Drug Pricing

Although PBMs are taking increasing heat for spread pricing — or charging payers more for a drug than pharmacies are reimbursed — they aren’t the only players in the drug supply chain that engage in the practice, a new study points out. And one of the study’s authors says its findings suggest that patients may be better off if generic drugs are simply removed from insurance coverage entirely.

The study, published in JAMA Health Forum on Oct. 20, examined data associated with 45 high-utilization Medicare Part D-covered generic drugs.

Almost two years after Paxlovid received emergency authorization as a treatment for acute COVID-19 infection, Pfizer Inc. and the U.S. government are now in the throes of transitioning the drug to the commercial market. That means the drugmaker is, in its own words, “working diligently with payers to achieve the best possible formulary placement” for Paxlovid — but also raising some eyebrows with the list price it set for the antiviral therapy.

Pfizer said in a statement that the commercial list price for Paxlovid (nirmatrelvir/ritonavir) in the U.S. will be $1,390 per five-day treatment course. That’s more than twice what the U.S. government paid for the drug, $529 per five-day course, and significantly higher than the price range of $563-$906 that the Institute for Clinical and Economic Review (ICER) suggested would be most cost effective.

Amazon.com Inc. will deliver prescriptions via drone in College Station, Texas, the e-commerce giant said on Oct. 18. The online retailer said it will fill and deliver prescriptions for Amazon Pharmacy customers via drone in “60 minutes or less,” and that more than 500 medications can be delivered using the service. An Amazon press release claims that “Amazon’s drones have safely delivered hundreds of household items in College Station since December 2022.” Intermountain Health, the Utah-based integrated health system, has delivered prescriptions by drone since 2021 in the Salt Lake City area, the Associated Press reports.

Elevance Health Inc.’s CarelonRx PBM will add two of Boehringer Ingelheim’s Humira (adalimumab) biosimilars to some of its formularies starting Dec. 1, the firm said on Oct. 19. The move will put those drugs “at parity with Humira,” per a press release. The lower-list-price version of adalimumab-adbm will be added to all CarelonRx’s commercial formularies, while Boehringer’s Cyltezo will be added to “select” commercial formularies, the press release added.

While the managed care stock story in the first half of 2023 revolved around care utilization concerns, the company that first fueled those worries — UnitedHealth Group — eased investors’ minds considerably when reporting third-quarter earnings.

“Care patterns remain consistent with the view we shared during the second quarter, with activity levels still led by outpatient care for seniors and still most notably in the orthopedic and cardiac procedure categories,” Chief Financial Officer John Rex said, addressing the utilization issue head-on before describing UnitedHealth’s financial results during its Oct. 13 earnings call.

When the Affordable Care Act (ACA) became law on March 23, 2010, it established the 351(k) biosimilar pathway via the Biologics Price Competition and Innovation Act (BPCIA), which amended the Public Health Service (PHS) Act. Since then, the FDA has approved more than 40 biosimilars, with only a handful of those gaining interchangeable status. That designation, however, may not carry quite the distinction it historically has had if proposed guidance from the agency — which would replace previous guidance — on labeling for interchangeable biosimilars is finalized. Various stakeholders, including manufacturers, pharmacies, patients and providers, stand to be affected, stakeholders say.

In contrast to the EU, whose European Medicines Agency (EMA) and the Heads of Medicines Agencies (HMA) clarified in September 2022 that all biosimilars approved in the EU are interchangeable, the FDA has created two levels of biosimilars: biosimilars and interchangeable biosimilars.

The state of Hawaii on Oct. 4 in federal court sued the Big Three PBMs — CVS Health Corp.’s Caremark, UnitedHealth Group’s Optum Rx, and The Cigna Group’s Express Scripts. The suit accuses the firms of “siphon[ing] increasing amounts of money from the pharmaceutical supply chain while significantly increasing prices for consumers, employers, and other health care payers” through unfair trade practices. According to a press release from Hawaii Gov. Josh Green, M.D., and Attorney General Anne Lopez, both Democrats, the complaint accuses PBMs of “unfair methods of competition and unfair and deceptive acts and practices in violation of Hawaiʻi law,” such as inappropriate fees charged to manufacturers for formulary placement. The state will seek civil penalties of $10,000 per violation, with additional penalties sought for “each deceptive or unfair act that was directed towards an elder.”

The first biosimilar for the treatment of multiple sclerosis recently received FDA approval, and when it launches, Tyruko (natalizumab-sztn) from Polypharma Biologics and Sandoz Inc. will enter a competitive therapeutic class that is a high priority for management. Payers have said they expect the new treatment to have a moderate impact on their management of the other agents available to treat the condition.

On Aug. 24, the FDA approved Tyruko for the treatment of two indications: (1) adults with relapsing forms of multiple sclerosis, including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease, and (2) adults with moderately to severely active Crohn’s disease with evidence of inflammation who have had an inadequate response to, or are unable to tolerate, conventional Crohn’s therapies and tumor necrosis factor (TNF) inhibitors.

In what is only the latest sign that PBM clients are growing increasingly disillusioned with the status quo, Minnesota-based insurer UCare recently chose Navitus Health Solutions, LLC as its new PBM partner — ending a relationship with The Cigna Group’s Express Scripts that had been in place since 2010.

“I think that there is a growing desire amongst employer groups and health plans to look at alternative options besides what we consider to be the big PBMs,” Patrick Mitsch, vice president of pharmacy at UCare, tells AIS Health, a division of MMIT. “There’s different value propositions that a PBM like Navitus can bring to the market that the Big Three just can’t,” he adds, referring to Express Scripts, CVS Health Group’s Caremark, and UnitedHealth Group’s Optum Rx, which control roughly 80% of the pharmacy benefits market.

In a recent report, the Pharmaceutical Care Management Association (PCMA), the trade group representing the largest PBMs, claimed that employers often choose spread pricing when they set up their PBM contracts. But employer plan sponsor groups, which have pushed for years for a federal ban on spread pricing, tell AIS Health that the way PCMA describes employers’ pharmacy benefit options is misleading — instead, the plan sponsor groups say, PBMs manipulate employers into spread pricing arrangements.

PBMs are under intense scrutiny in Congress: Legislators from both parties seem likely to pass more aggressive regulation of the industry this year. A ban on spread pricing is one of the key policies under consideration. Spread pricing is the business practice in which PBMs pay pharmacies dispensing a drug less than what they charge payers, with the PBM pocketing the difference. This can result in substantial revenue for the PBM, as the “spread” for the same pharmaceutical product can vary widely from pharmacy to pharmacy.

A U.S. district court judge recently struck down a federal rule allowing health plans to not count copayment assistance against members’ out-of-pocket costs. The move clears the way for plans to have to discontinue use of copay offset programs such as copayment accumulators, which have been popular tools to keep their costs down and often impact specialty therapies. But as a result of the ruling, industry experts say that patient adherence likely will improve.

U.S. District Judge John D. Bates of the U.S. District Court for the District of Columbia issued the ruling on Sept. 29.

To help patients pay for costly specialty drugs, pharma manufacturers offer assistance that can help cover their out-of-pocket costs. Companies claim that the assistance helps improve patient adherence to medications that often treat rare and deadly conditions. But critics of them say such programs incentivize drugmakers to raise prices of these agents.