Drug Pricing

PBM Critics Increasingly Take Their Grievances to Court

As scrutiny on PBMs continues, various stakeholders are turning to the legal system to challenge the business practices of major firms.

Centene Corp. has been the target of the most litigation, having now reached settlements with nine state attorneys general over allegations that its PBM subsidiary Envolve overcharged those states’ Medicaid programs for prescription drugs, according to a filing with the Securities and Exchange Commission. The company has set aside $1.25 billion to fund those settlements and potential future lawsuits, and it is in the process of restructuring its PBM holdings.

Drug Price Controls Appear Central to Democratic Priorities

Democratic lawmakers are expected to make a strong push to revive a variety of drug pricing proposals, such as those that would grant CMS the ability to negotiate the price of certain drugs and place a cap on Medicare beneficiaries’ out-of-pocket spending.

House Majority Leader Chuck Schumer (D-N.Y.) has indicated he is targeting the current congressional work period that runs through Memorial Day as the time to make good on drug pricing plans that Democrats have long favored, noted Matt Kazan, managing director of policy with consultancy Avalere Health, during an April 27 webinar.

The convergence of several factors, including looming mid-term elections and the scheduled end of the COVID-19 public health emergency (PHE) could spur Democrats to make a last-ditch effort to resuscitate the Build Back Better Act (BBBA) and the drug pricing controls contained within it — especially since the end of the PHE could significantly impact Medicaid and Affordable Care Act (ACA) exchange enrollment.

Many Medicare Enrollees Can’t Afford Cancer, Specialty Drugs

Large numbers of Medicare beneficiaries who are ineligible for low-income subsidies and have been prescribed high-price prescription drugs for conditions such as cancer don’t initiate their treatment, likely because they can’t afford it, according to new research published in Health Affairs. One of the study’s authors tells AIS Health that severe illness is a possible outcome of noninitiation in the studied clinical areas and adds that proposals under consideration in Congress to cap out-of-pocket spending for Medicare beneficiaries would make a big difference to the affected patients.

According to the paper, “among beneficiaries without subsidies, we observed noninitiation for 30 percent of prescriptions written for anticancer drugs, 22 percent for hepatitis C treatments, and more than 50 percent for disease-modifying therapies for either immune system disorders or hypercholesterolemia.”

States Pass More PBM Laws, Including Copay Accumulator Bans

PBMs have drawn more attention than ever from state officials responding to the steep cost of prescription drugs. As federal efforts to manage the rising cost of medications have stalled, state lawmakers across the country have considered hundreds of bills that affect PBMs, ranging from prescription drug affordability boards to banning copay accumulators.

The National Academy for State Health Policy (NASHP), a think tank and policy group, identified 118 bills introduced to state legislatures across the country that would change PBM regulations during 2022 sessions. In addition, NASHP found state legislators nationwide have introduced 44 bills that would reform drug coupons, including bans on copay accumulators and maximizers. That follows more than 100 laws passed since 2017 by state legislatures, according to a June 2021 NASHP blog post.

Many Medicare Enrollees Can’t Afford Cancer, Specialty Drugs

Large numbers of Medicare beneficiaries who are ineligible for low-income subsidies and have been prescribed high-price prescription drugs for conditions such as cancer don’t initiate their treatment, likely because they can’t afford it, according to new research published in Health Affairs. One of the study’s authors tells AIS Health that severe illness is a possible outcome of noninitiation in the studied clinical areas and adds that proposals under consideration in Congress to cap out-of-pocket spending for Medicare beneficiaries would make a big difference to the affected patients.

According to the paper, “among beneficiaries without subsidies, we observed noninitiation for 30 percent of prescriptions written for anticancer drugs, 22 percent for hepatitis C treatments, and more than 50 percent for disease-modifying therapies for either immune system disorders or hypercholesterolemia.”

