White Guide and Orange Guide Formatting Project - Pfizer

Orange Guide – Chapter 12: Contracting
Medicare Part D: the part of the Medicare program that subsidizes the costs of prescription drugs
for Medicare beneficiaries in the United States. It was enacted as part of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA) and went into effect on January 1, 2006.
"Swapping" describes a situation whereby a managed care organization, such as an HMO, and
pharmaceutical company agree to "swap" access to the organization’s Medicare Part D book of
business in exchange for greater rebates for the organization's commercial books of business. Many
HMOs might be willing to accept higher costs under Medicare Part D in exchange for lower commercial
plan costs because the government subsidizes a portion of their Part D plan costs while they often
remain entirely at risk for their commercial plan costs. Pfizer and Greenstone must never engage in
swapping and must additionally avoid situations in which swapping behavior could be perceived.
Meetings on Commercial and Part D Contracts
Q. May I discuss a commercial contract and a Part D contract in the same meeting
with a customer?
A. Yes. You may do this if the two are not discussed contemporaneously. For
example, it is acceptable to discuss the commercial contract during the first half
of your meeting, and then indicate to the customer that you are moving on to
the Part D contract discussion for the remainder of your meeting.
The following are examples of "swapping":
A pharmaceutical manufacturer and an HMO have a commercial agreement that provides
the HMO with an average 10% rebate on all products. The parties enter into negotiations to
reach agreement on new commercial and Part D agreements. In exchange for the HMO
placing its products on the new Part D formulary, the pharmaceutical manufacturer offers to
increase its rebate on the commercial agreement to an average 12.5% rebate. The
additional 2.5% rebate could be considered an improper reward to the HMO for providing
the pharmaceutical company with access to the HMO's Part D plan.
A pharmaceutical manufacturer and an HMO have no existing contractual relationship and
seek to negotiate new commercial and Part D rebate agreements. During the negotiations,
the parties reference and compare the terms of both agreements. Since the agreements
were negotiated at the same time, any concessions made by the HMO to accept lower
209
Rev. 09/12
Page 6 of 8