Radar on Drug Benefits

During their first-quarter earnings calls in recent weeks, top executives at the companies that own the three largest PBMs in the U.S. discussed the regulatory challenges and inquiries facing the industry. They also defended the PBMs’ business practices, claiming they play a major role in negotiating drug prices on behalf of their clients. And they noted they have retained nearly all of their customers and added new ones despite the increased industry scrutiny.

Elected officials have targeted CVS Health Corp.-owned Caremark, The Cigna Group’s Express Scripts and UnitedHealth Group’s Optum Rx, accusing them of contributing to the high price of medications and for their lack of transparency. Those three PBMs have about an 80% market share, a consolidation of power that has garnered criticism from state and federal policymakers.

In February 2023, the Help Ensure Lower Patient (HELP) Copays Act (H.R. 830), bipartisan federal legislation that would prohibit the use of copay accumulator programs, was reintroduced to Congress. The bill would require health plans and PBMs to count the value of copay assistance that patients receive toward their cost-sharing requirements, and it would apply to individual, small-group and employer-sponsored health plans.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies o­ffer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Another common practice, copay maximizers, takes the total amount of a manufacturer’s copay offset program and divides­ it by 12, making that amount the new monthly copayment on any given drug over the course of a year.

Oklahoma lawmakers accused CVS Health Corp.’s Caremark PBM of “intentionally lying” in its denials of 90-day prescription fills for some patients, according to The Oklahoman. The Oklahoma City newspaper reported that Caremark had routinely denied Oklahoma residents 90-day prescription fills and cited a state law as the reason, claiming that such fills were illegal under the statute. State Rep. Jon Echols, a Republican, said that such a justification was a lie: “Anyone that says that is not misinformed. They don’t misunderstand. They are intentionally lying to you. And we’re not going to stand for it.” Oklahoma’s insurance commissioner, Republican Glen Mulready, earlier this month filed an administrative action against Caremark that, per a press release from Mulready’s office, “targets the practice of ‘steering patients’ to CVS pharmacies and prescription mail-order services and seeks to censure, suspend, place on probation or revoke the Pharmacy Benefit Manager (PBM) license of CVS/Caremark. In addition, the… Department will seek restitution and/or levy fines for each alleged violation.”

A new report by the Institute for Clinical and Economic Review (ICER) argues that “white bagging,” if used appropriately, could save health plans enough money to slow premium growth, but it stipulates that policy reforms and clinical guidelines are necessary to make the practice fair to patients. Health care insiders tell AIS Health, a division of MMIT, that in their view, the white paper correctly and fairly identifies both the challenges and opportunities presented by the white bagging trend.

White bagging is a payer practice that significantly changes the customary dispensing and billing arrangements around specialty drugs. Until recently, nearly every specialty pharmacy transaction involved the so-called “buy-and-bill” framework. In buy-and-bill transactions, which still account for the vast majority of specialty pharmacy care, providers purchase a specialty drug, stock it in their facility and charge a payer for it after administering the drug to a patient. White bagging, on the other hand, involves a payer purchasing a drug directly from the manufacturer, distributor, or specialty pharmacy and arranging for the drug to be delivered to the site of care. In a similar practice also covered by the ICER report, “brown bagging,” payers also purchase the specialty drug directly, but have it delivered to the patient’s home instead of the provider’s facility.

The health insurer trade group AHIP recently unveiled a new advertising campaign that accuses the pharmaceutical industry of deflecting blame for its “price-gouging” practices and undermining the “evidence-based, market-driven tools” that health insurers use to keep drug costs in check. But the campaign doesn’t appear to mention PBMs, even though they’re the ones conducting drug-price negotiations with manufacturers on behalf of health plans and employers.

Health care industry observers say that omission is unsurprising since PBMs are currently facing a growing wave of scrutiny — scrutiny that insurers likely want to minimize even if they don’t want to lobby for that explicitly. Pharmaceutical Research and Manufacturers of America (PhRMA), meanwhile, pounced on the opportunity to call out what it sees as the unspoken, PBM-supporting message in AHIP’s new campaign.

Pharmacy benefit manager reform legislation co-authored by Senate Health, Education, Labor and Pensions Committee chair Bernie Sanders (I-Vt.) and ranking member Bill Cassidy (R-La.) addresses the hot-button issue of rebates but not in the way biopharma manufacturers are hoping for.

It would require PBMs to remit “100% of rebates, fees, alternative discounts and other remunerations received…that are related to utilization of drugs under such health plan or health insurance coverage to the group health plan.” Biopharma companies have for years been pushing for a policy that mandates rebates be passed through, not with health plans as envisioned by the legislation, but with plan enrollees at the point-of-sale as a better way to “share the savings.”

The pharmaceutical and health products industry poured over a record amount — more than $373.7 million — into lobbying and outspent all other industries in 2022, according to data compiled by OpenSecrets.

During the 2021-2022 election cycle, the pharma/health products industry bucked its historical trend of favoring Republicans and distributed around 60% of donated campaign funds to Democratic lawmakers. Among the 20 lawmakers who received the most contributions from the industry during the election cycle, 14 are Democrats. Sen. Raphael Warnock (D-Ga.) topped the list, receiving over $764,000.

Express Scripts and Optum Rx recently disclosed initiatives including pass-through arrangements, lower copays and price matches that they say will help clients and members save money and increase transparency. Marc Guieb, Pharm.D., a consulting pharmacist with Milliman, Inc., says the announcements are not “new or revolutionary or anything” and that they “seem to be rebranding of existing programs and products that are already offered.”

Guieb notes that the press releases are likely in response to the increasing scrutiny the PBM industry faces from politicians and others. Several Senate committees this year have introduced PBM legislation, and the Federal Trade Commission (FTC) last year opened an investigation into the business practices and consolidation of PBMs.

Although new treatments hold tremendous promise for addressing obesity and the myriad health issues associated with it, Medicare Part D is barred from covering them, and private insurers’ coverage is variable. And there are multiple barriers that will make fixing those coverage gaps challenging, health policy experts said during a recent panel discussion.

Perhaps the most headline-grabbing obesity treatment is semaglutide, which Novo Nordisk sells under the brands Ozempic (for Type II diabetes) and Wegovy (for weight loss). That drug has recently been the topic of a cascade of news articles discussing the drug’s ability to help patients shed stubborn pounds, side effects such as hair loss, and shortages faced by some diabetes patients due to semaglutide’s skyrocketing popularity.

The failure of a federal workers’ compensation program to properly manage prescription drug use and costs resulted in approximately $321 million in overspending on medications and “claimants receiving thousands of inappropriate prescriptions and potentially lethal drugs” like fentanyl, according to a new report from a government watchdog agency.

The Office of Workers’ Compensation Program (OWCP) said in the report, which reviewed data from fiscal years 2015-2020, that its hiring of a PBM in 2021 will address many of the concerns identified by auditors. But one consultant who participated in the audit contends that move will “absolutely not” fix the myriad oversight issues that were uncovered. In addition, the PBM’s contract does not require it to share any drug rebates with the Federal Employees Compensation Act (FECA) program — which makes the program an “outlier” among other federal payers, Joseph Paduda tells AIS Health, a division of MMIT.