Drug Rebates

CVS Health Corp.’s Caremark is the latest big PBM to offer clients new pricing models that the company claims will increase transparency and reduce overhead. Experts say that the new offerings are not as transparent as CVS claims they are, and constitute a response to various pressures including likely federal PBM reforms, scrutiny from plan sponsors and disruptive business trends like the growth of Mark Cuban Cost Plus Drug Co.

Most experts expect that the new CVS offerings, called CostVantage and TrueCost, will only make a marginal difference — if any — in either drug costs or price transparency. Industry observers point to similar product rollouts by the other two of the Big Three PBMs, UnitedHealth Group’s Optum Rx and The Cigna Group’s Express Scripts, neither of which seemed to dampen the firms' PBM earnings. Express Scripts’ ClearCareRx and Optum Rx’s Cost Clarity launched in April and May, respectively. Express Scripts also rolled out a new “cost-plus pharmacy pricing” option, called ClearNetwork, in November.

The HHS Office of Inspector General will evaluate the extent and quality of Medicare Part D plan coverage for biosimilars to AbbVie Inc.’s Humira (adalimumab) and expects to issue a report on the study in 2025, according to a recent update to the OIG’s work plan.

The study could provide fodder for reforms to pharmacy benefit manager rebating practices and for changes in Part D coverage policy that could help boost the uptake of biosimilars. Stakeholders and policy makers have viewed adalimumab biosimilars as a test case for the viability of the biosimilar model.

Depending on whom you ask, a new “cost-plus pharmacy pricing” option from The Cigna Group’s Express Scripts is either a half-hearted attempt to compete with true market innovation or an offering that simplicity-seeking PBM clients are likely to embrace. However, industry experts agree on one thing: The model was clearly inspired by Mark Cuban Cost Plus Drug Co.

“I’m not surprised to hear that Express Scripts is rolling this out. The Mark Cuban company set the pathway for this to happen; their business is growing pretty quickly,” says Marc Guieb, Pharm.D., a consulting pharmacist at Milliman. He notes that Blue Shield of California in August awarded a contract to Cost Plus Drugs to manage retail pharmacy pricing and payment for the insurer’s members, as part of an “unbundling” of Blue Shield’s current PBM contract with CVS Health Corp.

PBMs are increasingly deriving profits from collecting fees and from their specialty pharmacies as opposed to manufacturer rebates and spread pricing, according to an analysis published on Sept. 18 from Nephron Research. Eric Percher, the report’s author and a Nephron research analyst, tells AIS Health, a division of MMIT, that the findings suggest PBMs have shifted their business model in recent years even as they receive scrutiny from state and federal government officials for old tactics.

Nephron received compensation for the survey design and independent data analysis from the Pharmaceutical Research and Manufacturers of America (PhRMA), the leading trade group for drug manufacturers. Percher maintains that Nephron had full editorial control of the report.

Although CMS has released its list of the first drugs to be negotiated under the Inflation Reduction Act (IRA), questions surrounding the process, as well as other provisions of the law, still exist. During a recent webinar, Mark McClellan, M.D., Ph.D., the Robert J. Margolis Professor of Business, Medicine, and Policy, and founding director of the Duke-Margolis Center for Health Policy at Duke University, addressed some of those issues, including the real-world evidence that CMS is looking for and how the redesign of Medicare Part D will play out.

The Sept. 18 webinar was the second in a series presented by Innopiphany on navigating the IRA, following the initial one held June 20.

A bill that “delinks” PBM pay from drug list prices and utilization in Medicare Part D could “shift billions of dollars annually from patients and taxpayers to drug manufacturers and retail pharmacy companies,” according to a new paper funded by the PBM industry’s main trade group. However, some experts argue that the research may not offer a completely accurate assessment, even if it makes some valid points.

“I’m a little bit of two minds on this paper,” says Matthew Feidler, a senior fellow at The Brookings Institution’s Schaeffer Initiative on Health Policy. Feidler, who was not involved in the National Bureau of Economic Research (NBER) paper, recently coauthored an issue brief assessing the current landscape of PBM reform proposals.

Blue Shield of California will shift from a traditional PBM contract with CVS Health Corp.’s Caremark to a pharmacy benefits model that uses five different vendors to fulfill the discrete functions that Caremark previously managed all at once, the nonprofit carrier said Aug. 15. Managed care and pharmacy insiders say the move is just the latest sign that employers and regional carriers are dissatisfied with the services large PBMs provide, and they suggest that more plans could follow Blue Shield’s example if the model is successful.

According to Blue Shield of California Chief Operating Officer Sandra Clarke, when the insurer’s Caremark contract lapses at the end of this plan year, the Blues affiliate will begin agreements with five different firms to manage its various pharmacy benefit operations:

More than half of the drugs that could be subject to Medicare price negotiations in 2026 already have net prices that are lower than the minimum discounted price established by the Inflation Reduction Act (IRA), according to an analysis published this month in the Journal of Managed Care + Specialty Pharmacy. The findings come as multiple pharmaceutical manufacturers file lawsuits challenging the IRA and as CMS is set to announce by Sept. 1 the 10 drugs that Medicare will negotiate prices for starting in 2026.

The IRA stipulates that until 2030 the negotiated price will be capped at the greater of the net price after rebates or a maximum percentage of the drug’s list price based on how long it has been on the market. Specifically, that maximum will be 75% of the average manufacturer price (or a minimum 25% discount) for drugs that have been marketed between nine and 16 years and 40% of the average manufacturer price (or a minimum 60% discount) for drugs that have been on the market for more than 16 years.

Employers should start thinking about their specialty drug benefit design differently, recommended an industry expert at a recent conference. That includes not only reconsidering tiering but also coverage of biosimilars, as well as disease categories that increasingly will contribute to their specialty spend.

Alex Jung, founder of Alex Jung Consulting LLC and member of the Midwest Business Group on Health's board, opened her session at the MBGH Employer Forum on Pharmacy Benefits, Specialty Drugs & Biopharma: How PBMs Control Prices & What Employers Can Do About It by explaining that she is “try[ing] to correct a lot of the things that became misaligned incentives or…business practices that have resulted in exploitation of employers and their employees.” She expressed an interest in getting public policy experts to “understand that they need to step up and put in some governance and controls so that the burden doesn’t always fall on the employer” because they have enough to deal with.

Brand-name medications introduced from 2013 to 2017 across 12 therapeutic classes reduced net commercial spending by over $10 billion on existing medications, according to a new Health Affairs study.

Entry of new therapeutic competition led to a lower net price growth for 10 of the 12 drugs studied. Four of the medications showed a statistically significant decrease in the growth rate of net prices, including the long-acting insulin Levemir (insulin detemir) and the asthma inhaler Advair (fluticasone/salmeterol). Overall, the introduction of new drugs was associated with a 4.2% decrease in annual net price growth and a 6.8% immediate decrease in the mean net price of the existing drugs.

Among the 12 medications, eight saw lower commercial drug spending with the entry of new competition. Restasis (cyclosporine), a treatment for chronic dry eye, saw more than $7 billion in lower net spending within three years of competitor entry.