With drug pricing in the crosshairs of executive and legislative action at both the federal and state levels, the stakes for pharmaceutical and biologics companies have never been higher. Drawing on deep knowledge of all areas of drug pricing regulation, Ropes & Gray’s cross-practice drug pricing team provides life sciences enterprises with strategic business and legal advice on existing and proposed government approaches to prescription drug pricing and price reporting. Our team provides informed counsel on, among other pricing-related matters, on the Medicaid Drug Rebate Statute, Section 340B of the Public Health Service Act, Medicare Average Sales Price reporting and the ever-growing spectrum of state drug pricing initiatives. We advise on commercial market strategy to promote robust access to and appropriate reimbursement of drugs, including value-based contracts.
Our team counsels on proposed reforms to Medicare Parts B, C and D, and Medicaid managed care reimbursement and delivery models, on reforms that would more strictly regulate entities within the pharmaceutical supply chain, such as PBMs, and on reforms related to the offering of discounts or rebates on drugs. Additionally, we advise clients on initiatives to increase FDA and FTC activity to address alleged “gaming” of generic drug approvals, the increasingly noisy conversation encouraging the Federal government to use “march-in” rights or its eminent domain powers to license competitive drugs or work around intellectual property rights. In addition to this counseling and transactional work, we have a deep bench of litigators who represent manufacturer clients in enforcement proceedings and civil litigation around price reporting. Among other achievements, our litigators have successfully blocked public disclosure of our clients’ drug pricing and other proprietary information submitted to government agencies, including in cases when media outlets or competitors sought to obtain such information under public record laws.
- The Challenges Facing Trump's Drug Pricing Order (September 25, 2020)
- Drug Pricing Reforms and Value-Based Pricing: Future and Current Implications for Drug Companies Part 1: Federal Legislative and Executive Actions (August 4, 2020)
- 2021 Medicare Parts C and D Final Rule: Enhancing Coverage for ESRD and Easing Network and MLR Standards (July 17, 2020)
- A Look At CMS' Proposed Medicaid Drug Rebate Changes (July 9, 2020)
- Can They Really Do That? The Specter of Government-Authorized Infringement of Pharmaceutical Patents (April 27, 2020)
- What If Gov't Allows Patent Infringement For COVID-19 Drugs? (April 1, 2020)
- States Lead The Way On Drug Pricing Reform (February 12, 2020)
- Drug Pricing: What Happened in 2019 and What to Watch in 2020 (January 13, 2020)
- A First Look At New HHS Prescription Drug Safe Harbors (February 15, 2019)
- The Trump Administration's Latest Drug Pricing Initiatives (January 14, 2019)
- New CMS Rules Reinforce Trend Away From Traditional Care (November 29, 2018)
- A Closer Look At CMS' Drug Price Disclosure Proposal (October 26, 2018)
- A Look Inside Trump's 4-Point Plan For Curbing Drug Prices (May 18, 2018)
- How States, Federal Agencies Are Challenging Drug Prices (April 23, 2018)
- California's New Focus On Drug Pricing Transparency (November 20, 2017)
- D.C. Circuit Upholds Prior Medicare Cuts to 340B Hospitals’ Drug Payments and CMS Furthers the Cuts (August 5, 2020)
- Protecting Payment for Value - OIG and CMS Propose New AKS Safe Harbors and Stark Exceptions (October, 23, 2019)
- CMS Outpatient Payment, MA Plan Design, and 340B Rules: Cost-Cutting Trends (November 26, 2018)
- CMS Releases Final Medicare Rules on OPPS and ASC Payment Systems, and Expanded Telehealth Opportunities (November 26, 2018)
- HHS Proposes January 1, 2019 Rollout of the 340B Drug Pricing Program’s Civil Monetary Penalties and Clarified Drug Ceiling Price Calculation (November 26, 2018)
- CMS Issues Proposed Rule to Require Disclosure of List Price in Direct-to-Consumer Advertising for Prescription Drugs and Biological Products (October 23, 2018)
- FDA Issues Draft Guidance Regarding Waiver of Single Shared System REMS Requirement (June 13, 2018)
- California Enacts Bill on Drug Pricing Transparency (October 16, 2017)
Podcasts & Videos
- Outlook 2020 Teleconference: Washington, D.C. Updates and Insights on Life Sciences and Health Care (January 30, 2020)
- Podcast: IP(DC): Drug Prices, Political Pressures & Patents (August 20, 2019)
- Trending Video: Drug Pricing Initiatives During the Trump Presidency (June 20, 2019)
- Outlook 2019 Teleconference: Washington, D.C. Updates and Insights on Life Sciences and Health Care (January 23, 2019)
- Outlook 2018 Teleconference:The Trump Administration’s Impact on Life Sciences and Health Care—the First Year (January 23, 2018)
