Pharmacy Sees Surge in Legislative Activity to Regulate Specialty Drug Dispensing Practices in 2023
Twenty states proposed bills to prohibit white bagging and brown bagging policies this year.
In 2023, more than 20 states proposed bills to prohibit white bagging and brown bagging policies within the health care industry.1 The profit battle between health insurers (payers) and health care providers (eg, hospitals) is being played out in legislatures across the United States.
Overall spending on specialty drugs has increased over the past 5 years, mostly due to increased prices and utilization, as well as high markups.2 Three payer approaches to rein in specialty drug costs are white bagging, brown bagging, and site-of service policies. In the past 5 years, white bagging from specialty pharmacies gained a significant share of volume and includes a wider variety of medications and more health plans. On the other hand, brown bagging, clear bagging, and site-of-service policies have had more limited acceptance. With brown bagging, there are greater inherent patient safety issues because of the chain of custody of the drug, and it is more common in home infusion settings. Many commercial payers have then implemented site-of-service policies, shifting the patients to home infusion after the first dose of a clinician-administered drug.3 Table 1 provides a review of the associated terminology below.4
Table 1: Terminology
Physician practices are clearly impacted by white bagging expanding from health maintenance organizations to include preferred provider organizations. However, payer policy changes have also targeted infusion centers, with their inherent high costs, and health systems. Infusion centers and health systems have, for the most part, been able to buffer the impact by clear bagging (ie, having their own internal specialty pharmacy dispense the patient’s prescription and transport the product to be administered). Hospital-owned specialty pharmacies have grown commensurate with the white bagging mandate, accounting for one-third of all specialty pharmacies (there is a new organization around clear bagging called Health System Owned Specialty Pharmacy Alliance).4
Proponents/Opponents
Stakeholder perspectives regarding these models vary greatly with little peer-reviewed evidence one way or the other. Proponents of white bagging (ie, payers) claim cost savings due to lower negotiated prices for medications because of volume and positive patient effects. Payers also have more control over drug selection and can shift utilization to lower-priced drugs, often obtaining rebates in the process. Specialty pharmacies can provide additional services, such as clinical pharmacy staff to assist with adverse events (AEs), adherence, and patient out-of-pocket costs. Proponents also claim less impact from drug shortages because of their purchasing power and that patients have access to co-pay assistance and payment plans.
Opponents of white bagging (ie, provider groups and hospitals) state that patients are steered to pharmacy benefit manager (PBM)–affiliated/owned pharmacies, and that the motivation is about driving volume to their specialty pharmacies. There is an ongoing Federal Trade Commission (FTC) investigation regarding PBMs’ steering practices to specialty pharmacies. Opponents report that medications are mishandled, that there is an administrative and resource-intensive burden, and that disruptions to patient safety mechanisms are in place, resulting in negative patient impact.
Some issues repeatedly identified with white bagging are poor communication and coordination with providers, resulting in confusion and treatment delays. There is also limited notice when medications are added to the white bagging list, so dose changes may result in delays in care.
Wastage is also an issue with white bagging, as the white-bagged medications are patient specific and, unlike the buy-and-bill process, cannot be used for another patient. Dosing adjustments are based on the patient’s laboratory results or other clinical considerations, with therapy cancellations resulting in waste.5 Once the prescription has a patient-specific label, the specialty pharmacy will not accept returns. Delays in receiving the medication past an anticipated date are commonly caused by a variety of factors, including failed delivery, incorrect medications being delivered, medications shipped to the wrong address, prior authorization issues, and medications being out of stock. In addition, failure or inability of patients to pay up front for any co-pay or coinsurance (often thousands of dollars) can interrupt critical treatment. Moreover, white bagging may not be compliant with track-and-trace and drug pedigree laws, including the Drug Supply Chain Security Act and various state laws.6 Finally, opponents state that white bagging not only does not lower patient out-of-pocket costs, but that the benefit going from medical to pharmacy may increase patient costs. Other studies have shown cost savings with white bagging, but higher patient cost sharing is present.7
Site-of-service policies have been similarly criticized as creating a disconnect between the treating clinician and the patient, as well as logistical burdens for patients who may have to travel long distances to receive the drug at a facility associated with the payer’s specialty pharmacy. Reports have described patients being forced to travel from prescribers’ offices to alternative sites for drug administration on the same day. Providers report difficulty managing AEs at the patients’ home vs the clinicians’ office.
Legislative Developments
Providers and hospital associations backed by state boards of pharmacy have pushed for regulations on white bagging and brown bagging. These efforts, opposed by employer groups, have resulted in laws in multiple states. Arkansas, Louisiana, Virginia, Utah, Minnesota, and Tennessee have enacted laws restricting or prohibiting white bagging and/or site-of-service policies. Virginia and Vermont have enacted laws prohibiting brown bagging.8,9 After lack of success on the board of pharmacy level and after one bill failed, Florida is the latest state to enact legislation. Other states have introduced legislation (eg, Kentucky, Missouri, Arizona, Illinois, Ohio, California, New York) and for some, this represents the second or third introduction of a bill.
