Drug Rebates

CMS on March 15 revealed the first drugs that will be sanctioned for having their prices increase faster than the rate of inflation, as part of the Inflation Reduction Act. The 27 medications are all covered under Medicare Part B, and many of them are treatments for cancer, chronic kidney disease and the aftereffects of organ transplants. Beneficiaries who normally pay 20% coinsurance under Part B will see their share decline based on an inflation-adjusted price for these drugs.

The federal government will invoice the manufacturers for 2023 and 2024 Part B inflation rebates no later than fall 2025, and those funds will be deposited into the Medicare Trust Fund. A Kaiser Family Foundation analysis found that, from 2019 to 2020, half of all drugs covered by Medicare had price increases above the rate of inflation over that period.

While drugs are increasingly hitting the market that address unmet needs and even offer cures for some rare diseases, private insurers are highly concerned about such therapies’ eye-popping price tags, a recent survey indicated. But one prominent payer executive who spoke during AHIP’s Medicare, Medicaid, Duals & Commercial Markets Forum suggested that insurers are better off working collaboratively with drugmakers to ensure prices are tied to value — rather than engaging in an inter-industry war of words.

“More and more we’re seeing drugs come through with limited evidence through accelerated approval processes, which generally is a marker for an unmet need, which is a good thing. But the evidence can be thin,” said Michael Sherman, M.D., executive vice president and chief medical officer of Point32Health. During a March 14 panel at the AHIP forum, Sherman pointed to the example of Makena (hydroxyprogesterone caproate), a drug that aims to reduce preterm births but failed to prove clinical effectiveness in trials conducted after it received accelerated approval. With the FDA poised to make a final decision on the drug’s status, Clovis Pharma Group recently announced it would voluntarily pull Makena off the market.

Amid a trend of steep insulin price cuts by Eli Lilly & Co., Novo Nordisk A/S and Sanofi S.A., the state of California said it would develop its own line of affordable insulins with Civica Rx, the nonprofit drug manufacturer that launched in 2020. Experts say that patients will finally see relief from sky-high insulin prices and drug manufacturers will maintain a healthy margin — but they add that PBMs and some payers may actually see the costs of their insulin purchasing increase as rebate revenue decreases.

California and Civica's new insulin line will, according to a Civica press release, be called CalRx and will be sold at "no more than $30 per 10 mL vial and no more than $55 for a box of five 3 mL pre-filled pens." Allan Coukell, Civica's senior vice president of public policy, tells AIS Health, a division of MMIT, that the company expects to start selling the insulin after submitting biosimilars for FDA approval starting in 2024. According to the press release, the Civica insulin line will include biosimilars glargine (which references Sanofi's Lantus), lispro (Lilly's Humalog) and aspart (Novo's Novolog).

Pharma manufacturers may be breathing a sigh of relief as PBMs appear now to be the main focus of lawmakers’ actions on prescription drug pricing. January saw the reintroduction of two pieces of bipartisan Senate legislation, while February brought a Senate hearing focused on PBMs’ transparency and accountability. And in March, Rep. James Comer (R-Ky.), chairman of the House Committee on Oversight and Reform, revealed that he is launching an investigation into those practices. The move continues to keep pressure on the entities over some of their practices and lack of transparency amid concerns around drug prices.

Comer’s move comes more than a year after that committee held a forum titled Reviewing the Role of Pharmacy Benefit Managers in Pharmaceutical Markets. Held Nov. 17, 2021, that event featured a variety of stakeholders within the health care system who spoke about an array of issues, including PBM consolidation, “anticompetitive tactics,” rebates, the need for transparency and PBMs’ role in drug costs. That December, the committee published a report conducted by its staffers on these practices and other issues titled A View from Congress: The Role of Pharmacy Benefit Managers in Pharmaceutical Markets.

In 2028, the federal government will likely negotiate the prices of 38 drugs covered under Medicare Part D and two under Medicare Part B, according to an analysis published this month in the Journal of Managed Care & Specialty Pharmacy. Inmaculada Hernandez, Pharm.D., Ph.D., one of the study’s authors, tells AIS Health the evaluation “is going to be very helpful for health plans and PBMs to know which drugs are going to be negotiated” as they evaluate the impact of the Inflation Reduction Act (IRA).

The IRA, which passed last year, includes a provision that requires the government to negotiate for the first time with pharmaceutical manufacturers the prices of some high-cost medications that are not subject to generic or biosimilar competition. It will begin with 10 Part D drugs in 2026, an additional 15 Part D drugs for 2027, another 15 Part D and Part B drugs in 2028 and an additional 20 Part D and Part B medications each year starting in 2029. Part D covers retail prescription drugs, while Part B covers provider-administered medications.