- Podcast: The New FDA: Product Development, Pricing and Beyond (December 20, 2016)
Federal Drug Pricing Laws and Regulations
- Medicaid Drug Rebate Program (“MDR”)
- 340 B Program
- Federal Ceiling Prices
- Statute: 38 U.S.C. § 8126
- Average Sales Price (“ASP”)
- Statute: 42 U.S.C. § 1395w-3a
- Regulations: 42 C.F.R. §§ 414.800-414.904
- CMS Medicare Part B Drug Average Sales Price home page
State Drug Pricing Laws and Regulations
- National Conference of State Legislatures Prescription Drug Policy Resource Center
- National Conference of State Legislatures Drug Pricing Legislation Database
Key Bills in the 116th Congress
- Helping MOMS Act of 2020
- Elijah E. Cummings Lower Drug Costs Now Act, H.R. 3
- Lower Costs, More Cures Act , H.R. 19
- Lower Costs, More Cures Act, S. 3129
- Lower Health Care Costs Act, S. 1895
- Senate Finance Committee’s Prescription Drug Pricing Reduction Act:
- Medicaid Services Investment and Accountability Act, H.R. 1839 (containing the Right Rebate Act)
- Continuing Appropriations Act, 2020, and Health Extenders Act of 2019, H.R. 4378
- Further Consolidated Appropriations Act, H.R. 1865 (containing the CREATES Act)
Trump Administration Initiatives
- Final Rule (10/01/2020)
- Industry Guidance on Importation of Prescription Drugs
- CMS Guidance for States
- American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs (May 2018)
- International Pricing Index
- Rebate Reform
- Medicaid Drug Rebate Program and Value-Based Pricing
As legislators, regulators, and enforcement agencies continue to focus on prescription drug pricing, pharmaceutical companies must navigate evolving legal and business questions. Ropes & Gray’s cross-practice drug pricing team provides life sciences enterprises with strategic business and legal advice on existing and proposed government approaches to prescription drug pricing and price reporting. Our team provides informed counsel on, among other pricing-related matters, reporting and other obligations under the Medicaid Drug Rebate Statute, Section 340B of the Public Health Service Act, the Medicare Statute, and the growing number of state drug price transparency, supply chain (e.g. PBM) and other regulations and statutes. We actively monitor federal and state proposed reforms that would change the coverage, reimbursement, and/or delivery landscape for drugs or generally alter business relationships within the pharmaceutical supply chain (e.g., by reforming rebate safe harbors). We also advise clients on initiatives to increase FDA and FTC activity to address alleged “gaming” of generic drug approvals. When drug pricing or price reporting issues need to be litigated, we draw on our deep bench of civil and criminal litigators. We have successfully defended clients in enforcement proceedings and civil litigation involving alleged deficiencies in price reporting, and blocked disclosure of pricing and other proprietary information in litigation under state public disclosure laws.
- The firm has a cross-practice Drug Pricing Working Group that is a well-recognized thought leader, contributing on a regular basis to trade press concerning U.S. federal and state regulatory and legislative initiatives addressing prescription drug pricing and price reporting.
- Our lawyers routinely advise pharmaceutical manufacturers on compliance with federal drug price reporting requirements under the Medicaid Drug Rebate Statute, Section 340B of the Public Health Service Act, and the Medicare Statute. We assist manufacturers in interpreting applicable law, drafting reasonable assumptions to support their price reporting submissions, and preparing affirmative disclosures to the government and responses to government inquiries. We also provide strategic advice on manufacturer rights and legal obligations under the Medicaid Drug Rebate Statute, Section 340B of the Public Health Service Act, and the Medicare Statute, and advocate for clients in connection with U.S. federal government proposed legal reforms.*
- In connection with strategic investments and acquisitions by pharmaceutical manufacturers, as well as private equity and public company financing, we regularly advise on the compliance profile of a target company under current U.S. pricing and price reporting requirements, such as the Medicaid Drug Rebate Program, Section 340B of the Public Health Service Act, and Medicare average sale price. Our lawyers also advise on the value of the projected market, based on a therapy’s overall coverage, reimbursement, and pricing profile.
- We routinely advise pharmaceutical and medical device manufacturers on compliance with federal and state marketing and disclosure laws, including the so-called federal sunshine or open payments law.
