PBMs/Pharmacy Benefit Managers

Two patient advocacy groups are declaring victory after Blue Cross Blue Shield of North Carolina made midyear formulary changes that shifted several HIV treatments from higher to lower tiers, meaning patients can access them at much lower cost-sharing levels.

In an Aug. 31 press release, the HIV+Hepatitis Policy Institute and the North Carolina AIDS Action Network pointed out that the move came after they filed discrimination complaints with the North Carolina Dept. of Insurance and HHS’s Office for Civil Rights arguing that the Blue Cross NC formulary violated the Affordable Care Act’s prohibitions against discriminatory plan design. The formulary in question is the Blue Cross and Blue Shield of North Carolina Essential Formulary, which applies to ACA marketplace plans sold in the state.

CVS Health Corp. plans to launch its own white-label line of biosimilars, the retail and health care giant said on Aug. 23, in a play to lower specialty pharma costs. Experts say that it could be years before anyone is able to tell whether the venture has brought down costs — especially since the biosimilar market itself is still in its early stages of development.

The new CVS brand, Cordavis, will be “a wholly owned subsidiary that will work directly with manufacturers to commercialize and/or co-produce biosimilar products,” a press release said. The division “will help ensure consistent long-term supply of affordable biosimilars,” and, in doing so, leverage “one of the biggest opportunities for reducing drug costs for employers and consumers.”

With many new, expensive treatments entering the U.S. market, plan sponsors are facing more challenges when designing their drug benefits packages, according to Pharmaceutical Strategies Group’s 2023 “Trends in Drug Benefit Design Report,” sponsored by Rx Savings Solutions. The report is based on surveys of 180 individuals representing employers, health plans and union/Taft Hartley plans.

In 2023, almost all employers and health plans offered a preferred provider organization (PPO) plan and most offered a high-deductible health plan (HDHP) with a health savings account (HSA). Yet only 43% of respondents agreed or strongly agreed that HDHPs effectively manage overall drug trend. The percentage showed a modest increase compared to 35% in 2022.

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:

A federal appeals court on Aug. 16 delivered a significant victory for the under-fire PBM industry, ruling that an Oklahoma law regulating PBMs is preempted by federal statutes. Officials at lobbying groups that are closely watching the case say that the dispute may wind up before the Supreme Court — and if that occurs, employer plan sponsors will arguably have more at stake than PBMs themselves.

“I think it is highly likely to be appealed and to be pursued further,” says Dillon Clair, director of state advocacy and litigation at the ERISA Industry Committee (ERIC), which represents the employee-benefits interests of large employers. “This is a big case, not just for Oklahoma and their law and the employers that are going to have to comply with that, but for all the other state laws that have [been] enacted” and for states looking to follow suit.

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.

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.

The year after President Joe Biden signed the Inflation Reduction Act (IRA) into law, policymakers have now focused their efforts on PBMs and their business models. Members of Congress on both sides of the aisle have introduced multiple bills focusing on issues such as the lack of transparency into PBM practices, spread pricing, direct and indirect remuneration (DIR) clawbacks, rebates and anticompetitive behavior. And some industry experts say they are hopeful that such legislation could improve transparency around drug pricing, including in the high-cost specialty arena.

There was much talk but little action around bringing down prescription drug prices during the previous administration, which floated tactics such as implementing a most-favored-nation model that would have tied drug prices in Medicare Parts B and D to other countries’ prices, lowering prices for insulin and distributing $200 prescription drug credits to Part D beneficiaries.

After the introduction of newly FDA-approved, competing products in their therapeutic classes, the net price growth rate of select medications declined, according to an analysis published in the August issue of Health Affairs. The findings suggest that both “me too” therapies and PBM rebate negotiation might have an important role to play in reducing costs, researchers say.

The study found there was an estimated $10.4 billion reduction in net commercial spending for the existing therapies in the first three years after the introduction of the new medications. The authors noted that represented an 18.5% decline in projected spending on the existing therapies compared with if the new medications had never hit the market.