In 2028, the federal government will likely negotiate the prices of 38 drugs covered under Medicare Part D and two under Medicare Part B, according to an analysis published this month in the Journal of Managed Care & Specialty Pharmacy. Inmaculada Hernandez, Pharm.D., Ph.D., one of the study’s authors, tells AIS Health the evaluation “is going to be very helpful for health plans and PBMs to know which drugs are going to be negotiated” as they evaluate the impact of the Inflation Reduction Act (IRA).

The IRA, which passed last year, includes a provision that requires the government to negotiate for the first time with pharmaceutical manufacturers the prices of some high-cost medications that are not subject to generic or biosimilar competition. It will begin with 10 Part D drugs in 2026, an additional 15 Part D drugs for 2027, another 15 Part D and Part B drugs in 2028 and an additional 20 Part D and Part B medications each year starting in 2029. Part D covers retail prescription drugs, while Part B covers provider-administered medications.

A little more than a year after Rep. James Comer (R-Ky.), then-ranking member of the House Committee on Oversight and Reform, released a report on PBMs’ business practices and their negative impact on drug prices, patients’ health and market competition, the now-Chairman Comer revealed that he is launching an investigation into those practices. The move continues to keep pressure on the entities over some of their practices and lack of transparency amid concerns around prescription drug prices.

On March 1, Comer sent letters to senior officials at the Office of Personnel Management (OPM), Defense Health Agency (DHA) and CMS, as well as to the three largest PBMs — Cigna Corp.’s Express Scripts, CVS Health Corp.’s Caremark and UnitedHealth Group’s Optum Rx — requesting a trove of documents and communications.

Eli Lilly & Co. announced on March 1 that it would cap the out-of-pocket costs for its insulin products at $35 per month and reduce the list price of its most commonly prescribed insulins by 70%. President Joe Biden released a statement calling the move “a big deal” and has called on Congress to mandate a $35 out-of-pocket insulin cost cap for all commercial health plan members. Yet health policy insiders tell AIS Health the company’s decision may be tied in part to an upcoming change in Medicaid rebates. Plus, it’s unclear whether it will lower the net cost of the widely used therapies.

The American Rescue Plan Act that passed in 2021 includes a provision that eliminates the Medicaid drug rebate cap in 2024. Since 2010, there has been a rebate cap for Medicaid at 100% of a drug’s average manufacturer price (AMP), meaning drug companies that exceed the cap do not have to pay Medicaid additional money for increasing prices, as the Kaiser Family Foundation noted in a brief last year.

More than six years after the FDA approved it, the first biosimilar of AbbVie Inc.’s Humira (adalimumab) has finally launched in the U.S. On Jan. 31, Amgen Inc.’s Amjevita (adalimumab-atto) became available at two different wholesale acquisition costs — one 55% below Humira’s WAC and one 5% below it — a strategy that acknowledges the lure of rebates within the U.S. market. It remains to be seen whether additional adalimumab biosimilars launching this year will follow suit or explore a different strategy to differentiate themselves.

Initially approved Sept. 23, 2016, Amjevita was the first of eight Humira biosimilars that the FDA had OK’d as of early February. The tumor necrosis factor (TNF) inhibitor is approved for seven of Humira’s nine indications, including rheumatoid arthritis, plaque psoriasis and Crohn’s disease, although the biosimilar is indicated for ulcerative colitis in adults, while Humira is approved for UC in people at least 5 years old. The two Humira indications not on Amjevita’s label are hidradenitis suppurativa and uveitis.

More than six years after the FDA approved it, the first biosimilar of AbbVie Inc.’s Humira (adalimumab) has finally launched in the U.S. On Jan. 31, Amgen Inc.’s Amjevita (adalimumab-atto) became available at two different wholesale acquisition costs — one 55% below Humira’s WAC and one 5% below it — a strategy that acknowledges the lure of rebates within the U.S. market. It remains to be seen whether additional adalimumab biosimilars launching this year will follow suit or explore a different strategy to differentiate themselves.

Initially approved Sept. 23, 2016, Amjevita was the first of eight Humira biosimilars that the FDA had OK’d as of early February. The tumor necrosis factor (TNF) inhibitor is approved for seven of Humira’s nine indications, including rheumatoid arthritis, plaque psoriasis and Crohn’s disease, although the biosimilar is indicated for ulcerative colitis in adults, while Humira is approved for UC in people at least 5 years old. The two Humira indications not on Amjevita’s label are hidradenitis suppurativa and uveitis.