Comment on AN15-Proposed Rule-Carolyn B. Jones

August 10, 2009 Director Regulations Management (02REG) Department of Veterans Affairs 810 Vermont Avenue, NW Room 1068 Washington, D.C. 20420 RE: RIN 2900-AN15 “Charges Billed to Third Parties for Prescription Drugs Furnished by the VA to a Veteran for Nonservice-Connected Disability” Dear Director: Thank you for the opportunity to comment on the proposed rule regarding “Charges Billed to Third Parties for Prescription Drugs Furnished by the VA to a Veteran for Nonservice-Connected Disability.” Express Scripts, Inc. is one of the largest pharmacy benefit management (PBM) companies in North America, providing PBM services to millions of consumers. PBMs manage prescription drug benefits for thousands of client groups, including managed-care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. Specifically, we administer benefits on behalf of various payers and health plans for the VA program. In the proposed rule, the Department of Veterans Affairs would move from a flat $51 average drug charge amount to an actually drug ingredient cost incurred by the VA plus a $11.17 dispensing fee. While we understand the Department’s desire to bill third parties for a more accurate prescription drug amount, we have serious concerns about the proposed rule and its impact the rule could have on the prescription drug market. • The proposed rule would require third party plan sponsors to reimburse the Department of Veterans Affairs for its actual acquisition cost—regardless of whether that cost is what the private plan would have paid. While the VA clearly has a favored purchase price on single source prescription drugs, that is not necessarily the case with generics. For example, many PBMs purchase generics in bulk and repackage them. This can result in the plan sponsor actually paying less for a generic drug than what the VA would bill for. • The proposed $11.17 dispensing fee does not comport with average private sector dispensing fee. In the commercial market, a PBM fiercely negotiates dispensing fees and our industry has been successful in negotiating such fees to a range of $1.50-2.00. To require private plan sponsors to pay the VA’s administrative fee would require a plan sponsor to pay a much higher fee than if they had paid the claim according to their own terms and conditions. In addition to the serious policy concerns we have with the Department’s proposed rule, we also have several concerns with how the VA might go about implementing such a policy. Specifically: • What is the proposed timeline to make system changes and under what timeline will changes be applied? Under current law claims can be submitted up to four years after the date of service. It would be our strong recommendation that the VA clarify that any such proposed rule apply prospectively, from the date of service, so as to distinguish between reimbursement under the new system and reimbursement under the old system. • How will the Department determine the price point within the Drug File and how will this information be communicated to plan sponsors? • What field will the Department use to submit cost information? • While we understand the Department’s desire to pay more accurately for prescription drugs, the proposed rule will substantially raise private plan sponsors’ VA responsibility. Some sort of graduated or phased implementation should be considered so that plan sponsors have time to absorb these increased costs. In summary, we have serious policy and technical concerns with the Department’s proposed rule. We particularly are concerned with the extremely high mandated dispensing fee. We urge the Department to take our concerns into account when promulgating any final rule. Thank you for the opportunity to comment. If you have questions you can contact me directly at 952-949-3868 or cjones@express-scripts.com. Sincerely, Carolyn Jones Senior Director Policy Express Scripts, Inc.