News Briefs: Express Scripts Wins Anthem Lawsuit

The long-running lawsuit between Anthem, Inc. and Express Scripts — over whether the PBM now owned by Cigna Corp. overcharged Anthem for prescription drugs — has finally concluded. Anthem first sued Express Scripts in 2016, alleging primarily that the PBM failed to honor its contractual agreement to provide “competitive benchmark pricing” for prescription drugs and thus owed the insurer $14.8 billion in damages. Ultimately, Judge Edgardo Ramos dismissed most of Anthem’s claims, finding that the companies’ contract did not “obligate Express Scripts to provide competitive benchmark pricing, but merely to negotiate in good faith in the event that Anthem’s market analysis shows non-competitive pricing.”

News Briefs: 14.5M Enroll in Exchange Plans for 2022

The Affordable Care Act (ACA) exchanges have set new records for enrollment, with 14.5 million people enrolling or automatically reenrolling in health insurance during the 2022 open enrollment period, per CMS. New enrollments increased by 2.5 million, or 21%, compared to 2021. Due in part to the enhanced premium subsidies made available as part of the American Rescue Plan Act, the number of enrollees receiving advance premium tax credits (APTC) increased by 2.8 million compared to 2021. According to CMS, the average monthly 2022 premium for HealthCare.gov enrollees was $111. If consumers had not received the additional tax credits, the average monthly premium after APTC for HealthCare.gov consumers would have been 53% higher, or $170, per a press release issued on the ACA’s 12th anniversary. The enhanced APTCs are set to expire at the end of the 2022 plan year, though Congress has considered proposals to make them permanent.

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As Major Drug Price Reforms Stall, Focus Shifts to Insulin Costs

The Senate Finance Committee held a hearing on March 16 in which politicians and experts discussed drug price inflation and the proposal for Medicare to negotiate prices for some high-cost medications. But the efforts in those areas still seem uncertain and most are unlikely to move forward anytime soon as they were part of the Build Back Better Act (BBBA) bill that stalled out in December, one health policy expert tells AIS Health.

Health insurers and PBMs, though generally supportive of lowering drug prices, have in the past been critical of some of legislators’ reform proposals — including a narrower focus on lowering insulin out-of-pocket costs that has emerged in recent months.

Walgreens Faces Another ‘Usual and Customary’ Fraud Suit

Several Blue Cross and Blue Shield affiliates sued Walgreens Boots Alliance Inc. on March 15, alleging that the retail pharmacy giant fraudulently overcharged them and their members for generic drugs over the course of “more than a decade.” The suit follows years of similar allegations from multiple payers, including federal health insurance programs. One legal expert tells AIS Health, a division of MMIT, that the current litigation has the potential to expose Walgreens to years of legal risk.

In the suit, three Blues affiliates — CareFirst, Blue Cross and Blue Shield of South Carolina and Blue Cross and Blue Shield of Louisiana — allege that Walgreens systematically and fraudulently charged the health plans inflated prices for generic prescription fills. The health plans claim that their contracts with Walgreens entitled them to reimburse the pharmacy for drug fills at the lowest price that Walgreens charged for the drug in question, an arrangement called “usual and customary” pricing. The plans allege that, despite those agreements, Walgreens allowed members of its prescription drug savings club to pay less than Blues plan members for the same drug — and intentionally withheld information from the plans to avoid changing the usual and customary price.

Health Care and Life Sciences Are Facing Headwinds, but Investors Remain Interested in Deals

Health care and life sciences (HCLS) organizations took a tremendous hit from COVID-19 and its secondary effects, including labor shortages, rising wages, supply chain problems and inflation. In addressing the challenge posed by the pandemic, these companies were able to produce impressive progress, not the least of which were the development and delivery of vaccines, therapeutics and tests for COVID. In addition, telehealth evolved quickly, producing new delivery models across multiple parts of the health care system.

But even when faced with multiple headwinds and more uncertainty, investors continue to compete for HCLS acquisitions. According to a recent KPMG LLP report, merger-and-acquisition (M&A) activity across both sectors “bounced back with a vengeance” in 2021: 1,839 deals, not counting joint ventures, minority investments and venture funding. That’s up from 1,618 deals in 2020 and 1,543 deals in 2019.