HPC Releases Final Report and Recommendations on Third-Party Specialty Pharmacy Issues

At its July 24 board meeting, the Health Policy Commission (HPC) released its final report (required by Section 130 of Chapter 47 of the Acts of 2017) on the use of third party specialty pharmacies for certain clinician-administered medications. The report considers “the prevalence and impact of health insurers’ policies that seek to reduce overall pharmaceutical spending by requiring alternative methods of distribution and payment for certain costly specialty drugs.” It also includes several recommendations regarding the use, payment, and public oversight of such measures in Massachusetts. 
As the report lays out, under the new policies introduced by insurers, payers now contract with third-party specialty pharmacies to purchase pharmaceuticals, removing the provider from the drug acquisition process. The payer then reimburses the third-party specialty pharmacy for the drug and pays the provider only for the drug’s administration. 
The three most common alternative distribution methods are referred to as “white bagging,” “brown bagging,” and “home infusion.” “Brown bagging” is when a third-party specialty pharmacy dispenses a prescribed drug directly to the patient, and the patient then transports the drug to their provider for administration. “White bagging” is when a third-party specialty pharmacy dispenses a particular drug and sends it directly to the hospital pharmacy or physician’s office. With “home infusion,” payers may contract with home care services for a clinician to administer a drug in the patient’s home. 
The HPC found that third-party specialty pharmacy treatment methods have costs and cost-sharing amounts that can vary widely, and each method poses different potential challenges to safety that must be addressed to ensure that patients are receiving the most appropriate treatment in the right setting. The commission’s recommendations included: i) a prohibition of insurer-compelled brown bagging for any drugs; ii) home infusion should be an optional benefit for patients – not a requirement from insurers; iii) minimum safety standards and capabilities must be utilized by insurers with the third-party specialty pharmacies with whom they contract to protect patient safety when white bagging; iv) adoption of best practices and site neutral payment policies for white bagging; v) the passage of legislation to increase public transparency and scrutiny of the drug entire distribution chain; and vi) adoption of best practices in this area by the state’s Group Insurance Commission, Health Connector and MassHealth for all plans with which they contract. 
The report also lays out additional concerns that providers identified during the public hearing process on these methods, including the fact that white and brown bagging can have unintended consequences of creating uncompensated provider expenses as well as increasing administrative complexity in the healthcare system. The HPC held a public hearing and consulted with MHA, hospitals, other providers and insurers in the development of their findings.