful Bill Act (OBBA), Inflation Reduction Act (IRA) negotiation, physician fee schedule, and Health Resources and Services Administration (HRSA).
John discussed how the OBBA impacted orphan drug indications, making a change so that products that have multiple orphan drug indications are exempt from negotiation, and expanded on what this will mean the first year this will go into effect in 2028. He also discusses the Health Resources and Services Administration’s recent announcement of a one-year pilot project, allowing manufacturers of the first ten Part D selected drugs to effectuate the 240B price through a rebate rather than through an up front discount.
Hear more of John’s insights:
ADVI Health’s John Coster sat down to share several recent policy developments, such as the IRA negotiation program, physician fee schedule, HRSA, and more.
Panelists
Senior Director, Federal Agency Engagement and Co-Lead of ADVI’s IRA Center of Excellence
John is senior director, Federal Agency Engagement, and co-lead of the firm’s IRA Center of Excellence, where he drives ADVI’s Medicare drug negotiation effectuation initiatives, including upcoming guidance and regulation, Medicare drug renegotiation, 340B reforms, and Medicaid pharmacy program issues.
Full Transcript
John Coster: This is John Coster, senior director at ADVI Health and Co-Director of the IRA Center for Excellence. Over the last couple of months there have been several important developments in the IRA negotiation program, which we wanted to bring to your attention.
The first big change came in the one big beautiful bill (OBBA). Drugs which had single orphan drug indications were exempt from negotiation. If they had more than one, they were not exempt. There was concern that that policy was impeding manufacturers from wanting to do research in orphan indication. So the one big beautiful bill made a change such that products that have multiple orphan drug indications are exempt from negotiation. Once the product has a non-orphan indication, then it is eligible for negotiation, if it meets additional criteria. So what does this mean for 2028, the first year that this provision goes into effect? It means that there may have been some drugs that might have been subject to negotiation in 28, which will now get pushed out because they would have been in negotiation because they had multiple orphan indications, but now, since the law was changed, they can have multiple orphan indications and still not be subject to negotiation. So we’ll see what CMS does in terms of implementation and selection in February of 2026 when those drugs will be posted for negotiation for 2028.
The second change is in the physician fee schedule rule. CMS clarified that when a manufacturer calculates its average sales price for a drug that is paid for under part B, it has to include the units of any drug that is subject to an MFP, whether that be part D or part B. This is not a policy that most physician, provider, and other stakeholder groups we’re looking for because of a couple things. Inclusion of these units will create what’s called a spiral of ASP, by including these units it will depress the ASP. But CMS has also said it’s not going to publish ASP’s for selected drugs anyway, it’s only going to publish the payment limit of the maximum fair price plus 6%. This creates several issues. Many State Medicaid programs and commercial payers use ASP as the basis of their reimbursement. Now for these selected drugs, only an MFP will be available. So these payers may also use MFP which will create financial pressure on physicians offices. Second, the ASP, because ASP was a potential benchmark for the use as a standard default refund amount for part B MFP effectuation, and now it’s not being published, there’s some concern that there’s not another realistic benchmark to use. Other options include WAC, and then there’s also the actual contract price that the manufacturer and the entity agree to. But by not publishing ASP, it takes it off the table as a potential standard default refund amount in the effectuation of part B drugs, and by not publishing it, it really creates a spiral for physicians and others who may get paid based on ASP for administration of part B drugs in those other programs.
The third thing that occurred was HRSA. The Health Resources and Services Administration that administers the 340 B program just announced a 1 year pilot project that will allow the manufacturers of the first 10 part D selected drugs to effectuate the 340 B price through a rebate rather than through an upfront discount. Traditionally, 340 B prices have been effectuated by the manufacturers selling them at the 340 B price. Now, under this model, the manufacturers will be able to evaluate the claims that they get from 340 B covered entities for a 340 B rebate, and then will provide the 340 B rebate to those covered entities as the way to effectuate the 340 B price. So this was done primarily because of the statutory requirement in the IRA, which says that manufacturers do not have to pay a rebate, a 340 b discount, and an MFP rebate on the same drug many challenges with 340 B. So this was done primarily with the goal of trying to help manage that deduplication process which is prescribed in the statute.
These are the type of issues we work with every day with our clients at ADVI Health, among others. From the selection process, through the data aggregation process, through the effectuation process, we try to provide the best guidance and advice we can to our clients on these and other issues. If there’s any way we can be of help, please contact us. Thank you very much.