Drug Pricing

All Eyes Are on Novel New Therapies, Impact of IRA, AI

The FDA approved the highest number of novel therapies in years in 2023, and multiple potential blockbusters are slated for decisions in 2024. In addition, the Inflation Reduction Act looms large over the pharma industry as HHS negotiates the prices of the initial 10 Medicare Part D agents and lawsuits over the legality of the IRA play out. And while life sciences dealmaking was down a bit in 2023, the new year already looks to be more promising. AIS Health, a division of MMIT, spoke with some industry experts about their outlook for 2024.

AIS Health: What are some pharma issues to keep an eye on in 2024, and why?

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FDA Approves Game-Changing Regimen for Urothelial Cancer, but Will Cost Pose Issue?

In late 2023, the FDA approved a new treatment regimen for urothelial cancer that represents a “paradigm change,” according to one industry expert. The cost of the therapy, however, could pose a barrier to its uptake.

On Dec. 15, 2023, the FDA approved Pfizer Inc. and Astellas Pharma Inc.’s Padcev (enfortumab vedotin-ejfv) in combination with Merck & Co., Inc.’s Keytruda (pembrolizumab) for the treatment of people with locally advanced or metastatic urothelial cancer (la/mUC). The agency gave accelerated approval to this combination for people with la/mUC who are not eligible for cisplatin-containing chemotherapy on April 3, 2023. The newest approval converts that accelerated approval to full and expands the labeled indication to include the treatment of people eligible for cisplatin chemotherapy. The application had priority review and breakthrough therapy designation.

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Copay Accumulator Lawsuit Comes to an End; Will Ruling Be Enforced?

An ongoing lawsuit over the use of copay accumulators is drawing to a close following the defendants’ and plaintiffs’ motions to dismiss their appeals. The ball is now in the federal government’s and state insurance commissioners’ courts to enforce a district court judge’s ruling, which states that manufacturer assistance must be counted toward patients’ out-of-pocket responsibility unless a brand-name drug has a medically appropriate generic equivalent.

Health plans and PBMs several years ago began implementing copay accumulators — and then a new iteration known as copay maximizers that declare certain drugs non-essential health benefits to avoid covering them per the Affordable Care Act (ACA) — to counter manufacturer copay assistance programs. Before these tools, that assistance would count toward beneficiaries’ annual out-of-pocket expenses. When those out-of-pocket maximums were reached, health plans would cover the remainder of members’ costs for the year. With accumulators and maximizers, patients can still use that assistance, but it does not help reduce their out-of-pocket costs.

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Is Medicare Part D Red Tape Worsening Outcomes for Low-Income Seniors?

Seniors who experienced fluctuations in eligibility for Medicare Part D’s low-income subsidy (LIS) spent more money on prescription drugs and filled fewer prescriptions overall, according to new research published in JAMA Health Forum. While researchers said questions remain about whether these temporary losses can impact medication adherence and health outcomes — particularly among non-white seniors — policymakers should consider streamlining LIS eligibility systems to reduce administrative barriers.

In 2023, 13.4 million Part D beneficiaries received full or partial LIS benefits. The program provides assistance with paying premiums and deductibles, and it reduces any post-deductible cost sharing for beneficiaries. The majority of LIS beneficiaries are “deemed,” meaning they are automatically enrolled in the program based on dual eligibility with Medicaid and/or enrollment in a Medicare Savings Program (MSP). (This also includes non-duals who receive Supplemental Security Income.) But 17% of LIS beneficiaries are “nondeemed,” meaning they are not enrolled in Medicaid or an MSP and must apply for LIS themselves. All LIS beneficiaries undergo annual redeterminations, but the process for deemed beneficiaries is automatic, leaving the nondeemed population to face potential administrative challenges and unnecessary coverage loss.

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As Reform Efforts Persisted, PBM Trade Association Set Its Lobbying Record in 2023

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.

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Incorporating Pharmacy Spending in Value-Based Payment Models Remains Challenging

Payers face challenges incorporating drug spending into value-based payment models, making it difficult to reduce overall health care costs, according to panelists who participated in a session at the virtual Value-Based Payment Summit on Jan. 31. The speakers were encouraged with the increased attention being paid to expensive medications and difficulties in ensuring people take their prescriptions. However, they stressed that more needs to be done to educate providers and ensure pharmacy spending is in check.

Frank W. McStay, II, assistant research director at the Duke University Margolis Institute for Health Policy and the session’s moderator, noted the federal government and states have recently proposed and implemented policies to reduce drug costs and increase access to medications. For instance, the Biden administration on Jan. 30 announced that it planned to increase access to sickle cell treatments via the Cell and Gene Therapy (CGT) Access Model that CMS introduced last year.

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As Reform Efforts Persisted, PBM Trade Association Set Its Lobbying Record in 2023

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.

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Direct-to-Consumer Prescribing Could Have Downsides

UnitedHealth Group’s Optum division recently launched a new direct-to-consumer telehealth prescribing venture as part of its Optum Perks vertical, joining a crowded field of DTC prescribing and dispensing. Experts say that the Optum Perks debut is proof that DTC prescribing around “lifestyle drugs” will likely continue to grow rapidly, but they say that there are clear downsides around utilization management and care coordination — particularly where glucagon-like peptide-1 (GLP-1) agonists are concerned.

Optum Perks’ rollout follows closely on the heels of Eli Lilly & Co.’s Lilly Direct launch, which also saw a health care giant steer into DTC prescribing waters. Lilly and industry watchers say that Lilly Direct is mainly intended to dispense its tirzepatide GLP-1 drugs, known by the brand names Mounjaro and Zepbound. Patients may or may not be able to obtain GLP-1s from Optum Perks; UnitedHealth’s press release doesn’t have a comprehensive list of drugs offered under the service, although it says that “low-cost care and prescription treatments for hundreds of conditions ranging from acne to a cough to high blood pressure” are available.

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PBMs Tout Client Wins, Rx Pricing Models on 4Q Earnings Calls

During the recent fourth-quarter earnings calls held by their diversified parent companies, the Big Three PBMs — The Cigna Group’s Express Scripts, UnitedHealth Group’s Optum Rx and CVS Health Corp.’s Caremark — factored prominently into discussions of the firms’ financial results and future growth strategies.

When CVS Health reported its quarterly and full-year results on Feb. 7, CEO Karen Lynch wasted little time before describing what she called CVS’s “innovative models and offerings that create more transparency and choice for consumers and clients.”

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News Briefs: U.S. Pays 278% More for Drugs than Other Countries

U.S. patients paid an estimated 278% more for prescription drugs than patients in other high-income countries did for the same drugs in 2022, according to a RAND Corp. study. U.S. gross prices for brand-name originator drugs were 422% higher than drugs in the comparison countries, RAND found; after rebates were applied, brand-name drugs still cost more than three times the amount paid in other countries. Unbranded generics were the only category that were not “substantially higher” in price than drugs in other countries. As RAND pointed out, unbranded generics account for 90% of U.S. drug volume but just 8% of total drug spending at manufacturer gross prices.

A Johnson & Johnson employee sued the firm over allegations that the medical manufacturing giant overpaid for prescription drugs dispensed by the firm’s employee health plan — which she alleges is a violation of J&J’s fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA). The suit is part of what some legal experts have predicted will be a “” of litigation against plan sponsors that may have paid more than they should have for certain health care services and products, potentially including prescription drugs or pharmacy benefits. The plaintiff in the suit is Ann Lewandowski, a health care policy and advocacy director at J&J, STAT reported.

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