In New York, Senate Bill S7413 introduced on May 23, 2023, contains patient safety and quality assurance measures applicable to white bagging. There has also been legislative pushback on site-of-service policies in Arkansas, Minnesota, and Tennessee, prohibiting mandatory home infusion. Additionally, some large provider group practices have refused to accept white bagging, especially for complicated chemotherapy medications.9 These laws include varied provisions, a sampling of which are briefly presented in Table 2.10
BB, brown bagging; DSCSA, Drug Supply Chain Security Act; FFS, fee for service; PBM, pharmacy benefit manager; WB, white bagging.
In addition, the white bagging mandate of insurance companies that have integrated PBMs and specialty pharmacies and refusal to reimburse from other unaffiliated specialty pharmacies, may constitute employing illegal vertical and horizontal restraints to maintain a monopoly over the specialty pharmacy market. Such practices may violate US competition laws, thus constituting an unfair method of competition (see Section 5 of the FTC Act and section 2 of the Sherman Antitrust Act of 1890).11,12
Compromise and Best Practices
An excellent comprehensive report by the Institute for Clinical and Economic Review looked at best practices such as promoting patient-centered care, addressing same-day medication changes, increasing specialty pharmacy oversite, creating a balance with existing buy-and-bill incentives, and improving transparency. Several of the innovative policy options suggested in that report may provide a compromise between the 2 sides: increase chain of custody transparency (eg, bar codes); devise emergency reimbursement mechanisms for same-day treatment changes (set at Medicare rates to avoid incentives for minor dosing changes); cap medication markup through legislation; provide advance notice of new coverage policies; replace white bagging with a fee schedule to eliminate buy-and-bill incentives; share cost savings with patients; prohibit brown bagging outside selected treatments; and require payment parity between specialty pharmacy and buy and bill.13
Conclusion
The growth of white bagging, brown bagging, and site-of-service policies reflects many of the problems in US health care. Not only are specialty drug costs extremely high, but these solutions that payers have embraced have major issues that need to be addressed. Although state-level legislation is fragmented, embracing best practices and compromise could lead to lower medication costs and better patient care.
References
1. Prescription Drug State Bill Tracking Database: 2015-present. National Conference of State Legislators. Updated September 25, 2023. Accessed October 18, 2023. https://www.ncsl.org/health/prescription-drug-state-bill-tracking-database-2015-present
2. Fein AJ. The Inflation Reduction Act: three unintended consequences for biosimilars, health plans, providers, and pharmacies. Drug Channels. April 18, 2023. Accessed August 6, 2023. https://www.drugchannels.net/2023/04/the-inflation-reduction-act-10.html
3. Drug infusion/injection site of care policy. Aetna. Accessed August 6, 2023. https://www.aetna.com/health-care-professionals/utilization-management/drug-infusion-site-of-care-policy.html
4. Pedersen CA, Schneider PJ, Ganio MC, Scheckelhoff DJ. ASHP national survey of pharmacy practice in hospital settings: prescribing and transcribing-2019. Am J Health Syst Pharm. 2020;77(13):1026-1050. doi:10.1093/ajhp/zxaa104
5. Schwartz RN, Eng KJ, Frieze DA, et al. NCCN Task Force Report: Specialty Pharmacy. J Natl Compr Canc Netw. 2010;8(suppl 4):S1-S12. doi:10.6004/jnccn.2010.0127
6. Requirements, 21 USC §360eee, et seq (2013). Accessed October 18, 2023. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title21-section360eee-1&num=0&edition=prelim
7. Review of Third-Party Specialty Pharmacy Use for Clinician-Administered Drugs. Commonwealth of Massachusetts Health Policy Commission; July 2019. Accessed October 18, 2023. https://cdn.ymaws.com/www.mashp.org/resource/resmgr/files/White_bagging,_Brown_bagging.pdf
8. Fla Stat §2023-29 (2023). Accessed October 18, 2023. https://laws.flrules.org/2023/29.
9. 2020 Community Oncology Alliance Practice Impact Report. Community Oncology Alliance. April 24, 2020. Accessed October 18, 2023. https://communityoncology.org/category/research-publications/practice-impact-reports/
10. Provides Relative to Coverage of Certain Physician-Administered Drugs and Related Services, S 191 (La 2021). Accessed October 18, 2023. https://legiscan.com/LA/bill/SB191/2021.
11. Unfair or Deceptive Acts or Practices. 15 USC 45 (2008). Accessed October 18, 2023. https://www.federalreserve.gov/boarddocs/supmanual/cch/200806/ftca.pdf
12. Competition and monopoly: single-firm conduct under Section 2 of the Sherman Act: Chapter 1. US Department of Justice Archives. May 11, 2009. Accessed October 18, 2023. https://www.justice.gov/archives/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-1#:~:text=Section%202%20of%20the%20Sherman%20Act%20makes%20it%20unlawful%20for,foreign%20nations%20.%20.%20.%20.%22
13. Pearson C, Schapiro L, Pearson SD. White bagging, brown bagging and point of care policies: best practices in addressing provider markup in the commercial insurance market. Institute for Clinical and Economic Review. April 19, 2023. Accessed October 18, 2023. https://icer.org/wp-content/uploads/2023/04/ICER-White-Paper-_-White-Bagging-Brown-Bagging-and-Site-of-Service-Policies.pdf
About the Author
Martha M. Rumore, PharmD, MS, LLM, FAPhA, Esq, is senior counsel at Frier Levitt. Her practice is focused on pharmacy law, food/drug/cosmetic law, and intellectual property.
