PBMs/Pharmacy Benefit Managers

In March, the FDA approved Novo Nordisk’s Wegovy (semaglutide) for cardiovascular risk reduction, which could further boost the already-strong sales for the GLP-1 weight-loss medication.

Specifically, Wegovy is now approved to reduce risk of “major adverse cardiovascular events (MACE) including cardiovascular death, non-fatal heart attack (myocardial infarction) or non-fatal stroke” in adults who are either overweight or obese and have established cardiovascular disease, per a Novo press release.

When the FDA approved Novo Nordisk’s Wegovy (semaglutide) for reducing the risk of serious heart problems, it paved the way for Medicare Part D plans to cover the drug. Industry experts also predict that the drug’s expanded indication will pressure more commercial insurers and their plan-sponsor clients to cover the pricey — and increasingly popular — medication.

“The pressure is just going to be too much” for commercial plans to avoid broadening their GLP-1 coverage, says Debra Devereaux, principal and chief pharmacy/clinical officer at Rebellis Group. However, she cautions that there may not be many significant coverage-policy changes this year.

Many commercial health plans already cover the drug for weight loss. Data from MMIT, AIS Health’s parent company, show that in 31 states, pharmacy formularies that cover more than half of commercial-plan enrollees categorize Wegovy as “preferred” or “preferred with utilization management restrictions.”

The Big Three PBMs — UnitedHealth Group’s Optum Rx, CVS Health Corp.’s Caremark, and The Cigna Group’s Express Scripts — have opted to cover Perrigo Co.’s over-the-counter birth control pill, Opill (norgestrel), at no cost to members in most non-grandfathered commercial plans, according to one expert. That suggests they are taking proactive steps to comply with potential rulemaking that could require most health plans to cover Opill and other types of over-the-counter birth control without cost sharing.

“There has been pretty broad, in the industry, adoption of Opill to the ACA preventive list,” Cody Midlam, Pharm.D., tells AIS Health, a division of MMIT. Midlam is a director at the benefits consulting firm WTW. “If a drug is on that list, that is generally available at $0 cost share at the point of sale for members.”

Startup PBM Rightway on March 30 closed a $100 million Series C financing round, the firm said. According to Rightway, that means the startup is now valued at $1.1 billion. A press release discussing the funding round claims that the firm now serves more than 500,000 members and 850 clients. Rightway, which touts its transparency to prospective clients, also claimed that it generates “an average of 20% reduction in year 1 pharmacy cost savings.”

Payers doubt that state prescription drug affordability boards (PDABs) will have an effect on prescription costs any time soon, according to a survey by Avalere Health. As part of its survey, Avalere conducted “six double-blinded interviews with health plan representatives.” Among the states that have established PDABs, Colorado, Maryland, Minnesota and Washington granted their boards the authority to set upper payment limits (UPLs.) According to Avalere, “all interviewees agreed that UPL-affected drugs or their competitors in the therapeutic class could see greater utilization management…depending on how manufacturers respond to supply chain changes, rebating, and UPL implementation.” In addition, five of six interviewees said they “expect formulary adjustments.” Colorado’s was the first PDAB to propose a UPL, but that has been challenged by the affected drug manufacturer. As a result, interviewed Colorado payers “are not yet actively preparing for a UPL,” expecting that the actual UPL won’t come into effect for “more than a year.”

Although a newly finalized health insurance regulation clocks in at 748 pages, it is missing something patient advocates have been eagerly hoping to see: language stating CMS will enforce a court ruling regarding the use of copay accumulator programs. Due to that omission, a patient advocacy group says it is once again exploring its legal options to curtail the practice in which payers prevent drug manufacturer coupons from applying toward patients’ out-of-pocket cost obligations.

Patients and advocacy groups for years have filed official comments on the annual Notice of Benefit and Payment Parameters (NBPP), urging federal officials to curtail the use of copay accumulator programs, according to Carl Schmid, executive director of the HIV+Hepatitis Policy Institute. “And every year, they’ve completely ignored those comments,” he tells AIS Health, a division of MMIT.

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.

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.”

Elevance Health Inc. plans to buy Kroger Co.’s specialty pharmacy division, the firms revealed on March 18, in a deal that closely follows Elevance’s purchase off Paragon Healthcare, Inc., an infusion center provider. Health care insiders say that the Kroger deal is a shrewd play for Elevance, which in recent years has sought to expand its Carelon health services arm, particularly the CarelonRx PBM.

The deal could help Elevance catch up with other major insurers. Elevance, a for-profit Blue Cross and Blue Shield affiliate, lags behind its publicly traded managed care competitors, such as The Cigna Group, CVS Health Corp. and UnitedHealth Group, in health services revenue. All three health services divisions, respectively Evernorth, Caremark and Optum, include a major PBM and lucrative specialty pharmacy divisions that serve both their own plans and payers outside their own enterprise. Cigna and CVS's care management divisions had higher revenues and earnings than their insurance divisions in the fourth quarter of 2023, which is often the case for those firms.

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.

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.