Express Scripts 2014 Annual Report Download - page 18

Express Scripts 2014 Annual Report
16
ofAppealsfortheFirstCircuitpreviouslyheldthelawnotpreemptedbyERISA.IntheDistrictofColumbiacase,thecourt
grantedinpartPCMA’smotionforsummaryjudgmentfindingtheDistrictofColumbialawwaspreemptedbyERISAandthat
decisionwasaffirmedbytheUnitedStatesCourtofAppealsfortheD.C.Circuit.Widespreadenactmentofsuchstatutes(ifnot
preemptedbyERISA)couldhaveamaterialadverseeffectuponourfinancialcondition,resultsofoperationsandcashflows.
Consumer Protection Laws.Moststateshaveconsumerprotectionlawsthathavebeenthebasisforinvestigations
andmulti-statesettlementsrelatingtofinancialincentivesprovidedbydrugmanufacturerstoretailpharmaciesinconnection
withdrugswitchingprograms.SuchstatuteshavealsobeencitedasthebasisforclaimsagainstPBMseitherincivillitigation
orpursuanttoinvestigationsbystateAttorneysGeneral.
Network Access Legislation.Amajorityofstatesnowhavesomeformoflegislationaffectingourability,orour
clients’ability,tolimitaccesstoapharmacyprovidernetworkorremoveaproviderfromthenetwork.Suchlegislationmay
requireusorourclientstoadmitanyretailpharmacywillingtomeettheplan’spriceandothertermsfornetworkparticipation
(“anywillingprovider”legislation)ormayprovidethataprovidermaynotberemovedfromanetworkexceptincompliance
withcertainprocedures(“dueprocess”legislation).Wehavenotbeenmateriallyaffectedbythesestatutes.
CertainstateshaveenactedlegislationprohibitingcertainPBMclientsfromimposingadditionalco-payments,
deductibles,limitationonbenefits,orotherconditions(“Conditions”)oncoveredindividualsutilizingaretailpharmacywhen
thesameConditionsarenototherwiseimposedoncoveredindividualsutilizinghomedeliverypharmacies.However,the
legislationrequirestheretailpharmacyagreetothesamereimbursementamountsandtermsandconditionsasareimposedon
thehomedeliverypharmacies.Anincreaseinthenumberofprescriptionsfilledatretailpharmaciesmayhaveanegative
impactontheamountofprescriptionsfilledthroughhomedelivery.Itisanticipatedadditionalstateswillconsidersimilar
legislationandwecannotpredictwhichstateswilladoptsuchlegislationorwhateffectitwillhave,ifany.
Legislation Affecting Plan Design.Somestateshaveenactedlegislationthatprohibitsmanagedcareplansponsors
fromimplementingcertainrestrictivebenefitplandesignfeatures,andmanystateshaveintroducedlegislationtoregulate
variousaspectsofmanagedcareplans,includingprovisionsrelatingtothepharmacybenefit.Forexample,somestates,under
so-called“freedomofchoice”legislation,providemembersoftheplanmaynotberequiredtousenetworkproviders,butmust
insteadbeprovidedwithbenefitseveniftheychoosetousenon-networkproviders.Otherstateshaveenactedlegislation
purportingtoprohibithealthplansfromofferingmembersfinancialincentivesforuseofhomedeliverypharmacies.Medicare
andsomestateshaveissuedguidanceandregulationswhichlimitourabilitytofillorrefillprescriptionselectronically
submittedbyaphysiciantoourhomedeliverypharmacywithoutfirstobtainingconsentfromthepatient.Suchrestrictions
generateadditionalcostsandlimitourabilitytomaximizeefficiencieswhichcouldotherwisebegainedthroughtheelectronic
prescriptionandautomaticrefillprocesses.Legislationhasbeenintroducedinsomestatestoprohibitorrestricttherapeutic
intervention,ortorequirecoverageofallFDAapproveddrugs.Otherstatesmandatecoverageofcertainbenefitsorconditions,
andrequirehealthplancoverageofspecificdrugsifdeemedmedicallynecessarybytheprescribingphysician.Statesarealso
standardizingtheprocessfor,andrestrictingtheuseof,utilizationmanagementrulesandshorteningthetimeframeswithin
whichprescriptiondrugpriorauthorizationdeterminationsmustbemade.Suchlegislationdoesnotgenerallyapplytous
directly,butmayapplytocertainofourclients,suchasmanagedcareorganizationsandhealthinsurers.Ifsuchlegislation
weretobecomewidelyadoptedandbroadinscope,itcouldhavetheeffectoflimitingtheeconomicbenefitsachievable
throughpharmacybenefitmanagement.
Legislation and Regulation Affecting Drug Prices.Somestateshaveadoptedso-called“mostfavorednation”
legislationprovidingapharmacyparticipatinginthestateMedicaidprogrammustgivethestatethebestpricethepharmacy
makesavailabletoanythird-partyplan.Suchlegislationmayadverselyaffectourabilitytonegotiatediscountsinthefuture
fromnetworkpharmacies.
Inthepasttwoyears,stateshavealsostartedtoenactstatutesregulatingtheuseofMaximumAllowableCost
(“MAC”)pricing.Thesestatutes,referredtoas“MACTransparencyLaws,”generallyrequirePBMstodisclosespecific
informationrelatedtoMACpricingtopharmaciesandprovidecertainappealrightsforpharmacies.MACTransparencyLaws
alsorestricttheapplicationofMACandmayrequireoperationalchangestomaintaincompliancewiththelaw.Theselaws
havethepotentialtonegativelyimpactExpressScriptsinanumberofways,including,butnotlimitedto,increasing
administrativeburdenanddecreasingflexibilityinsettingandmanagingMACpricing.AsmorestatesadoptMAC
TransparencyLaws,theimpactoftheselawsmaycontinuetogrow.
ThefederalMedicaidrebateprogramrequiresparticipatingdrugmanufacturerstoproviderebatesonalldrugs
reimbursedthroughstateMedicaidprograms,includingthroughMedicaidmanagedcareorganizations.Manufacturersofbrand
nameproductsmustprovidearebateequivalenttothegreaterof(a)23.1%oftheaveragemanufacturerprice(“AMP”)paidby
retailcommunitypharmaciesorbywholesalersforcertaininnovatordrugsdistributedtoretailcommunitypharmacies,or
(b)thedifferencebetweenAMPandthe“bestprice”availabletoessentiallyanycustomerotherthantheMedicaidprogramand
12