HHS watchdog office steps up focus on drug pricing

Seeking to address rising concerns about prescription medicines, the watchdog arm of the US Department of Health Human Services is adding to its list of pharmaceutical issues to be examined.

The HHS Office of Inspector General regularly compiles reports on such matters, whether in response to requests from Congress or to follow up issues, but is trying to widen its focus as questions accelerate about drug costs and the sources for some medicines, according to a new work plan released today.

Among the new issues that are being studied: the amount of medicine that may be wasted when cancer treatments, for instance, are distributed in single vials; the amount of money the government might save in the Medicare Part B program if rebates were tied to inflation; and questionable billing for topical medicines that are compounded and covered by Medicare Part D.

The OIG is devoting more resources and “drilling down” as concerns rise over drug pricing and accompanying billing patterns, explained an agency source familiar with the effort. “Prescription drug oversight is a top priority,” an OIG spokeswoman told STAT.

Indeed, the effort comes as the nation grapples with rising costs for medicines, an issue that is causing growing anxiety. The Obama administration has embraced some tactics — notably, making it possible for the Centers for Medicare and Medicaid Services to negotiate prices for the Medicare Part D program. But CMS is trying to move ahead with a program for lowering Medicare Part B drug costs.

The HHS OIG does not propose programs, but its ability to research trends holds the potential for spurring change that can affect how the federal government develops policies, manages budgets, and corrects problems.

One of the newest efforts of the inspector general concerns the use of single vials for medicines that are injected or infused. An independent analysis released earlier this year found that cancer treatments are packaged in uniform-sized vials, which often generate leftover quantities that must be discarded due to safety standards.

The OIG believes that money can be saved if smaller single vials available in other countries were available in the US and if drug makers market these vials at lower prices. So the OIG plans to find out if the amount of waste generated by 20 single-use-vial drugs and provide specific examples of where a different size vial could significantly reduce waste, according to the work plan.

Another report involves identifying questionable pharmacy billing patterns for compounded topical drugs, such as creams, ointments, and gels. A recent OIG report noted that Medicare Part D spending for topical drugs rose 3,466 percent since 2006, when these medicines accounted for 9 percent of all spending on compounded drugs. By last year, they were closer to half.

The OIG is now taking a closer look in response to reports of “significant jumps” in cost, said Miriam Anderson, an OIG team leader. “We’re seeing trends in the data that is a potential emerging fraud… And this may not only affect the Medicare Part D program, but also other federal payers. So we feel it warrants a further look.”

Still another area the OIG is looking might be potential savings from rebates tied to inflation for drugs covered by Medicare Part B. In response to a congressional request, the OIG will examine existing inflation-based rebates that are given to Medicaid and try to determine whether the program could collect such rebates from drug makers. The study will select a sample of 50 to 100 Part B drugs.

The OIG is also exploring how much money could be saved if drug makers paid rebates for medicines dispensed through the Medicare Part D program at hospitals that participate in the federal 340B program. In this program, drug makers must offer discounts of up to 50 percent on all outpatient drugs to such hospitals that serve indigent populations.

The working plan also lists several other pharmaceutical topics that are being explored, although these had previously been disclosed. They include increases in prices for brand-name drugs paid for by Medicare Part D. OIG is comparing the rate of change in various industry benchmark prices — such as wholesale and manufacturer costs — against the rate of inflation for thousands of drugs in several different therapeutic classes between 2011 and 2015

“There have been some rapid increases” in price,” said Linda Ragone, an OIG regional inspector general, who explained the analysis will look at claims data for changes in reimbursement.

Yet another report will examine the aftermath of the Drug Supply Chain Security Act, which was passed three years ago to track and trace pharmaceuticals. The OIG is looking at how the supply chain prevents medicines from being diverted and identifies counterfeits, according to Kelly Waldhoff, a deputy regional inspector at OIG.