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Breaking Down the Practice of Bagging

April 19, 2024

May 2024

Brown bagging may be a great way to save money in the cafeteria, but now payers are trying to do the same in the infusion room.

Leah Lawrence

Leah Lawrence is a freelance health writer and editor based in Delaware.

Most drugs administered via infusion have traditionally been purchased by the treating physician's office or hospital and administered to patients in the corresponding medical setting. This method, commonly referred to as “buy-and-bill,” is typically covered by a patient’s medical insurance.

In 2021, the specialty drug market, which includes oral chemotherapy drugs, was estimated to represent about 50% of total drug spending in 2021.1 As this market has grown, some insurance payers have begun to mandate the practice of “bagging” infusion drugs. Bagging requires specialty drugs to be shipped to a specialty pharmacy before they are delivered directly to the patient or physician’s office for administration.

More than five years ago, former American Society of Hematology (ASH) President Alexis Thompson, MD, MPH, wrote the then-secretary of Health and Human Services regarding the Society’s concerns “about adverse health effects that would result from improper handling or transport of chemotherapy treatment.”2 More recently, the American Society of Clinical Oncology (ASCO) released a position statement calling for legislation to “prohibit the mandatory use of white bagging.”3

To better understand the ongoing controversy surrounding the issue of “bagging,” ASH Clinical News spoke with several people involved in the processes of fulfilling or prescribing these specialty drugs.

What’s in the Bag?

“In the traditional system of buy-and-bill, physicians' offices or hospital-based clinicians have purchased specialty drugs from wholesalers and compounded and administered the drugs on site,” explained Martha Mims, MD, PhD, professor and section chief of hematology and oncology in the Dan L. Duncan Comprehensive Cancer Center at Baylor College of Medicine in Houston. The medications are purchased directly from the manufacturer or distributor — “buy” — and then “billed” to the payer under the patient’s medical insurance.

A newer alternative to the buy-and-bill system is called “white bagging.” In a white-bagging system, a specialty pharmacy buys the drug at the direction of the payer and sends that patient-specific drug to the administering physician or hospital.

“In this case the hospital or clinic cannot bill for acquiring the drug, only for administering the drug,” Dr. Mims said. Instead, the medication is billed under the patient’s pharmacy insurance.

Variations to white bagging include “brown bagging” and “clear bagging.” With a brown-bagging system, patients pick up the drug at a specialty pharmacy or have it delivered to their home before bringing it to the hospital or clinic for administration. With clear bagging, an internal specialty pharmacy within a payer’s network dispenses a patient’s prescription and transports it to the site of service.

“Clear bagging is more aligned with white and brown bagging through its billing process,” said Evan Slater, PharmD, director of Pharmacy and Admixture Services at Rocky Mountain Cancer Centers in Colorado, “but is more aligned with buy-and-bill from a chain-of-custody and patient-safety standpoint.”

Implications of Bagging

This shift from buy-and-bill to bagging reflects an attempt to shift the dynamics of control, said Xuejie (James) Zhang, PhD, a senior fellow at NORC at the University of Chicago.

“In the traditional way, there were three parties: the patient, the provider, and the insurance,” Dr. Zhang said. “Now with bagging, there is a fourth party: the specialty pharmacy.”

By using specialty pharmacies, payers attempted to address the markup charged by providers who buy the drugs directly from manufacturers or wholesalers and bill the payers.

Leslie T. Busby, MD, a hematologist and oncologist at Rocky Mountain Cancer Centers, said buy-and-bill is part of the revenue stream for many oncology practices, but markups associated with these drugs often cover costs related to their shipping and handling, including unpacking them, storing them, mixing them, and tracking inventory. In the case of white bagging, physicians are still left to unpack, store, and track the drugs but can no longer be reimbursed for those services.

However, according to a white paper from the Institute for Clinical and Economic Review (ICER), markups may vary by site of service. Specifically, the paper said a drug administered in a hospital-based outpatient department had significantly greater markups — sometimes 100% higher — compared with administration at an independent physician’s clinic. In some situations, “markups can be more than the price of the drug itself” and put “real pressure on insurance premiums and are viewed by payers and plan sponsors as an outgrowth of an outdated contracting approach that was more suited to an environment when very few patients required specialty drugs and the cost of specialty drugs was far lower.”4

By circumventing this buy-and-bill approach, payers want to avoid these markups and hope to use specialty pharmacies to negotiate drug prices. However, a recent study found that although bagging in oncology did result in lower payment for insurers, it resulted in higher out-of-pocket payments for patients.5

