Radar on Drug Benefits

CVS Health Corp.'s Caremark will pay at least $45 million to the state of Illinois to settle accusations from the state's attorney general, Democrat Kwame Raoul, that the PBM didn’t pass through rebates to the state's health plans. According to a June settlement document obtained by STAT, Raoul accused CVS of "unlawfully depriv[ing] the state" of owed rebates negotiated with manufacturers for prescription drugs. CVS denied mishandling the rebates but still agreed to settle the case.

Vermont Attorney General Charity Clark, a Democrat has filed a lawsuit against The Cigna Group’s Evernorth and Caremark. A July 17 press release alleges that the two PBMs “grant placement on their standard formularies to the prescription drugs with the largest payments from manufacturers and the highest list prices, while excluding lower-cost prescription drugs.” Clark is just the latest state attorney general to target PBMs. Among others, Arkansas Republican Attorney general Tim Griffin recently sued UnitedHealth Group’s Optum Rx and Evernorth over their alleged roles in the opioid epidemic. And in 2023, Ohio Attorney General Dave Yost filed a lawsuit accusing Express Scripts, Prime Therapeutics, Humana Pharmacy Solutions and Ascent Health Services of colluding to drive up drug prices.

The FDA’s approval last month of Verona Pharma plc’s Ohtuvayre (ensifentrine) provides another treatment option for patients with chronic obstructive pulmonary disease (COPD). While Verona touts Ohtuvayre’s novel mechanism of action and broad indication, and Wall Street analysts expect it to have a major market impact, its price is well above the cost-effectiveness threshold estimated by the Institute for Clinical and Economic Review (ICER), potentially leading to payers balking at covering the product.

Chris Martin, Verona’s chief commercial officer, said on a June 26 conference call that Ohtuvayre’s wholesale acquisition cost (WAC) of $2,950 per month or $35,400 annually “reflects the overall benefit and value to the health care system.” He added that the total annual medical costs associated with COPD are about $50 billion per year in the U.S., while the costs associated with a severe COPD exacerbation are about $26,000.

White bagging continues to be a sore subject for providers, according to a June 21 Avalere Health report. As in past reports, providers surveyed by Avalere are concerned that white bagging can harm patients and lead to wasted medication — which can add up, since payers only use white bagging strategies for expensive specialty medications. The report also raised concerns that payer ownership of specialty pharmacies raises conflicts of interest and could accelerate provider consolidation.

White bagging is a payer practice that significantly changes the customary dispensing and billing arrangements around provider-administered drugs. Until recently, providers used the “buy-and-bill” framework with regard to such drugs. 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.

Blue Shield of California caught the attention of the industry last August when it announced a switch to a pharmacy benefits model using five vendors. While some insurers and plan sponsors have considered a similar move following Blue Shield’s revelation, benefits consultants tell AIS Health, a division of MMIT, that most payers continue to have a traditional arrangement where one PBM handles all pharmacy-related activities. They add that Blue Shield’s so-called unbundled approach could be difficult to manage and may not achieve significant cost savings.

A survey released last month from the Pharmaceutical Strategies Group (PSG) found that 72% of health plan respondents had heard about Blue Shield of California’s change. Morgan Lee, Ph.D., PSG’s senior director of research and strategy and one of the report’s authors, noted during a June 18 webinar that the survey was conducted in February and March. As such, “we’ll probably continue to see [awareness of unbundling] increase over time,” Lee said.

Medicare Advantage Prescription Drug plans (MA-PDs) continued to gain more enrollees than stand-alone Prescription Drug Plans (PDPs) in 2024, according to a KFF analysis.

As of 2024, about 53.1 million Medicare beneficiaries were enrolled in a plan with Part D prescription drug coverage, with 57% in MA-PDs and 43% in stand-alone PDPs. Two-thirds of enrollees receiving the low-income subsidies (LIS) — 9 million out of 13.7 million — chose MA-PDs in 2024. Among the 14 national PDPs, 11 of them lost non-LIS enrollees, with only Wellcare Value Script seeing significant membership growth (from 2.6 million to 3.7 million) due to its low monthly premium.

When the Federal Trade Commission (FTC) on July 9 released an interim report based on its yearslong investigation of PBMs, criticism of the document was in no short supply.

The trade group representing major PBMs, the Pharmaceutical Care Management Association (PCMA), said the report “falls far short of being a definitive, fact-based assessment of PBMs or the prescription drug market.” And FTC Commissioner Melissa Holyoak, who voted against issuing the report, said during a House Energy & Commerce Committee hearing on July 9 that the report is not nearly comprehensive enough and “lacks economic and empirical evidence.”

Although CVS Health Corp.’s move to drop Humira from its main template formularies did help adalimumab biosimilars finally chip away at the blockbuster drug’s dominant market share, that effect appears to be leveling off, according to industry analysts.

CVS said earlier this year that starting in the second quarter of 2024, it will remove AbbVie’s autoimmune condition treatment Humira from major national commercial formularies, instead preferring biosimilars including Sandoz’s Hyrimoz. Notably, CVS subsidiary Cordavis, which the firm launched in 2023, has a contract with Sandoz to commercialize a co-branded, low-list-price version of Hyrimoz. Cordavis also has a deal with AbbVie to produce a limited amount of co-branded version of Humira.

Safety and efficacy data of generic versions of several drugs, including Pfizer Inc.’s Viagra (sildenafil) and Eli Lilly & Co.’s Cialis (tadalafil), may have been falsified, according to Bloomberg. Bloomberg on July 9 reported that the FDA in June notified drug manufacturers that data from Synapse Labs Pvt. Ltd., an Indian drug researcher, may have been used in hundreds of drugs currently on sale. The FDA was tipped off by European regulators about the problematic data. In an interview with Bloomberg, former FDA inspector Massoud Motamed expressed concerns that the affected drugs may have too much or too little of their active ingredient. However, the FDA has not revealed specifics about which drugmakers used Synapse’s data, citing confidentiality reasons, and has not suspended sales of any drugs — unlike EU regulators, who recommended that member states stop sales of certain drugs. Cherie Duvall-Jones, a spokesperson for the agency, told Bloomberg that "the FDA remains vigilant and will act should we identify safety issues."

When designing their drug benefits packages, deciding how to approach GLP-1 medications was a top concern for plan sponsors, according to Pharmaceutical Strategies Group’s 2024 “Trends in Drug Benefit Design Report,” sponsored by Prescryptive Health. The report is based on surveys of 223 individuals representing employers, health plans and union/Taft-Hartley plans.

The report highlighted the complexities presented by the demand and high costs of GLP-1 drugs. In 2024, over 90% of all employers and health plans covered GLP-1s for Type 2 diabetes, while just over 30% covered these drugs for obesity. Of those who excluded the medications for obesity from coverage, 38% considered them too expensive to cover.

The U.S. health care system could save billions if it increases access to treatment for hepatitis C, now that a series of curative therapies approved in the 2010s have decreased in price, according to the Congressional Budget Office (CBO). However, one expert says that federal and state governments will have to force health plans — particularly Medicaid managed care organizations — to increase access to those therapies.

Doubling hepatitis C treatment access in Medicaid could save the federal government $7 billion over 10 years, the CBO found in a report published June 14. In addition, a 2023 white paper from researchers affiliated with the National Bureau of Economic Research found that a Biden administration budget request for a federal program to eliminate hepatitis C would diagnose and cure about 90% of all U.S. hepatitis C patients, saving the health care system $18.1 billion, of which $13.3 billion would accrue to the federal government.