Radar on Drug Benefits

When the Federal Trade Commission (FTC) officially accused the three largest PBMs of artificially inflating insulin prices, it marked the latest move in what has become a protracted effort by federal regulators to rein in the industry’s business practices.  

However, experts who spoke to AIS Health say it’s unclear how much of an impact the FTC-driven litigation will have on the market — or whether the complaint itself will survive once the White House gains a new occupant. 

Even if the FTC’s lawsuit is “robustly successful,” says Joe Shields, managing director of Transparency-Rx, it is focused on only one drug category. “That’s not meant as a criticism, but the reality is, what that means to the broader aspects of formulary or pharmacy benefit management, it’s an open-ended question,” adds Shields, whose organization of smaller PBMs is pushing for industry reform.  

Employers and health plans are less satisfied with the “Big Three” PBMs — CVS Health Corp.’s Caremark, UnitedHealth Group’s Optum Rx and The Cigna Group’s Express Scripts — compared with their smaller peers in the pharmacy benefits industry, according to a Pharmaceutical Strategies Group (PSG) survey published this month. While the Big Three have taken steps in recent months to offer more transparent models, Michael Lonergan, PSG’s president, tells AIS Health those companies have faced numerous challenges to their businesses that have made them more unpopular among clients. 

For instance, he mentions the Federal Trade Commission (FTC) lawsuit filed on Sept. 20 against the Big Three PBMs and their affiliated group purchasing organizations (GPOs), accusing them of inflating the list price of insulin medications and restricting access to those drugs. The FTC also issued an interim report in July that was highly critical of the Big Three, which together account for about 80% of the U.S. prescription drug claim processing market.  

Overall satisfaction with PBMs is at a decade-long low this year, according to the 2024 Pharmacy Benefit Manager Customer Satisfaction Report, published by Pharmaceutical Strategies Group, an EPIC company. The report also showed that payers were seeking improvements in the PBM industry and were willing to be part of the disruptive change.

The report is based on responses from 248 benefits leaders at employers, unions/Taft-Hartley plans, health plans, and health systems, and it was conducted from May 10, 2024, through June 7, 2024.

Health policy experts appear to largely agree that regardless of the partisan makeup of Congress and the White House next year, PBM reform will continue to be a key priority. Opinions are mixed, however, as to whether Democrats or Republicans would be more likely to take the hardest line against a highly scrutinized industry. 

During a recent webinar hosted by Faegre Drinker Consulting, Nick Manetto, a principal at the firm, said Democrats are “maybe a hair” more likely to embrace PBM reforms that go beyond enacting new transparency requirements. PBM critics have said that while they support transparency, more data-reporting requirements aren’t enough to drive meaningful change in the industry.  

A recent Avalere Health analysis found that some managed Medicaid insurers have stricter policies for cell and gene therapies than fee-for-service Medicaid programs, even though the authors cited a federal regulation that “requires MCO coverage policies to be no more restrictive than FFS policies.” Despite that regulation, Margaret Scott, an Avalere principal and report co-author, says it is “a little bit of a gray area” whether MCOs need to abide by that mandate. 

“That really isn’t defined very well either in regulation or in any guidance from CMS,” Scott tells AIS Health, a division of MMIT. “We also see that a lot of states don’t actually review the clinical coverage criteria that are used by their MCOs. It may not come to a state’s attention that a particular MCO may have stricter coverage criteria unless they receive a complaint from a beneficiary.”