A report to the Massachusetts Legislature in 2017 illustrated this point with examples of drugs being billed through Medicare Part B compared with Part D coverage, where prices are generally higher. In some cases, price per unit with Part D ranged from 13% higher (denosumab) to 79% higher (octreotide); patient cost-sharing per unit, or how the cost of the drug is divided between the patient and insurance plan, also varied from being more than twice as high with Part D for Gammagard (immune globulin [human] [IgG]) to being 27% lower with Part D compared with Part B for denosumab.6

Another wrinkle in the system is the 340B Drug Pricing Program, part of the Public Health Service Act, that requires manufacturers to sell outpatient drugs at discounted prices to covered entities for the manufacturers’ drugs to be covered by Medicaid. In the ICER white paper, the authors wrote that “many argue that this extra margin has enhanced incentives for 340B entities to purchase the practices of clinicians with high rates of specialty drug utilization, including oncologists and rheumatologists.” Providers who are eligible for a 340B discount may have a loss of revenue by shifting to bagging policies.4

“There is clear evidence that [health] systems are expanding to acquire these clinics and take advantage of 340B to acquire drugs at lower costs and may still charge patients at the same rate,” Dr. Zhang said. “It’s clearly an issue.”

Chain of Custody

Another important implication of bagging concerns what Dr. Slater and others called the chain of custody or line of sight.

“With buy-and-bill, the physician’s office orders a treatment, and upon receiving [the drug], it is mixed and administered by staff in the clinic,” Dr. Slater said. “It comes directly from the wholesaler, and the chain of custody is maintained all the way to the patient.”

Bagging disrupts this process by introducing specialty pharmacies into the process, where the cost of the drug is processed through a patient’s pharmacy plan.

“In the white-bagging scenario, if mixing is required, the drug is mixed by the specialty pharmacy and then sent to the practice for storage until the time of administration, and then the clinic is responsible for verifying and administering that drug to the patient,” Dr. Slater said. The time spent outside of the provider’s control allows for the possibility of errors in how a drug is handled or stored.

Distributors take a lot of time to determine what a package containing specialty drugs might go through, said Dr. Busby.

“Shipping a package to Seattle is going to be very different from Phoenix,” Dr. Busby said as an example. “The drug may have to be packaged in different types of boxes or with a different number of cold packs.”

That is because some specialty drugs have temperature requirements. With no method to track the drug or find out about temperature controls, administering physicians can never be sure of a drug’s integrity.

“There are a lot of humidity requirements for the stability of these drugs, and once mixed, there is often a narrow window for when they have to be administered to fall within sterility requirements,” Dr. Slater said. “If a drug is sent directly to us that is a one-time overnight shipment, we can see when we receive it, how it was packed, and if it is still cold. We know that cold chain has been maintained, and we can then monitor it up until the moment we mix it and administer it.”

In the case of brown bagging, where drugs may be delivered directly to a patient’s home, issues with chain of custody may be even worse. Drugs may not be received on time, could be damaged during shipping, or could be otherwise compromised while in the patient’s custody.7

Other Implications

Dr. Busby said that in addition to concerns about safety and reimbursement, use of white bagging removes clinicians’ ability to be flexible based on their patients’ needs.

One example of this has to do with timing. If a drug is ordered through white bagging, it is not always 100% clear when it will arrive, Dr. Busby said. According to ASCO’s position statement, clinicians “report they frequently are not notified of shipping delays, nor of the expected date and time of arrival of the drug, which leads to uncertainty regarding treatment schedule.”

“In our state, a number of patients may travel two-plus hours to come in for treatment,” Dr. Slater said. “If we have to send them away and have them come back, that is an inconvenience for them or their caretaker. That has a massive downstream impact.”

White bagging can also lead to waste because the drugs received from the specialty pharmacies are patient-specific and cannot be transferred to another patient.

“Let’s say a patient comes in and is supposed to receive nivolumab, but because of disease progression, you decide to forego that dose,” Dr. Mims said. “That nivolumab has to be thrown out. It’s a waste to the system as a whole.”

White bagging also requires that a drug be ordered in advance, with the patient returning later to receive the drug, Dr. Busby said. However, upon the patient’s return, that person could have lost weight or have a decline in kidney function, which would possibly necessitate a change in dosage.

“The ordered drug has to be destroyed and reordered, and we have to bring the patient back another time,” Dr. Busby said. “All these delays start to add up, and there are some data saying that too many delays decrease survival even in patients who may be curable.”

In other cases, a clinician may decide to add a supportive care therapy, such as growth factor, to the treatment, Dr. Slater said. If a mandate is in place that requires white bagging, the whole treatment could have to be rescheduled. The process removes the ability for physicians to make judgment calls based on the patient sitting in front of them on the day of infusion.

“You’re forced to ask yourself if you should go ahead and give a dose that may increase adverse events but allows the patient to stay on time with treatments, or send them home and delay treatment in order to get the right dose,” Dr. Busby said.

