AHA Raps 'White Bagging,' 'Brown Bagging' Drug Policies

Hospitals say the drug policies serve no purpose other than enriching payers through their PBMs and pharmacy business lines.

Health insurers are increasingly adopting new policies that restrict provider supplies of prescription drugs and instead funnel revenues from drug buys through payer-owned or affiliated pharmacy benefits companies, the American Hospital Association said Tuesday in a new white paper.

These policies -- known as "white bagging" and "brown bagging" -- serve no purpose other than enriching health insurance companies through their PBMs and specialty pharmacy business lines, the AHA said, adding that the policies should be heavily restricted and even banned.

"In some cases, the providers are barred entirely from administering drug therapies to their critically ill patients and instead must direct their patients to seek care at unknown specialty pharmacies owned or affiliated by the payers," the AHA said.

"These actions pose significant risks to quality of care as providers have inadequate control in ensuring patient access to high quality drugs, as well as the appropriate storage and handling of those drugs."

Under a traditional "buy and bill" drug payment model, hospitals buy, store, and administer drugs and are reimbursed by payers.

Under the new brown bagging and white bagging models, "insurers are upending the traditional system, potentially sacrificing patient safety and quality care to benefit their profit margins," AHA says.

White bagging disallows hospitals and physicians from buying and storing prescription drugs and instead requires that drugs be acquired through third-party pharmacies on a one-off basis.

Brown bagging is similar to white bagging, but it requires third-party pharmacies to dispense drugs directly to patients, who then bring the drugs to the hospital or physician's office for administration.

The AHA is calling for brown bagging to be prohibited, and that restrictions be placed on white bagging.

"Shipping pharmaceutical products that require provider administration directly to patients presents significant and serious patient safety issues," AHA said of brown bagging. "Specifically, there is no method to guarantee proper storage of these drugs and the risk of drug diversion increases."

AHA said restrictions should be placed on white bagging "when the dosage or compounding of a pharmaceutical product is dependent upon the results of a patient's lab tests."

AHIP Responds

Kristine Grow, spokesperson for America's Health Insurance Plans, said payers are merely trying to lower out-of-control drug prices for patients.

"That means advocating with Big Pharma for lower prices, as well as ensuring that patients are prescribed prescription drugs and therapies that are right for them," Grow said.

"Let’s be clear: In every case, drugs must be safely dispensed. Specialty pharmacies play an essential role – meeting stringent safety and handling requirements for prescription drugs, particularly for specialized medications," she said. "Many specialty pharmacies employ clinical specialists (i.e. physicians, PAs, NPs, nurses, etc.) that are available 24/7 to support their patients and even directly administer these medications in some cases."

In addition, Grow said not all specialty drugs are subject to white or brown bagging.

"Specialty pharmacies will only employ such practices for those drugs that can be safely handled and dispensed in such ways, and only when the patient is an appropriate candidate for such forms of dispensing," she said. 

"The bottom line is the problem has long been – and still is – the price," she said. "There are many innovative strategies being used to lower drug costs for patients. Hospital and prescription drug costs together represent 63.5 cents – nearly two-thirds – of every health care dollar. We should not be stifling innovation.