Mergers & Acquisitions

FTC’s Reported Plan to Sue PBMs Over Rebates Raises Eyebrows

The Federal Trade Commission (FTC) on July 9 released a new report stemming from its investigation into the business practices of PBMs — and on the next day, the Wall Street Journal and other news outlets reported the antitrust agency is on the verge of filing a lawsuit against the country’s largest PBMs over how they negotiate rebates with drug manufacturers for products including insulin. The FTC reportedly is concerned that the lure of high rebates is causing PBMs to steer patients toward higher-cost drugs.

The FTC has not yet confirmed the WSJ report, which cited people familiar with the matter. But one expert says the FTC needs to be careful about the way it treats rebates.

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Shot and Chaser: FTC Issues PBM Report, Reportedly Plans Lawsuit

When the Federal Trade Commission on July 9 released an interim report based on its yearslong investigation of PBMs, criticism of the document abounded, with even an FTC Commissioner saying it wasn't nearly comprehensive enough to publish. However, one day later the FTC appeared to prove its critics wrong, with the Wall Street Journal reporting that it plans to sue the three largest PBMs over their business practices related to the rebates they negotiate with drug manufacturers for products like insulin.

The FTC has not yet confirmed the WSJ report, which cited a person familiar with the matter. But it would not be the first time the federal government attempted to reform how PBMs treat drug rebates. The Trump administration proposed a rule in 2019 that would have effectively forced PBMs to pass negotiated rebates on to consumers at the point of sale in Medicare Part D and managed Medicaid, but it later tabled the regulation.

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FTC’s First Shot at PBMs Leaves Many Industry Critics Wanting More

When the Federal Trade Commission (FTC) on July 9 released an interim report based on its yearslong investigation of PBMs, criticism of the document was in no short supply.

The trade group representing major PBMs, the Pharmaceutical Care Management Association (PCMA), said the report “falls far short of being a definitive, fact-based assessment of PBMs or the prescription drug market.” And FTC Commissioner Melissa Holyoak, who voted against issuing the report, said during a House Energy & Commerce Committee hearing on July 9 that the report is not nearly comprehensive enough and “lacks economic and empirical evidence.”

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News Briefs: Texas Court Ruling Delays New Agent and Broker Restrictions in MA

Just days after the Supreme Court issued rulings overturning a longstanding legal framework that gives federal agencies the benefit of the doubt when interpreting ambiguous legislation, the U.S. District Court for the Northern District of Texas granted plaintiffs’ request for a stay to prevent CMS from implementing new agent and broker provisions in Medicare Advantage this fall. Since CMS finalized the 2025 MA and Part D rule that included new caps on administrative payments to agents and brokers by MA organizations and a ban on anticompetitive terms in MAO contracts with agents, brokers and third-party marketing organizations, at least three complaints have been filed challenging CMS’s implementation of the new provisions that take effect Oct. 1. According to a July 3 opinion signed by U.S. District Judge Reed O’Connor, the court agreed to stay the effective date of the fixed-fee and contract-terms restriction in the final rule until the issues can be fully briefed and heard by the court. The parties must submit a joint schedule for summary judgment briefing by no later than July 17. “Of note, the Court declined to grant a stay with respect to the regulatory changes on the sharing of beneficiary information,” Helaine Fingold, partner at the law firm Epstein Becker & Green, P.C., tells AIS Health, a division of MMIT. “Keep in mind that this does not mean that the plaintiffs will definitely win (or definitely lose, as to the sharing of beneficiary information provision) upon the Court’s full consideration of the issues. It does, however, indicate that the plaintiffs were able to convince the Court that they are likely to prevail (or not) on the merits.”

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News Briefs: Court Upholds ACA Preventive Services Coverage Mandate, for Now

The U.S. Court of Appeals for the Fifth Circuit on June 21 found that the federal government can still require health plans to provide some preventive services to plan members free of charge under the Affordable Care Act — for now. Prior to Braidwood v. Becerra, federal regulators relied on recommendations for preventive services from medical experts in several federal agencies, especially the U.S. Preventive Services Task Force (USPSTF), the Advisory Committee on Immunization Practices (ACIP) and the Health Resources and Services Administration (HRSA). Based on those recommendations, non-grandfathered health plans governed by the ACA would have to cover certain preventive services free of charge, including vaccinations and contraceptives. In their ruling in Braidwood, the Fifth Circuit's judges agreed with Texas District Court Judge Reed O'Connor's earlier finding that USPTF did not have the constitutional authority to recommend preventive services coverage mandates to federal regulators. In further litigation in O'Connor's court, the other agencies could come under the same scrutiny. According to Richard Hughes IV, partner at Epstein Becker Green, the Fifth Circuit "agree[s] that there's a constitutional problem with the [USPTF]." In addition, he says, "they just raise more questions with respect to whether the other bodies' roles are constitutional." For the time being, Hughes says, other than the plaintiffs, "all other private payers and employers subject to the ACA requirements must continue to provide zero [cost] out-of-pocket coverage for recommended preventive services, including PrEP for HIV." But going forward, Hughes says, "the requirement to cover vaccines and contraceptives could be in jeopardy."