Legislation

Dr. Zhang said there are also regulatory issues to consider. In 2013, The Drug Supply Chain Security Act, enacted by Congress in 2013, required electronic tracing of products at the package level to identify and trace certain prescription drugs.8

“This stipulates that all drugs have to be traceable from the manufacturer to the patient, but if a specialty pharmacy is in the middle, sometimes that cannot be met,” Dr. Zhang said.

There are also regulatory issues at the state level. After publishing its position statement on white bagging, ASCO began providing updates on state efforts to address payer-mandated white bagging, and several states have passed laws prohibiting the practice. In 2023, 23 states introduced bills that would address payer-mandated white bagging, and many of these bills remain active in 2024.9 While not outright banning white bagging, this type of legislation would allow the provider to decide if white bagging makes sense on a patient-by-patient basis.

Dr. Busby said his practice within US Oncology doesn’t work with payers that have payer-mandated white-bagging policies; however, he knows of colleagues within US Oncology who have been forced to comply with payer-mandated white bagging because “they don’t feel like they have a choice.”

Dr. Zhang said the issue of buy-and-bill versus bagging remains complex because a variety of stakeholders are involved and their interests are not necessarily aligned. Some ways to begin addressing that, he said, are detailed in the ICER paper.

The paper’s authors suggest creating a balance with existing physician incentives under buy-and-bill by replacing white bagging with a fee schedule. The paper states, “The fee schedule would specify provider reimbursement rates on a per product basis to reduce or eliminate markup. Providers who want to buy-and-bill a product would need to accept the fee schedule reimbursement rate. The fee schedule could set payment rates at any level, meaning reimbursement could remain higher than it would be through specialty pharmacy but lower than the markup charged by the highest-paid providers.”

“Everyone with concerns related to these topics has legitimate concerns,” Dr. Zhang said. “If you realign financial incentives, then it is possible that everybody could have better alignment of interest — patients, hospitals, clinics, insurance, and specialty pharmacies.”

More research into the patient experience with buy-and-bill versus bagging and clinical outcomes related to each would also help to inform future policies.

References

  1. Department of Health & Human Services, Office of the Assistant Secretary for Planning and Evaluation, Office of Science & Data Policy. Trends in prescription drug spending, 2016-2021. September 2022. Accessed February 26, 2024. https://aspe.hhs.gov/sites/default/files/documents/88c547c976e915fc31fe2c6903ac0bc9/sdp-trends-prescription-drug-spending.pdf.
  2. American Society of Hematology. ASH response to drug pricing blueprint. July 18, 2018. Accessed February 26, 2024. https://www.hematology.org/-/media/hematology/files/advocacy/ash-response-to-drug-pricing-blueprint_letterhead.pdf.
  3. American Society of Clinical Oncology. ASCO position statement on white bagging. August 24, 2023. Accessed February 26, 2024. https://old-prod.asco.org/sites/new-www.asco.org/files/content-files/advocacy-and-policy/documents/2023-08-25-White-Bagging-Position-Statement.pdf.
  4. Pearson C, Schapiro L, Pearson SD. White bagging, brown bagging, and site of service policies: best practices in addressing provider markup in the commercial insurance market. April 19, 2023. Accessed February 26, 2024. https://icer.org/wp-content/uploads/2023/04/ICER-White-Paper-_-White-Bagging-Brown-Bagging-and-Site-of-Service-Policies.pdf.
  5. Shih YT, Xu Y, Yao JC. Financial outcomes of “bagging” oncology drugs among privately insured patients with cancer. JAMA Netw Open. 2023;6(9):e2332643.
  6. Commonwealth of Massachusetts Health Policy Commission. Review of third-party specialty pharmacy use for clinician-administered drugs. July 2019. Accessed February 26, 2024. https://cdn.ymaws.com/www.mashp.org/resource/resmgr/files/White_bagging,_Brown_bagging.pdf.
  7. Academy of Managed Care Pharmacy. Professional practice advisory on brown bagging. Accessed February 26, 2024. https://www.amcp.org/sites/default/files/2019-03/Brown%20Bagging%20Practice%20Advisory%202.2009.pdf.
  8. S. Food & Drug Administration. Drug Supply Chain Security Act (DSCSA). Accessed February 26, 2024. https://www.fda.gov/drugs/drug-supply-chain-integrity/drug-supply-chain-security-act-dscsa#:~:text=The%20law%20requires%20wholesale%20distributors,Congress%20on%20November%2027%2C%202013.
  9. American Society of Clinical Oncology. State of play: white bagging. December 5, 2023. Accessed February 26, 2024. https://old-prod.asco.org/news-initiatives/policy-news-analysis/state-play-white-bagging.

 

 

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