PBMs/Pharmacy Benefit Managers

Amid ongoing concerns about heightened health care utilization, Medicaid redeterminations and even risk adjustment, major managed care companies in their second-quarter 2023 earnings reports made sure to emphasize the strong performance of their health care services segments — which happen to house the country’s three largest PBMs.

The Cigna Group, which owns the PBM Express Scripts under its Evernorth division, kicked off its quarterly earnings call on Aug. 3 with CEO David Cordani singing Evernorth’s praises.

“In Evernorth Health Services, we saw another strong quarter of our market-leading pharmacy, care and benefits portfolio,” Cordani said. “Express Scripts, our pharmacy benefits business, harnesses our deep relationships, extensive clinical expertise, and is delivering innovations and innovative solutions for those we serve.”

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 or 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.

The FDA on Aug. 4 approved Zurzuvae (zuranolone) for the treatment of postpartum depression (PPD), making it the first oral pill available to treat a condition that affects an estimated 500,000 people annually. While that ostensibly would be good news for the drug’s manufacturers — Biogen Inc. and Sage Therapeutics, Inc. — Sage’s shares plummeted amid the FDA’s decision not to approve Zurzuvae for major depressive disorder, which affects a much larger patient population.

That setback, plus the FDA’s addition of a boxed warning that cautions patients not to drive or operate heavy machinery for at least 12 hours after taking Zurzuvae, led analysts to express significant concerns about the sales potential of the drug. Meanwhile, from a coverage standpoint, experts tell AIS Health, a division of MMIT, that rebates will play a significant role in whether payers choose to put the new drug on their formularies.

UnitedHealth Group has promoted Patrick Conway, M.D., to CEO of Optum Rx, the company’s PBM. Conway revealed the new role in a LinkedIn post. He was previously the CEO of Care Solutions at Optum, UnitedHealth’s health care services division. Heather Cianfrocco, Optum Rx’s CEO, is now the president of Optum. Before coming to UnitedHealth, Conway served as CEO of Blue Cross Blue Shield of North Carolina and as director of the Center for Medicare and Medicaid Innovation.

Mark Cuban Cost Plus Drug Co. has formed a partnership with Scripta Insights, a health care software company that works with health plans and self-insured employers to lower pharmacy benefit costs. Scripta plans on integrating the Mark Cuban company’s discounted pricing into its Med Mapper product. Alex Oshmyansky, CEO of Mark Cuban Cost Plus, said the companies “share a common goal of providing consumers the lowest possible price for their prescription medications.” The Mark Cuban company primarily sells generic medications at a discount, but earlier this year it began offering brand-name drugs from Janssen, a division of Johnson & Johnson Co., and IBSA Institut Biochimique SA, a pharmaceutical company based in Switzerland.

At first blush, The Cigna Group’s second-quarter financial results largely impressed equities analysts, with a higher-than-expected risk adjustment payable representing one of the few headwinds reported by the company.

“Overall, 2Q results look solid and generally in line with expectations versus a backdrop of elevated concern around trend,” Leerink Partners’ Whit Mayo advised investors in an Aug. 3 research note. The latest round of managed care earnings reports has been closely watched by investors amid disclosures from industry bellwether UnitedHealth Group that the firm is seeing elevated medical utilization.

Cigna reported adjusted earnings per share (EPS) of $6.13 for the quarter, beating the Wall Street consensus estimate of $6.04. The diversified health care company — which owns insurer Cigna Healthcare and PBM Express Scripts, among other assets — raised its full-year 2023 revenue projection by $2 billion to $190 billion, and it reaffirmed its adjusted EPS guidance of at least $24.70.

Two congressional committees advanced notable PBM legislation, moving one step closer toward comprehensive changes to PBMs’ dominant business model.

The Senate Finance Committee, with a near-unanimous bipartisan majority, advanced a major Medicare- and Medicaid-focused PBM reform bill on July 26. D.C. insiders tell AIS Health, a division of MMIT, that the committee’s move bodes well for notable commercial market PBM reforms. So does the fact that senators of both parties are emphatically in favor of it, despite reluctance by some Republican members of the House of Representatives to make aggressive changes to PBM regulations.

The City of Cleveland on July 24 filed a lawsuit against PBMs and drug manufacturers, alleging they “orchestrated a pricing scheme that resulted in skyrocketing insulin prices and cost the city millions of dollars in prescription benefit payouts.” The companies named in the lawsuit include The Cigna Group’s Evernorth and its PBM/pharmacy subsidiaries Express Scripts, Medco Health Solutions and ESI Mail Pharmacy Services; CVS Health Corp. And its Caremark division; UnitedHealth Group and its Optum, Optum Rx and Optum Insight subsidiaries; as well as Eli Lilly & Co., Novo Nordisk Inc., and Sanofi-Aventis U.S. LLC. Cleveland is the first city to file such a suit; California filed a similar complaint in January, however, accusing largely the same companies of insulin price-fixing.

The Federal Trade Commission doesn’t want to hinder state and federal government efforts to reform pharmacy benefit managers as it continues its investigation of possible anti-competitive business practices in the industry.

With that in mind, the commission unanimously adopted a position statement July 20 that “cautions against reliance on certain of its prior advocacy statements and reports relating to the pharmacy benefit manager market.”

The three commissioners on the panel are Democratic appointees. Whether the vote would have been any different with a Republican presence on the commission is unclear, however. The FTC agreed last year to launch its broad investigation into the PBM industry with the support of two Republican commissioners.

Two congressional committees advanced notable PBM legislation, moving one step closer toward comprehensive changes to PBMs’ dominant business mode.

The Senate Finance Committee, with a near-unanimous bipartisan majority, advanced a major Medicare- and Medicaid-focused PBM reform bill on July 26l. D.C. insiders tell AIS Health, a division of MMIT, that the committee’s move bodes well for notable commercial market PBM reforms. So does the fact that senators of both parties are emphatically in favor of it, despite reluctance by some Republican members of the House of Representatives to make aggressive changes to PBM regulations.

For the past couple of years, payers have been focusing more attention on health inequities related to race, income and other factors by hiring staff and investing money in programs to improve access to care and lower costs. More recently, they have adopted similar strategies to address inequities in the pharmacy side of their businesses, according to health plan executives who spoke at a conference last month at the University of Pittsburgh.

The push among payers is known as “pharmacoequity,” a term popularized by Utibe Essien, M.D., an internal medicine physician and assistant professor at UCLA. Essien, who moderated the panel with the payer executives, defines pharmacoequity as “equity in access to pharmacotherapies or ensuring that all patients, regardless of race and ethnicity, socioeconomic status, or availability of resources, have access to the highest quality of pharmacotherapy required to manage their health conditions.”