Radar on Drug Benefits

In a new regulation released on  May 23, the Biden administration proposed increasing drug price transparency reporting by PBMs and pharmaceutical manufacturers supplying Medicaid — and requiring Medicaid managed care organizations to remove pharmacy benefit administration costs from medical loss ratio (MLR) reporting. Experts say the proposed rule is a marginal but meaningful step forward in prescription drug cost containment, but they add that the proposed rule won’t do as much as bills under serious discussion in Congress to rein in controversial PBM business practices such as spread pricing.

The proposed rule, which CMS says in a fact sheet “implement[s] new statutory authorities included in the Medicaid Services Investment and Accountability Act of 2019,” is meant to improve the Medicaid Drug Rebate Program by “proposing new policies that would assure greater consistency and accuracy of drug information reporting, strengthened data collection, and efficient operation of the MDRP.” Per the fact sheet, notable elements of the regulation include:

When the Federal Trade Commission (FTC) announced on May 17 that it ordered Zinc Health Services, LLC, and Ascent Health Services, LLC, to turn over their business records, it was just the latest salvo in a rising tide of scrutiny directed at PBM-affiliated group purchasing organizations (GPOs).

One former FTC official says the agency has a range of powers it can wield to find out more about PBM-linked GPOs — and even potentially change how they do business. Yet the PBMs that own and use such rebate-aggregating organizations say their reputation as shadowy, overseas entities belies the GPOs’ simple goal of extracting larger drug discounts from manufacturers.

During a May 23 hearing held by the House Oversight and Accountability Committee, both Republican and Democratic representatives — as well as the witnesses — seemed to agree that PBM reforms are needed. However, a consensus wasn’t clear on what policies are best suited to fix problems with the current pharmacy benefits landscape, other than mandating increased transparency into how PBMs do business.

Just one day after the hearing, another House panel — the Energy and Commerce Committee — advanced the Promoting Access to Treatments and Increasing Extremely Needed Transparency (PATIENT) Act of 2023, which would require PBMs to annually report to employer plan sponsors a host of information about prescription drug spending, utilization, acquisition costs, rebates and more. Specific to the Medicaid program, the legislation would also ban spread pricing, which occurs when PBMs pay pharmacies dispensing a drug less than what they charge payers and pocket the difference. The Biden administration on May 23 proposed a regulation that targets spread pricing in Medicaid, but it does not ban the practice.

In recent months, the interest in prescription weight loss medications has grown exponentially as celebrities tout the drugs and clinical trial results show their safety and effectiveness. However, while tens of millions of people could benefit from the medications, health policy experts tell AIS Health that payers are taking a cautious approach and are concerned at the financial impact if the FDA approves more drugs for that indication, as is expected.

A recent survey from the International Foundation of Employee Benefit Plans found that 22.1% of employers last year offered prescription drug coverage for weight loss, including 21.3% of corporations, 22% of public employers and 27% of multiemployer plans. Of the 470 companies that responded to the survey, 25% said obesity is one of the top three health conditions that has the largest impact on overall health costs.

Since the FDA’s approval of the first biosimilar in 2015, the agency has approved almost 40 more agents. However, their adoption in the U.S. market has been slow. A recent study, published in the journal BioDrugs, found that biosimilars were covered more restrictively than their reference biologics in 19.4% of coverage decisions made by select commercial health plans.

The study examined 1,181 coverage decisions made by 17 commercial health plans as of August 2021 from the Tufts Medical Center Specialty Drug Evidence and Coverage database, which included 19 commercially available biosimilars for seven biologic reference products used in treating 28 conditions.