Radar on Drug Benefits

In two recent proposals, CMS outlines numerous changes to technical aspects of the Medicare Part D program — many of which are related to provisions in the Inflation Reduction Act (IRA) that restructured the Part D benefit phases. Sources tell AIS Health, a division of MMIT, that the proposals could have both positive and negative effects on Part D plan sponsors and beneficiaries and will likely attract a bevy of industry feedback.

The documents in question are the 2025 Advance Notice of payment changes for Medicare Advantage and Part D plans and the Draft 2025 Part D Redesign Program Instructions. While the Advance Notice is unveiled around the same time every year, the draft Part D redesign instructions are being issued to help implement provisions of the IRA that make major changes to the structure of the Part D benefit.

Although 2023 was a banner year for biosimilars hitting the U.S. market, uptake of these near-copies of biologic drugs remains low. Manufacturers of biologics also commonly file lawsuits or take other measures to extend their patents and have successfully delayed the introduction of FDA-approved biosimilars. Pharmaceutical industry experts tell AIS Health, a division of MMIT, that the slow adoption of biosimilars has an impact on payers that would prefer patients receive lower-cost biosimilars rather than expensive biologics.

In fact, a recent study offers evidence that private insurers are increasingly embracing biosimilars. Uptake of biosimilar medications was higher in Medicare Advantage plans than in traditional, fee-for-service Medicare from May 2015 through September 2022, according to a recent study published in JAMA Health Forum. However, biosimilars had less than a 50% market share in six of the seven product classes the authors examined, suggesting providers and patients often still opt for biologics.

The Biden administration announced new measures to protect reproductive health care accessibility on the 51st anniversary of the Roe v. Wade ruling, which found that the U.S. Constitution protects the right to have an abortion. HHS, alongside the Labor and Treasury departments, released new guidance that instructs health insurers on how to comply with the Affordable Care Act’s requirements to cover contraception at no cost. For hospitals and provider associations, HHS and CMS launched new efforts to increase awareness about access to emergency medical care — including abortion services — required under the Emergency Medical Treatment and Labor Act.

A year and a half after the Supreme Court’s decision in Dobbs v. Jackson Women's Health Organization — which reversed Roe v. Wade — access to abortion is uneven across the nation. As of January 2024, 14 states have made abortion illegal. Among the states without bans, the majority have at least one restriction on the books, such as limiting abortion access to just those who are early in pregnancy and imposing mandatory waiting periods. Arizona, North Carolina and Wisconsin, for example, currently have six abortion-limiting regulations in place, according to a KFF analysis.

PBM and drug pricing regulation will continue to be hot topics at the state level after several years of busy lawmaking, experts predict, even as PBM reforms are diluted and stalled in Congress. They predict that more states than ever will continue to embrace or pursue policies like drug affordability review boards.

“I do think the momentum is still strong, because states have the ability to do a lot more,” Kate Sikora, managing director at Avalere Health, tells AIS Health, a division of MMIT. “Federal bills typically get a little bit watered down by the time they actually pass. So some of these state laws are a little bit heartier — a little bit more robust — in terms of what they attempt to do.”

Tyson Foods, Inc. dropped CVS Health Corp.’s Caremark PBM in favor of Rightway, a fee-based PBM partnered with Mark Cuban Cost Plus Drug Co. Rightway promises to save employers 15% on their pharmacy benefit costs. Tyson’s head of benefits, Renu Chhabra, told CNBC that concerning jumps in specialty drug spending were a key reason behind the move. CVS withheld data that Chhabra hoped to use to manage costs, she said. “We were going anywhere between 12% to 14% increases for pharmacy — and on a $200 million spend that’s quite a bit,” said Chhabra. “I wanted to look at Humira, and I wanted to see what the acquisition cost was…it was very difficult to get to those numbers. Part of this was to really get a partner who can help us organize the information, make sure we understand how to manage specialty, and really looking at how to get the best net cost.”

On Jan. 22, the 51st anniversary of the now-overturned Roe v. Wade Supreme Court ruling, the Biden administration seized the opportunity to reaffirm its support for reproductive rights — a stance it appears to be increasingly emphasizing as the 2024 presidential election draws near. As part of that effort, three federal agencies issued new guidance to help health plans and issuers avoid running afoul of the Affordable Care Act’s contraception coverage mandate.

Health policy experts who spoke to AIS Health, a division of MMIT, say that the guidance could be a helpful tool for compliance-focused insurers, as it outlines the narrow set of circumstances in which a health plan doesn’t have to fully cover certain types of birth control.

Last year, as the country’s three dominant PBMs faced an unprecedented amount of scrutiny, smaller firms saw an opportunity to step into the spotlight. Thus, they founded Transparency-Rx, a coalition of PBMs with “transparent” business models and a shared goal of pushing for the reform their larger rivals were resisting.

One of the members of that new coalition, SmithRx, announced on Jan. 23 that it closed a $60 million Series C financing round led by the health care venture capital firm Venrock. The latest funding infusion, which builds on a $20 million Series B round raised in 2022, positions SmithRx to continue fixing a “broken” pharmacy pricing system, according to its founder and CEO, Jake Frenz.

The Institute for Clinical and Economic Review’s (ICER’s) new president and CEO Sarah Emond took over the role from the organization’s longtime leader and founder Steve Pearson on Jan. 1, and in an interview at the J.P. Morgan Healthcare Conference in San Francisco, she discussed some of the pressing drug pricing issues on ICER’s radar for the year ahead.

Emond has had a lengthy career at ICER, having worked for the organization for 14 years — most recently as vice president and chief operating officer, helping to lead strategic operations. She said the leadership change was part of a long and planned transition and Pearson continues to work as an advisor.

For years, payers have been concerned about the rising prices of prescription medications and how to cover newly approved drugs. Pharmaceutical experts tell AIS Health, a division of MMIT, that PBMs and plans will continue to be challenged in 2024 with similar issues, particularly when it comes to gene therapies, obesity medications and other expensive products.

Andy Szczotka, Pharm.D., chief pharmacy officer at AscellaHealth, notes that more than half of pharmacy benefit spending is on specialty medications even though only a small percentage of members use those drugs.

He says dealing with high-cost specialty products “is a focus for most payers” and adds there is a “large target on specialty drugs.”

Although 2023 trained a harsh spotlight on the country’s dominant PBMs — pressuring some to introduce new pharmacy pricing models — industry observers tell AIS Health, a division of MMIT, that this year may not be nearly as paradigm-shifting.

Take, for example, potential policy action aimed at changing PBMs’ increasingly criticized business models, particularly those associated with the Big Three PBMs: The Cigna Group’s Express Scripts, CVS Health Corp.’s Caremark, and UnitedHealth Group’s Optum Rx.