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‘We Don’t Need to Do M&A,’ Cigna Chief Financial Officer Says

Months after rumors of a brewing deal with Humana Inc. generated a spate of headlines, The Cigna Group’s chief financial officer is signaling clearly that the company isn’t eager to jump into the mergers and acquisitions game until the conditions are just right.

“We continue to view inorganic activity through the lens of, it needs to be strategically attractive for the company,” CFO Brian Evanko said during a question-and-answer session with analyst Nathan Rich during the Goldman Sachs Global Healthcare Conference on June 11.

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CVS, UnitedHealth Execs Talk Oak Street Financing, Medicaid Pay Pressures

During the Bernstein Strategic Decisions Conference, CVS Health Corp. executives directly addressed the company’s rumored desire to find a private equity partner to fund the growth of its Oak Street Health clinics. Meanwhile, managed care stocks took a hit after UnitedHealth Group CEO Andrew Witty called out reimbursement headwinds associated with Medicaid eligibility redeterminations.

“There’s been a lot of inquiries, you know, based on some recent press reports on Oak Street,” CVS Chief Financial Officer Tom Cowhey said during a May 29 “fireside chat” with Bernstein analyst Lance Wilkes and CVS CEO Karen Lynch. Bloomberg reported on May 23 that the company has reached out to a handful of private equity firms in a bid to generate more capital to support new, senior-focused primary care clinics under the Oak Street brand.

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News Briefs: Survey Finds Customer Satisfaction With Health Plans Ticks Up

Satisfaction with commercial insurance plans increased on a year-to-year basis by 3 points on a 1,000-point scale, according to the J.D. Power 2024 U.S. Commercial Member Health Plan Study. However, the results, released on May 29, indicate satisfaction varies significantly among carriers. For instance, the highest-performing plans saw their member satisfaction scores increase by 20 points while the lowest-ranked plans saw member satisfaction scores decrease by 8 points. J.D. Power said the largest differences in customer satisfaction among the high-performing and low-performing plans were in plans’ ability to help members save time and money, help them obtain health services, and gain members’ trust.

CDPHP and the Lifetime Healthcare Cos. have agreed to an affiliation in which Lifetime would become the parent company of CDPHP, according to a May 22 press release. The companies’ boards of directors have unanimously approved the deal, which still must be approved by state and federal regulators. Lifetime is the parent company of Excellus BCBS and Univera Healthcare, which like CDPHP are nonprofit health plans based in New York. If approved, the insurers would maintain their brands.

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DOJ Probe of UnitedHealth Spawns Shareholder Lawsuit

Although the outcome of a Dept. of Justice investigation into UnitedHealth Group is far from certain, it recently led UnitedHealth shareholders to file a lawsuit claiming that the company deceived investors before the DOJ investigation came to light.

In February, news broke that the DOJ had been quietly looking into UnitedHealth’s buyup of physician practices — including how that vertical consolidation affects rival providers and health insurers — as well as Medicare Advantage billing issues. UnitedHealth’s shares tumbled on the news, which came to light after the New York-based Examiner News obtained an internal email showing the firm first became aware of the investigation in October 2023.

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Bipartisan Criticism of Health Care Consolidation Reaches New Heights

Momentum to roll back health care consolidation is building in Washington, D.C. Lawmakers in both parties have attacked the trend in recent weeks, and prominent senators trained their sights on MultiPlan Corp., with one senator accusing the firm and its insurer clients of collusion, a violation of antitrust law.

Given all the scrutiny on health care consolidation, one antitrust expert says Congress might be motivated to grant federal authorities the ability to review the kind of health care transactions that federal regulators are currently unable to block.

Two committees of the House of Representatives held hearings on health care consolidation last week, and both featured continuous attacks by members of both parties on routine health care dealmaking.

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