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Pharma Takes Aim at New Legal Foe: State Drug Affordability Boards

Prescription drug affordability boards (PDABs) have been rising in popularity as a way for states to tamp down on soaring drug prices. But a recent lawsuit filed by one drugmaker and public remarks from the industry’s main trade group make it clear that the pharma sector sees such boards — and the price caps some are authorized to set — as a major threat.

In a suit filed on March 22, Amgen Inc. takes aim at Colorado’s Prescription Drug Affordability Review Board, which is the closest to becoming the first state board to set an upper payment limit (UPL) on a drug. The state in late February initiated formal rulemaking to set a UPL for Enbrel (etanercept), Amgen’s rheumatoid arthritis treatment, after determining it was unaffordable.

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Part D Formularies Get More Restrictive, but MA-PDs Beat PDPs on Access

Medicare Part D formularies are becoming more restrictive over time, asserts new research published in the March issue of Health Affairs. Studying Medicare administrative data that included Part D claims and plan formulary characteristics, researchers from the University of Southern California and Blaylock Health Economics found that utilization management tactics such as prior authorization, step therapy and formulary exclusions became far more commonplace between 2011 and 2020. In 2011, an average of 31.9% of drugs were restricted in some form, vs. 44.4% in 2020.

Restrictions varied based on drug costs and the availability of generic alternatives to brand-name drugs. Nearly 70% of brand-name compounds with no generic alternatives were restricted in 2020, compared to 30% of drugs with generic availability. Additionally, the lower the cost of the drug, the less likely it was to be restricted. In 2020, only 16.7% of drugs with generic availability that cost less than $100 per prescription faced restrictions, vs. 83.7% of brand-name only drugs that cost more than $1,000.

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Part D GLP-1 Spend Soars as CMS Makes Key Coverage Decision

Medicare is spending billions on GLP-1s, the groundbreaking diabetes drugs that are now seeing skyrocketing demand for their ability to help patients lose weight. While Medicare Part D plans are prohibited from covering weight loss therapies, a new FDA decision for Novo Nordisk’s Wegovy (semaglutide) could reshape the coverage landscape for some GLP-1s — and drive Part D spending even higher.

A March 22 analysis from KFF found that Part D spending on Novo’s Ozempic (semaglutide) alone reached $4.6 billion in 2022, a 77% increase from the prior year and a 207% increase from 2020. (Novo brands its injectable semaglutide as Ozempic for the treatment of Type 2 diabetes and as Wegovy for weight loss.) KFF found that Part D spending on GLP-1s has grown exponentially every year since 2018. Eli Lilly’s Trulicity (dulaglutide), an older GLP-1 that hit the market in 2014, saw the second-highest gross Part D spending among all therapies in 2022 at $6.2 billion. Ozempic, meanwhile, sat at No. 6. KFF speculated that both Ozempic and Novo’s oral semaglutide Rybelsus could be selected for Medicare drug price negotiation as early as 2025.

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Wegovy Coverage Question Puts Part D Plans in Tricky Position

In newly released guidance, CMS told Medicare Part D plans that they’re allowed to cover weight-loss drugs if they’ve been approved for another medical use — a description fitting Novo Nordisk’s Wegovy (semaglutide) after it recently received an FDA nod for preventing major heart problems.

So far, CVS Health Corp., Elevance Health, Inc. and Kaiser Permanente have said their Part D plans will cover Wegovy for its newest approved use: reducing the risk of heart attacks and strokes in people who have cardiovascular disease and who meet body-weight criteria, the Wall Street Journal reported on March 28.

For other insurers that sell Part D plans, the decision about whether to cover Wegovy represents an additional challenge to grapple with, as they’re also facing significant regulatory changes.

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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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Rise of GLP-1s Puts Growing Pressure on Medicaid

One in five state Medicaid programs covered at least one anti-obesity medication in 2023, while the amount of reimbursement for these drugs has increased dramatically over the past decade, according to a recent JAMA study.

The researchers studied state Medicaid coverage policies for six anti-obesity drugs approved by the FDA through 2022 — orlistat, lorcaserin, phentermine-topiramate, bupropion-naltrexone, liraglutide, and semaglutide. For the two GLP-1s — liraglutide and semaglutide — the study examined both their branded versions for obesity treatment (Saxenda and Wegovy) and the versions to treat diabetes (Victoza and Ozempic). (It is likely, per news reports, that a substantial amount of diabetes-coded utilization of GLP-1s is actually off-label weight loss utilization.)

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Pharma Takes Aim at New Legal Foe: State Drug Affordability Boards

Prescription drug affordability boards (PDABs) have been rising in popularity as a way for states to tamp down on soaring drug prices. But a recent lawsuit filed by one drugmaker and public remarks from the industry’s main trade group make it clear that the pharma sector sees such boards — and the price caps some are authorized to set — as a major threat.

In a suit filed on March 22, Amgen Inc. takes aim at Colorado’s Prescription Drug Affordability Review Board, which is the closest to becoming the first state board to set an upper payment limit (UPL) on a drug. The state in late February initiated formal rulemaking to set a UPL for Enbrel (etanercept), Amgen’s rheumatoid arthritis treatment, after determining it was unaffordable.

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Insurers Will Likely Require Step Therapy for New Schizophrenia Drug

Bristol Myers Squibb on March 18 completed its $14 billion acquisition of Karuna Therapeutics, Inc., whose lead drug, KarXT (xanomeline-trospium), is expected to gain FDA approval for treating schizophrenia later this year. That deal and results from clinical trials suggest KarXT could gain significant market share in a crowded schizophrenia medication marketplace.

However, two drug pricing experts tell AIS Health that it remains to be seen how payers will cover KarXT, especially if it’s priced significantly higher than its generic competitors, as it is expected to be. KarXT, an oral medication, has an FDA Prescription Drug User Fee Act data of Sept. 24, meaning the FDA will make an approval decision by then.

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Wegovy Coverage Question Puts Part D Plans in Tricky Position

In newly released guidance, CMS told Medicare Part D plans that they’re allowed to cover weight-loss drugs if they’ve been approved for another medical use — a description fitting Novo Nordisk’s Wegovy (semaglutide) after it recently received an FDA nod for preventing major heart problems.

So far, CVS Health Corp., Elevance Health, Inc. and Kaiser Permanente have said their Part D plans will cover Wegovy for its newest approved use: reducing the risk of heart attacks and strokes in people who have cardiovascular disease and who meet body-weight criteria, the Wall Street Journal reported on March 28.

For other insurers that sell Part D plans, the decision about whether to cover Wegovy represents an additional challenge to grapple with, as they’re also facing significant regulatory changes.

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Alternative Payment Policies May Help Medicare Part B Reap Greater Savings From Biosimilars

The growing use of biosimilars has reduced spending in the Medicare Part B program, but there are opportunities to further reduce costs — through greater use of more affordable biosimilars and through the implementation of different payment policies, according to a study published by the HHS Office of Inspector General (OIG).

The OIG analyzed the average sales prices, utilization and costs of 21 biosimilar drugs and their reference biologic products in the Medicare Part B program between 2015 and 2021. The agency found that overall use rate of biosimilars in Part B jumped from 18% in 2015 to 62% in 2021. While the adoption of biosimilars has lowered both the prices of biologics and biosimilars, Part B spending could have been reduced by $179 million in 2021 if the five biosimilars that cost less than their reference products — epoetin alfa, infliximab, bevacizumab, rituximab and trastuzumab — had been used at the same rate as the most widely used biosimilar, filgrastim.

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