Drug Rebates

With IRA Impacts Looming, Manufacturers Should Focus on Providing Patient Support

Most industry experts likely would agree that certain provisions in the Inflation Reduction Act (IRA), such as a $2,000 out-of-pocket spending cap for Medicare Part D beneficiaries and copay smoothing — known as the Medicare Prescription Payment Plan (M3P) — are no-doubt wins for patients. But other aspects of the law, particularly Medicare drug price negotiations and inflation-based rebates, have prompted disagreements over their ultimate outcomes, with some experts claiming that they will hurt drug development and will prompt more restrictive utilization management among payers. Ultimately, said pharma industry experts during a recent webinar, stakeholders should keep patient support top of mind as they navigate these changes.

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Report: Led by Anti-Inflammatories, Specialty Drugs Continue Upward Trend

Specialty drugs are still taken by only a small percentage of people but represent more than half of total drug costs. Anti-inflammatory specialty therapies continue to be a huge driver of those costs, according to the recently released 2023 Drug Trend Report from PBM analytics firm Xevant. The specialty pipeline remains strong, and payers should expect these agents to continue to affect their costs, says one industry expert.

Based on Xevant’s book of business for 2022 and 2023, the company observed an 11% increase in the number of prescriptions filled for specialty drugs. The plan-paid amounts for those agents rose 19%, slightly less than nonspecialty medications’ 22% plan-paid costs. In addition, the average plan cost per specialty prescription rose from $6,100 in 2022 to $6,700 in 2023.

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Report: Led by Anti-Inflammatories, Specialty Drugs Continue Upward Trend

Specialty drugs are still taken by only a small percentage of people but represent more than half of total drug costs. Anti-inflammatory specialty therapies continue to be a huge driver of those costs, according to the recently released 2023 Drug Trend Report from PBM analytics firm Xevant. The specialty pipeline remains strong, and payers should expect these agents to continue to affect their costs, says one industry expert.

Based on Xevant’s book of business for 2022 and 2023, the company observed an 11% increase in the number of prescriptions filled for specialty drugs. The plan-paid amounts for those agents rose 19%, slightly less than nonspecialty medications’ 22% plan-paid costs. In addition, the average plan cost per specialty prescription rose from $6,100 in 2022 to $6,700 in 2023.

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AMCP Panel, GAO Report Sharpen Focus on State PBM Regulation

Although PBM-targeted legislation has stalled at the federal level, states are forging ahead in their efforts to rein in the highly scrutinized industry. In fact, the volume of state measures aimed at PBMs recently led the Government Accountability Office (GAO) to publish a review that zeroed in on five states that have taken a variety of approaches. Meanwhile, speakers at the Academy of Managed Care Pharmacy (AMCP) annual meeting told attendees about pending measures in states like California that industry stakeholders should be closely watching.

“We talk about states as the laboratories of democracy a lot,” Adam Colborn, director of government affairs at AMCP, said during an April 17 session at the conference, which was held in New Orleans. “There are a lot of experiments; I don’t know that they’re all successful experiments, but a lot of policies — particularly in the health care space — that are first enacted at the state level are then later implemented at the federal level.”

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CVS-Driven Biosimilar Boom Stokes Excitement, Frustration at AMCP Conference

Since CVS Health Corp. dropped the blockbuster drug Humira (adalimumab) from its national commercial template formularies on April 1, the number of prescriptions written for Humira biosimilars has jumped from just 5% to 36%, according to a recent equity analyst report.

Speakers at the Academy of Managed Care Pharmacy (AMCP) conference in New Orleans said the development is encouraging and could change the game for future biosimilars — including those in the pipeline for another immunosuppressive drug, Stelara (ustekinumab). But clinicians speaking at the conference also said that the transition to biosimilars has not always gone smoothly for patients.

For example, rheumatologist Mark Box, M.D., said the potential cost savings associated with switching patients to biosimilars compared to the administrative burden on providers “often does not balance.”

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News Briefs: Amazon Pharmacy Teams Up With Lilly

Amazon.com Inc’s pharmacy division will be the exclusive home delivery partner for Eli Lilly & Co.’s direct-to-consumer business, Lilly Direct, which will distribute GLP-1s, among other drugs. In addition, the e-commerce giant now offers same-day delivery of many medications in New York and Los Angeles; it already offered same-day delivery in Austin, Indianapolis, Miami, Phoenix and Seattle. Analysts were positive about the LillyDirect deal: GlobalData’s Costanza Alciati wrote on March 14 that “Surely, by facilitating its medicines’ access in the world’s biggest obesity market, Eli Lilly made a great move to promote [GLP-1] utilization over competitor Novo Nordisk [A/S].” Bank of America analyst Allen Lutz wrote on March 13 that while “Amazon’s entrance into the pharmacy space has been underwhelming,” the LillyDirect deal “reflect[s] a shift in consumer preferences” that Amazon is wise to capitalize on. Lutz added that “patients taking GLP-1 drugs for the first time in 2024 could be introduced to Amazon’s mail pharmacy for the first time, which could potentially create greater awareness of the platform.”

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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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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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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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Fresh Off New Funding Round, PBM SmithRx Targets ‘Underserved’ Market

Last year, as the country’s three dominant PBMs faced an unprecedented amount of scrutiny, smaller firms saw an opportunity to step into the spotlight. Thus, they founded Transparency-Rx, a coalition of PBMs with “transparent” business models and a shared goal of pushing for the reform their larger rivals were resisting.

One of the members of that new coalition, SmithRx, announced on Jan. 23 that it closed a $60 million Series C financing round led by the health care venture capital firm Venrock. The latest funding infusion, which builds on a $20 million Series B round raised in 2022, positions SmithRx to continue fixing a “broken” pharmacy pricing system, according to its founder and CEO, Jake Frenz.

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