RADAR on Drug Benefits

Insurers Brace for When U.S. Stops Buying COVID-19 Vaccines, Therapeutics

The federal government will stop purchasing COVID-19 vaccines and therapeutics as soon as this fall, Biden administration officials said recently — meaning payers will have to procure vaccines and treatments like any other commercial pharmaceutical product. Health care experts tell AIS Health, a division of MMIT, that the move is likely to make vaccines and therapeutics less accessible and introduce dispensing costs that could drive up premiums.

The Biden administration is transitioning away from the “acute emergency phase where the U.S. government is buying the vaccines, buying the treatments, buying the diagnostic tests. We need to get out of that business over the long run,” White House Coronavirus Response Coordinator Ashish Jha, M.D., said during an Aug. 16 event organized by the U.S. Chamber of Commerce.

Payers May Restrict Coverage of New Fast-Acting Oral Drug for Major Depression

The FDA on Aug. 19 approved the first and only rapid-acting oral drug for major depressive disorder (MDD), a treatment that is being hailed by its manufacturer as a “potential game-changer” for people struggling with the difficult-to-treat condition.

One pharma analyst expressed optimism about the drug’s ability to disrupt the MDD treatment market. However, experts from the PBM sector predict that payers may not embrace the drug warmly given how many generics are available to treat depression.

News Briefs: Medicare Negotiation Will Cost Pharma Manufacturers

Moody’s on Aug. 19 released a report “stating that the drug pricing provisions in the Inflation Reduction Act of 2022 are credit negative for the pharmaceuticals industry, as the savings to the federal government and consumers will generally be borne by the industry,” the credit rating firm said. The most substantial impact on drug manufacturers will come from the IRA’s Medicare provisions, which the report observes are “estimated to save the US government $102 billion over 10 years. This cost will fall largely to the industry, as will the price curbing provisions and the reduction in the beneficiary out-of-pocket costs.” Moody’s also expects pharma’s early-stage transaction trend to accelerate: “One implication of the Inflation Reduction Act will be an increase in industry-wide acquisitions, as companies will seek ways to improve longer-term growth rates, given pressure on earnings growth that will result from the legislation. By acquiring companies with promising pipeline-stage products, pharmaceutical companies can increase the number of future drug launches to drive higher earnings.”

Employers Shift More Drug Cost Control Efforts From PBMs to Medical Plans

In 2021, prescription drugs accounted for a median of 21% of large employers’ health care costs, and a full 100% of firms said they were concerned about prescription drug spending trends, according to the Business Group on Health’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey.

Yet the rising cost of specialty medications — which are often covered by medical rather than pharmacy benefits — has forced companies to think differently about how to curtail drug spending, the organization found. According to the survey, specialty medications account for 56% of all pharmacy spending by polled employers.

Part D Bid and Base Premium Will Drop in 2023; MA-PD Enrollment Surpasses PDP for the First Time in 2022

The monthly Medicare Part D base beneficiary premium for 2023 will be $32.74, a slight decrease from $33.37 in 2022, according to CMS. The Part D national average monthly bid amount continues to drop, from $38.18 in 2022 to $34.71 in 2023. Regional low-income premium subsidy amounts have increased over the past few years in most states, yet five states — New York, Illinois, New Jersey, Indiana and Kentucky — are projected to see a decline larger than 5% in 2023. South Carolina is projected to see the biggest jump, with its average subsidy amount going up from $31.12 in 2022 to $37.84.

FDA Approves Gene Therapy, Manufacturer Prices Drug at Record $2.8 Million

After the FDA approved Zynteglo (betibeglogene autotemcel) on Aug. 17, the gene therapy’s manufacturer, bluebird bio, Inc., announced the drug would have a $2.8 million wholesale acquisition cost (WAC). That is the highest WAC for a drug hitting the market in the U.S.

Zynteglo is indicated as a potential cure for patients with transfusion-dependent beta-thalassemia, a rare disorder caused by genetic mutations in cells that carry oxygen throughout the body. Such patients typically require red blood cell transfusions every two to five weeks.

New Drug Pricing Bill Could Affect Millions of Medicare Beneficiaries

More than 1.4 million Medicare beneficiaries could see their medication costs plunge if the Senate passes a budget reconciliation bill that contains drug pricing reforms, Kaiser Family Foundation estimated.

The bill — put forward by Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin III (D-W.Va.) — will allow Medicare to negotiate some prescription drug prices starting in 2026 and require drug companies to pay rebates if drug prices rise faster than inflation starting in 2023. Between 2019 and 2020, half of drugs covered by Medicare Part D and 48% of drugs covered by Medicare Part B saw price increases greater than the rate of inflation (1.0%), according to a previous Kaiser Family Foundation analysis.

In 2Q, Some PBMs Report Dampened Margins, Customer Pipelines

Unlike in recent periods, PBMs were not necessarily stars of the show as the country’s largest publicly traded managed care organizations reported their second-quarter 2022 earnings. However, executives across the board still touted PBMs as a key component of their growth and diversification strategies.

At UnitedHealth Group, the first major MCO to report its quarterly results, one equities analyst queried the health care giant’s leaders about why OptumRx’s “strong” revenue and membership growth haven’t translated into larger margins.

Congress Won’t Act on Insulin Prices for Commercial Market

Although Congress is on the brink of passing a landmark prescription drug price reform bill as part of the Inflation Reduction Act (IRA) — Democratic leadership in the House of Representatives plans to vote on the bill Friday — the legislation will not include any provisions that impose price controls on insulin sold to patients with commercial insurance. D.C. insiders tell AIS Health, a division of MMIT, that they do not expect separate, standalone legislation to make it through Congress any time soon, which shines a spotlight on new insulin benefits announced by major carriers like UnitedHealth Group.

News Briefs: Court Ends Patent Thicket Lawsuit Against AbbVie

A U.S. appeals court ruled that AbbVie Inc. does not need to defend itself from a lawsuit brought by the city of Baltimore, unions and insurance carriers that alleges the pharma giant used a patent thicket to improperly protect Humira (adalimumab) from competition. Before the ruling, the suit had the potential to upend widespread pharma industry business practices if it had been decided against AbbVie. It also comes amid news that the Biden administration is launching efforts to prevent patent thicketing, a process by which pharmaceutical companies extend patent exclusivity beyond what patent law ostensibly allows. Two laws, the Hatch-Waxman Act and Orphan Drug Act, set typical patent windows at five years and seven years, respectively. High-level officials at the FDA and the U.S. Patent and Trademark Office in July said they would be working together to scrutinize certain practices that could potentially lead to delays in competition from biosimilars and generics.