Drug Costs

The growing use of biosimilars has reduced spending in the Medicare Part B program, but there are opportunities to further reduce costs — through greater use of more affordable biosimilars and through the implementation of different payment policies, according to a study published by the HHS Office of Inspector General (OIG).

The OIG analyzed the average sales prices, utilization and costs of 21 biosimilar drugs and their reference biologic products in the Medicare Part B program between 2015 and 2021. The agency found that overall use rate of biosimilars in Part B jumped from 18% in 2015 to 62% in 2021. While the adoption of biosimilars has lowered both the prices of biologics and biosimilars, Part B spending could have been reduced by $179 million in 2021 if the five biosimilars that cost less than their reference products — epoetin alfa, infliximab, bevacizumab, rituximab and trastuzumab — had been used at the same rate as the most widely used biosimilar, filgrastim.

The pharmaceutical and health products industry, which has consistently outspent all other industries on federal campaign contributions and lobbying, spent nearly $378.6 million in 2023 to further policy goals, according to data compiled by OpenSecrets.

With the 2024 presidential election around the corner, the pharma/health products industry nearly evenly distributed their donated campaign funds to Democratic and Republican lawmakers during the 2023-2024 election cycle. Among the 20 lawmakers who received the most contributions from the industry, nine are Democrats. President Joe Biden, who is running for re-election this year, topped the list, receiving over $232,000.

The pharmaceutical and health products industry, which has consistently outspent all other industries on federal campaign contributions and lobbying, spent nearly $378.6 million in 2023 to further policy goals, according to data compiled by OpenSecrets.

With the 2024 presidential election around the corner, the pharma/health products industry nearly evenly distributed their donated campaign funds to Democratic and Republican lawmakers during the 2023-2024 election cycle. Among the 20 lawmakers who received the most contributions from the industry, nine are Democrats. President Joe Biden, who is running for re-election this year, topped the list, receiving over $232,000.

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.

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.

Plan sponsors’ overall satisfaction with their PBMs was 7.8 on a 1-10 scale in 2022, down from 8.2 last year, according to Pharmaceutical Strategies Group’s 2022 Pharmacy Benefit Manager Customer Satisfaction Report. The report was based on surveys completed by 236 individuals representing employers, unions/Taft Hartley plans, health plans and health systems that covered an estimated 76 million lives. Respondents reported a lower likelihood to recommend their PBM to a colleague or to renew their contract without issuing a competitive request for proposal this year, highlighting costs as the primary driver to leave the PBM.

Among core PBM services, satisfaction was highest for “offering competitive traditional drug discounts” and “meeting financial guarantees.” As clinical and cost management programs play a key role in reducing overall costs, 82% of respondents reported using utilization management, while only 8% used gene therapy financial protection programs.

Plan sponsors’ overall satisfaction with their PBMs was 7.8 on a 1-10 scale in 2022, down from 8.2 last year, according to Pharmaceutical Strategies Group’s 2022 Pharmacy Benefit Manager Customer Satisfaction Report. The report was based on surveys completed by 236 individuals representing employers, unions/Taft Hartley plans, health plans and health systems that covered an estimated 76 million lives. Respondents reported a lower likelihood to recommend their PBM to a colleague or to renew their contract without issuing a competitive request for proposal this year, highlighting costs as the primary driver to leave the PBM.

Among core PBM services, satisfaction was highest for “offering competitive traditional drug discounts” and “meeting financial guarantees.” As clinical and cost management programs play a key role in reducing overall costs, 82% of respondents reported using utilization management, while only 8% used gene therapy financial protection programs.

With the Inflation Reduction Act (IRA) now signed into law by President Joe Biden, analysts are predicting that some — but not all — of its health care provisions will be a boon for the managed care industry.

In a new report, insurance industry-focused credit rating firm A.M. Best noted that insurers estimated 2 million to 3 million people would drop their Affordable Care Act exchange policies if enhanced subsidies — which were ushered in as part of coronavirus relief legislation — expired in 2023. The IRA prevented that outcome, however, by extending subsidies for three years. The increased financial aid for enrollees both eliminated the subsidy cliff for higher earning individuals and provided access to zero-premium plans for people on the lower end of the income scale, helping drive enrollment to a record high in 2022.

Through 2020, CMS spent $68 billion on 38 drugs that were granted accelerated approval from the FDA between 2012 and 2017, with spending after conversion to standard approval accounting for 75% of overall spending, according to a JAMA Health Forum study. However, only 34% of these drugs had a confirmatory trial evaluating a clinical outcome as a primary end point and more than $40 billion was spent for drugs evaluated using surrogate end points. Clinical trials for one drug that converted to standard approval (pembrolizumab) and three that remained unconverted (atezolizumab, durvalumab and olaratumab) for their original indications failed to confirm benefit for primary efficacy end points, while these drugs cost CMS $14 billion in total through 2020. The researchers concluded that “persistent evidentiary gaps should prompt payers to limit spending on promising drugs with unproven benefits.

Former Centene Corp. CEO and Chairman Michael Neidorff died on April 7, just weeks after he ended his 26-year tenure at the helm of the nation’s largest Medicaid and individual market insurer. Neidorff stepped down from his role leading Centene on Feb. 24 for undisclosed medical reasons, and the insurer’s board appointed a prominent Neidorff deputy, former Optum executive Sarah London, as his successor on March 22. During his marathon tenure, Neidorff transformed Centene from a regional carrier into a publicly traded firm ranked No. 25 on 2021’s Fortune 500. Industry insiders also credit Neidorff with being the first executive to see both Medicaid managed care and the Affordable Care Act exchanges as lucrative businesses.