Buy and bill

For medicines in the US administered by providers in the outpatient setting, a provider may buy the medicine from a manufacturer and then bill payers once the provider administers the medicine to patients. Some payers reimburse providers for these buy-and-bill medicines as a percentage of the price of the medicine.

CGTs raise two questions with respect to buy-and-bill. First, for a high-priced medicine, a typical percentage fee for purchasing, storage, and administration may be a large number in dollar terms. Payers may contract for alternative payment terms to avoid using fixed percentage markups for provider reimbursement. For example, Spark Therapeutics, manufacturers of LUXTURNA™, allows payers to purchase this physician-administered therapy directly from a specialty pharmacy. In cases like this, payers and providers would also need to negotiate the appropriate separate reimbursement for administration services.

Second, some providers may rely on profits from current buy-and-bill medicines to defray the cost of providing other services to patients that cannot be directly billed (e.g., social workers providing patient support). Providers’ ability to continue providing these services may need to be reconsidered in the face of a potential loss of that revenue if the new therapies that replace current buy-and-bill therapies are transacted directly between the payer and the developer. In this event, payers and providers may also need to reevaluate the appropriate reimbursement for other services where cross-subsidization may have occurred.