Understanding the Implications of Mandatory Vendor Imposition in Oncology

Roy A. Beveridge, MD; Michael A. Kolodziej, MD; and Matt Brow
Published: Saturday, Mar 05, 2011
brown bag medicationThe idea of Mandatory Vendor Imposition (MVI) in oncology is burgeoning again. The rising costs of healthcare have caused payers to analyze spending and take measures to contain costs. One of their prime targets is specialty drugs, and many are considering models that eliminate the buy-and-bill process for expensive office-administered drugs and biologics used by oncologists. As the attempt to implement this method becomes more prevalent, it is critical to understand what MVI is and the risks and consequences associated with MVI programs to be able to work proactively with payers to find alternative solutions.

History of MVI

MVI programs are designed to create arrangements between payers and specialty pharmacies to supply drugs to patients. MVI can take the form of the concepts commonly referred to as brown-bagging and white-bagging. Brown-bagging requires patients to receive prescribed drugs directly from the vendor or specialty pharmacy and then bring them to the clinic for administration by the clinic staff. In this situation, physicians do not acquire, store, or manage the drugs they are providing to their patients. With white-bagging, the clinic receives a patient’s drugs from the third-party pharmacy and must store these patient-specific drugs in separate inventory. The idea behind both concepts is to remove the buy-and-bill process from physicians, thus eliminating payment of physician markup on drugs and capitalizing on cost savings through the use of contract pricing and manufacturer rebates that are currently received by physicians.

MVI is not new. In fact, physicians have been successful in pushing back against the idea with private payers in numerous states over the past decade. They also fought MVI when the Centers for Medicare and Medicaid Services (CMS) attempted to instate the Competitive Acquisition Program (CAP) in 2006 as part of the Medicare Modernization Act (MMA). This voluntary white-bagging program encouraged physicians to purchase and receive drugs from vendors who would handle the billing of Medicare and collection of copayments owed by the beneficiary. Only one vendor, BioScrip, opted to participate in this program, and physician participation, especially among oncologists, was very limited. Then in 2008, CMS announced it was ending the program due to contractual issues, but the agency indicated that it might revisit the idea in the future.

Currently some private payers, especially smaller, local payers who administer mostly self-insured plans, are heading down this same path. They are introducing benefit structures that include MVI and using approaches that range from highly restrictive to seemingly “voluntary.” The more restrictive plans require patients to receive their drugs from specialty pharmacies. Patients whose benefit schedules include these requirements are not allowed to receive drugs from physicians at all. Other structures allow patients to receive drugs from their physician or the specialty pharmacy, but the financial incentives to use the specialty pharmacy are so great that most patients would be hard-pressed to make any other choice. In these situations, the payer may set small, patient-fixed copayments for specialty pharmacy drugs and a significant patient coinsurance (usually a significant percentage of the allowed amount) for drugs obtained from physicians. In some cases, payers offer to let practices opt out of the business of buyand- bill for the payer’s patients, but in other cases, they have gone as far as threatening to lower reimbursement for practices that do not choose MVI.

Safety Must Be Paramount

Regardless of which approach payers are taking, MVI has serious consequences for patients, the most significant of which affect patient safety. Brown-bagging and white-bagging remove important clinical controls that exist to ensure the safety and reliability of cancer drugs. Removing these controls means that oncologists no longer know the origin and chain of custody of the drugs. This increases the patient’s risk of receiving drugs that have been tampered with, are counterfeit, or come from the highly unregulated secondary market. In fact, brownbagging and white-bagging undermine drug pedigree laws passed by states like Florida and California. The intent of these laws is to ensure that providers are able to track a drug back to the original manufacturer should there ever be a need to identify the chain of custody.


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