Radar on Drug Benefits

  • As ‘Carveout’ Debate Continues, States Try Hybrid Approach to Medicaid Rx Benefits

    Frustrated by rising pharmacy costs and seeking a simpler system, eight states in recent years have decided to “carve out” retail pharmacy benefits management from their contracts with Medicaid managed care organizations. So far, there appears to be limited evidence regarding whether such moves have been beneficial, and the number of Medicaid programs opting to do so has leveled off.

    However, a “middle ground” approach first tested by Kentucky is gaining steam, as two states, Louisiana and Mississippi, followed in Kentucky’s footsteps after the state implemented such a program in July 2021. With that approach, Medicaid MCOs still get paid for providing pharmacy benefits but must contract with a single PBM and use a preferred drug list (PDL) selected by the state.

  • In Win for Pharmacies, Court Rules Part of CVS Arbitration Clause ‘Unconscionable’

    Independent pharmacies scored an early win in a class action lawsuit against CVS Health Corp., Caremark and Aetna that seeks to recoup millions of dollars in direct and indirect remuneration (DIR) fees. The National Community Pharmacists Association (NCPA) hailed the “landmark” decision to allow the court to decide whether arbitration is necessary, noting that arbitration clauses keep similar cases and their facts secret. “That allows Caremark and the other PBMs to continue to treat pharmacies unfairly and illegally extract junk fees,” Matthew Seiler, NCPA’s general counsel, said in a statement.

    On Nov. 15, Judge John Tuchi in the U.S. District Court for the District of Arizona ruled that the court should decide whether the case should be sent to arbitration, not an arbitrator. He deemed several provisions of the CVS arbitration clause unconscionable, including one that requires plaintiffs to deposit $50,000 in an escrow account before arbitration. A CVS spokesperson tells AIS Health that the company is reviewing the order but has no additional comment on ongoing litigation.

  • Study Makes Case for Rethinking Medicare Drug Price Negotiation Timeline

    Small-molecule drugs and biologics may produce similar health benefits, but because small molecules tend to be priced lower than biologics, they often represent better value, according to a recent Health Affairs study. And the study authors argued those findings suggest it could be worth revising how the Medicare Drug Price Negotiation Program is set up.

    The Inflation Reduction Act of 2022 requires that Medicare negotiate a Maximum Fair Price for selected small-molecule drugs nine years after they were approved by the FDA. Whereas for selected biologics, the negotiated price takes effect after 13 years.

  • UnitedHealth Program Aims to Give Employers More Bang for Their GLP-1 Bucks

    Employer plan sponsors in recent years have struggled to contain the costs associated with the increasing demand from beneficiaries to use GLP-1 medications for obesity and diabetes. For instance, Aon, a health benefits consultant, found there was an 87% increase in spending on GLP-1 drugs in 2023 due to higher utilization. And JPMorgan analysts predict the GLP-1 market could exceed $100 billion by 2030, when 30 million U.S. residents (or 9% of the population) could be taking the medications.

    To address the growing obesity treatment market, UnitedHealthcare is offering the Total Weight Support program for self-insured employers. Rhonda Randall, M.D., chief medical officer for UnitedHealthcare’s commercial business, says managing weight loss drug costs “has been a significant priority for us and our employer customers.”

  • MedPAC Explores Drug Coverage Plan Problems as Part D Stand-Alone Plan Access Declines

    The Medicare Payment Advisory Commission (MedPAC) is analyzing the differences between Medicare outpatient drug coverage in Medicare Advantage prescription drug (MA-PD) plans and stand-alone Prescription Drug Plans (PDP), ideally to help preserve stand-alone plans as an ongoing option for beneficiaries.

    Concerns about declines in the number and attractiveness of PDPs in recent years relative to MA-PD plans, which appears to be exacerbated by the Part D redesign established by the Inflation Reduction Act, is driving the work. MedPAC discussed the issue at its Nov. 7 public meeting.

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