PBMs/Pharmacy Benefit Managers

A little more than a year after Rep. James Comer (R-Ky.), then-ranking member of the House Committee on Oversight and Reform, released a report on PBMs’ business practices and their negative impact on drug prices, patients’ health and market competition, the now-Chairman Comer revealed that he is launching an investigation into those practices. The move continues to keep pressure on the entities over some of their practices and lack of transparency amid concerns around prescription drug prices.

On March 1, Comer sent letters to senior officials at the Office of Personnel Management (OPM), Defense Health Agency (DHA) and CMS, as well as to the three largest PBMs — Cigna Corp.’s Express Scripts, CVS Health Corp.’s Caremark and UnitedHealth Group’s Optum Rx — requesting a trove of documents and communications.

Eli Lilly & Co. announced on March 1 that it would cap the out-of-pocket costs for its insulin products at $35 per month and reduce the list price of its most commonly prescribed insulins by 70%. President Joe Biden released a statement calling the move “a big deal” and has called on Congress to mandate a $35 out-of-pocket insulin cost cap for all commercial health plan members. Yet health policy insiders tell AIS Health the company’s decision may be tied in part to an upcoming change in Medicaid rebates. Plus, it’s unclear whether it will lower the net cost of the widely used therapies.

The American Rescue Plan Act that passed in 2021 includes a provision that eliminates the Medicaid drug rebate cap in 2024. Since 2010, there has been a rebate cap for Medicaid at 100% of a drug’s average manufacturer price (AMP), meaning drug companies that exceed the cap do not have to pay Medicaid additional money for increasing prices, as the Kaiser Family Foundation noted in a brief last year.

Covis Pharma Group said on March 7 that it will voluntarily stop selling Makena (hydroxyprogesterone caproate), a drug that aims to reduce preterm births and that has become a flashpoint in the debate over the FDA’s accelerated approval pathway. Makena was granted accelerated approval in 2011, but subsequent clinical trials failed to demonstrate its effectiveness, leading FDA advisers last fall to recommend withdrawing the drug from the market. “While we stand by Makena’s favorable benefit-risk profile, including its efficacy in women at highest risk of preterm birth, we are seeking to voluntarily withdraw the product and work with the FDA to effectuate an orderly wind-down,” Covis Chief Innovation Officer Raghav Chari, Ph.D., said in a statement. The move comes ahead of an anticipated final decision on Makena’s status by FDA Commissioner Robert Califf and Chief Scientist Namandjé Bumpus.

During a recent hearing held by a U.S. Senate committee, a variety of witnesses took the stand who nearly all had one message in common: criticizing the role PBMs play in increasing medication costs for consumers. The hearing — which is just the latest indication lawmakers are more closely monitoring PBMs — occurred less than three weeks after Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) introduced the Pharmacy Benefit Manager Transparency Act of 2023 to the Senate floor.

Ryan Urgo, managing director of health policy at Avalere Health, tells AIS Health that the hearing and bill are part of “a broader effort by lawmakers right now to apply more scrutiny to the PBM business model and certain PBM business practices that lawmakers feel are either anticompetitive or contribute to the broader growth of drug prices.”

Insurers in 2021 continued to command higher gross margins in the Medicare Advantage market than in other health insurance markets, according to a new Kaiser Family Foundation (KFF) analysis. Using financial data reported by insurers to the National Association of Insurance Commissioners (NAIC) and compiled by Mark Farrah Associations, KFF estimated that MA gross margins — or the amount by which total premium income exceeds total claims costs per enrollee per year — averaged $1,730 per enrollee in 2021, $2,257 in 2020, $1,819 in 2019, and $1,727 in 2018. Across all four years, MA insurers earned markedly higher gross margins than insurers in the individual, group and managed Medicaid markets, reported KFF. As seen in other markets, MA gross margins spiked in 2020 due to low utilization during the first year of the COVID-19 public health emergency.

A Missouri federal judge barred former Cigna Group executive Amy Bricker from moving to CVS Health Corp., finding that Bricker’s planned move would violate her noncompete agreement with Cigna, where she led the Express Scripts PBM. Cigna sued to block Bricker from leaving the company, arguing that Bricker’s knowledge of trade secrets and the firm’s “most highly sensitive information” would aid CVS in direct competition with Cigna. Bricker countered that her new CVS role was not meant to encompass pharmacy benefits and would not have involved any work with CVS’s Caremark PBM division. Earlier this year, the Biden administration announced an effort to ban noncompete clauses in employment agreements.

The number of independent pharmacists remained relatively flat in 2023, according to a survey by the Pharmaceutical Care Management Association (PCMA), a PBM trade group, with 23,353 independent pharmacies in operation across the U.S. The number of independent pharmacies increased by 99 between January 2022 and January 2023, a 0.4% uptick that nearly matches the 0.5% five-year trend, the survey found. Over the past 10 years, the number of independent pharmacies has grown by 7.5%.

During a recent hearing held by a U.S. Senate committee, a variety of witnesses took the stand who nearly all had one message in common: criticizing the role PBMs play in increasing medication costs for consumers. The hearing — which is just the latest indication lawmakers are more closely monitoring PBMs — occurred less than three weeks after Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) introduced the Pharmacy Benefit Manager Transparency Act of 2023 to the Senate floor.

Ryan Urgo, managing director of health policy at Avalere Health, tells AIS Health that the hearing and bill are part of “a broader effort by lawmakers right now to apply more scrutiny to the PBM business model and certain PBM business practices that lawmakers feel are either anticompetitive or contribute to the broader growth of drug prices.”

During their recent fourth-quarter and full-year 2022 earnings calls, the companies that own the country’s largest PBMs all said they expect that part of their business to gain momentum this year thanks to successful selling seasons in which their increasingly diversified offerings resonated with clients.

In 2022, “Optum Rx revenues grew 9%, approaching $100 billion for the year, driven by continued strong sales and the expansion of our pharmacy services businesses,” UnitedHealth Group Executive Vice President and Chief Financial Officer John Rex said during the company’s Jan. 13 conference call to discuss financial results. “Both customer retention and new customer wins were among the highest Optum Rx has ever delivered, laying a strong foundation for continued market-leading growth,” he added.

More than six years after the FDA approved it, the first biosimilar of AbbVie Inc.’s Humira (adalimumab) has finally launched in the U.S. On Jan. 31, Amgen Inc.’s Amjevita (adalimumab-atto) became available at two different wholesale acquisition costs — one 55% below Humira’s WAC and one 5% below it — a strategy that acknowledges the lure of rebates within the U.S. market. It remains to be seen whether additional adalimumab biosimilars launching this year will follow suit or explore a different strategy to differentiate themselves.

Initially approved Sept. 23, 2016, Amjevita was the first of eight Humira biosimilars that the FDA had OK’d as of early February. The tumor necrosis factor (TNF) inhibitor is approved for seven of Humira’s nine indications, including rheumatoid arthritis, plaque psoriasis and Crohn’s disease, although the biosimilar is indicated for ulcerative colitis in adults, while Humira is approved for UC in people at least 5 years old. The two Humira indications not on Amjevita’s label are hidradenitis suppurativa and uveitis.

Cigna Corp.-owned Express Scripts removed 43 medications from its 2023 National Preferred Formulary, while the other two major PBMs — CVS Health Corp.’s Caremark and UnitedHealth Group’s Optum Rx — cut 23 and 19 drugs from their formularies in 2023, respectively. Since 2014, the three PBMs have dramatically increased the number of excluded drugs, but the growth rate of exclusions has slowed for the second year in a row.