November 3, 2020

Around the nation: Novartis announces scaled-back plan to end certain 340B discounts

Daily Briefing

    Novartis will no longer move forward with its plan to halt discounts for participants of the 340B Drug Discount Program who did not comply with certain requirements, but the company instead plans to restrict sales of discounted drugs to contract pharmacies within 40 miles of a 340B hospital's location, in today's bite-sized hospital and health industry news from California, Maryland, New Jersey, and New York.

    • California/New York: Teladoc Health on Friday announced it has completed its $18.5 billion acquisition of Livongo. The merger, which the companies completed in under three months, combines two of the largest publicly traded virtual care companies to form a health technology giant, FierceHealthcare reports. The new company is expected to reach $1.3 billion in revenue in 2020 and see revenue growth of 30% to 40% over the next two to three years. Teladoc in a release said the merger's completion marks the "most significant blending of capabilities and talent in the history of digital health" (Landi, FierceHealthcare, 10/30; Teladoc release, 10/30).

    • Maryland: CMS on Friday released the second part of the agency's advance notice proposing changes to Medicare Advantage (MA) and Part D plans for calendar year 2022—about three months earlier than CMS typically releases the notice. CMS said it issued the notice early to allow MA and Part D plan sponsors to estimate their 2022 costs "in light of the uncertainty associated with" America's coronavirus epidemic. In the notice, CMS proposed adjusting MA risk scores by 5.9% "to offset the effects on MA risk scores of higher levels of coding intensity in MA relative to" Medicare Fee-for-Service plans. Overall, CMS said its proposed changes for 2022 would increase total payments to MA plans by an average of 0.93% when compared with 2021. In addition, CMS asked for feedback on how to improve MA and Part D Star Ratings and encourage Medicare beneficiaries to receive coronavirus vaccinations once they become available. CMS is accepting public comments on the proposed changes through Nov. 30 and will released finalized changes no later than April 5, 2021, the agency said (CMS release, 10/30; Brady, Modern Healthcare, 10/30; CMS advance notice, 10/30).

    • New Jersey: Novartis on Friday announced that the drugmaker will no longer move forward with its plan to halt discounts for participants of the 340B Drug Discount Program who did not comply with certain requirements. Instead, Novartis said it will restrict sales of discounted drugs to contract pharmacies within 40 miles of a 340B hospital's location, effective Nov. 16. According to FierceHealthcare, the move represents a scaled back version of Novartis' initial plan, which the company had announced in August but had never taken effect. Still, the new policy drew criticism from 340B Health CEO and President Maureen Testoni, who said, "The 340B statute is crystal clear. Pharmaceutical companies that participate in Medicaid and Medicare Part B must sell certain outpatient drugs to eligible hospitals at no more than the ceiling price. They are not permitted to put limits on those discounts based on where hospitals are distributing the drugs to their patients" (King, FierceHealthcare, 10/30).

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