- We are advising several of the world’s largest manufacturers on the growing number of state laws that impose, and state legislative efforts to impose, drug price reporting transparency and other requirements on prescription drug manufacturers, distributors, and pharmacy benefit managers. We routinely advises on reporting obligations under those statutes (including as they relate to drug launches and company pricing decisions) and affirmative steps to protect proprietary, confidential and trade secret information.Our lawyers also have successfully challenged, through the administrative process, multiple sizeable penalties that state agencies have imposed on manufacturers under drug price transparency statutes. *
- For a major Chinese prescription drug maker, we have advised on the implications of pending U.S. drug pricing and price reporting reform proposals on a potential licensing arrangement with a U.S.-based manufacturer.
- We are advising multiple pharmaceutical and medical device manufacturers on structuring patient support programs (reimbursement support hotlines/guides, copay assistance programs, long and short term free drug programs) to address patient access challenges, including coverage and reimbursement challenges. Our advice has included review of policies, procedures and practices as well as proposed initiatives. Our advice also takes into account drug pricing reform and industry trends (e.g., health plan treatment of manufacturer copay assistance).
- We have assisted various pharmaceutical manufacturers with the development of fair market value rate schedules for health care consultants and other healthcare service providers, including specialty pharmacies.
- We provide health care regulatory and commercial contracting advice to various pharmaceutical manufacturers, including the development and/or negotiation of managed care plan, PBM, GPO, distributor and specialty pharmacy agreements and the review of compensation provided under such agreements.
- Our lawyers have advised various pharmaceutical manufacturers on legal issues associated with implementing value-based pricing and potential structures to address legal concerns.Relatedly, we have assisted pharmaceutical manufacturers in drafting, and entering into, value-based contracts with state Medicaid agencies and commercial payers, including by advising on key contract terms, Medicaid Best Price safeguards, and reporting measures and data-sharing obligations. *
- We assess discount and rebate proposals offered by various pharmaceutical manufacturers to health care customers, such as hospitals, integrated delivery systems, managed care plans, PBMs and specialty pharmacies to identify potential “fraud and abuse” or FDA promotional issues, as well as pricing and price reporting implications.
- We served as national coordinating counsel and trial counsel for two pharmaceutical companies in a series of complex civil litigations brought by 23 state Attorneys General alleging FCA and unfair trade practices act violations, and common law fraud arising out of the pricing for pharmaceutical products.
- On behalf of Walgreens, Ropes & Gray assisted in negotiating a $209.2 million settlement with the U.S. Department of Justice and various state governments to resolve claims under the False Claims Act related to allegations of overbilling for insulin pen products. The settlement was announced in conjunction with a second settlement related to purportedly improper price reporting that resulted in alleged overcharging of Medicaid programs. Walgreens ultimately paid $269.2 million to resolve both cases. Walgreens issued a statement saying that it “admitted no liability” and it has entered into a CIA with the OIG.
- Ropes & Gray also represented a national pharmacy chain in connection with a settlement with the Massachusetts Attorney General to resolve claims related to the non-compliance with state workers’ compensation drug pricing regulations.
- Ropes & Gray represented a major biopharmaceutical company in an FCA litigation brought by the federal government, 35 states, the District of Columbia, and two relators alleging the company misreported product prices to the government, underpaying rebates owed to Medicaid and state agencies by hundreds of millions of dollars. Shortly before trial, the company settled to resolve all outstanding claims for a fraction of the $4 billion plaintiffs sought.
- We served as nationwide counsel to a major pharmaceutical company in multi-jurisdictional federal and state consumer protection and False Claims Act claims arising out of allegedly inflated drug pricing in more than 29 proceedings brought by insurers, state AGs, and individuals across the country. Won dismissal of a False Claims Act count carrying with it the possibility of billions of dollars in penalties in one of these lawsuits, leading to numerous subsequent favorable settlements.
Protecting Confidential Information
- We have a successful track record assisting pharmaceutical and medical device manufacturers in protecting proprietary information from public disclosure, including turning back attempts by media outlets or competitors to use a state’s public records laws to obtain competitively sensitive information (e.g., about drug pricing and data analytics) that the manufacturer submitted to government agencies in a bidding or RFP process. Our advice has included analysis of state and federal public records and trade secret law, negotiation with state attorneys general and entities that have submitted public records requests seeking the competitively sensitive information, and preparation of regulatory submissions and court pleadings to block disclosure.
*Includes experience prior to joining Ropes & Gray