While the COVID-19 pandemic led to worrying spikes in demand for certain drugs back in March and April — spurring PBMs to swiftly establish dispensing limits — that particular storm appears to have passed. However, a push to reduce reliance on foreign-produced medicines could be the next cause for concern about the drug supply chain.
HHS on May 19 said it awarded a four-year, $354 million contract to “a team of private industry partners,” led by Virginia-based startup company Phlow Corp., which will work toward expanding pharmaceutical manufacturing in the U.S. “for use in producing medicines needed during the COVID-19 response and future public health emergencies.” The COVID-19 pandemic “has reminded us how health threats or other sources of instability can threaten America’s medical supply chains,” HHS Secretary Alex Azar said in a press release.
✦ In its final Notice of Benefit and Payment Parameters for the 2021 benefit year, CMS crystallized a controversial policy of allowing commercial health insurers to prevent drug manufacturer coupons from counting toward members’ annual out-of-pocket limits. So-called copay accumulator programs, in the eyes of health insurers, help prevent drug coupons from steering patients to higher-priced, brand-name drugs by obscuring their true cost (RDB 3/12/20, p. 4). But drugmakers and some patient advocacy organizations contend that copay accumulators stop patients from getting crucial help to pay for their medications. Read the final rule at https://go.aws/2Any1WY.
✦ Maryland Gov. Larry Hogan, a Republican, vetoed funding for a board that would have set maximum prices that the state and local governments would have to pay for certain medicines. In a letter to legislators on the matter, the governor said he made the move to prevent increasing taxes during the emerging pandemic-driven economic catastrophe. The board’s supporters criticized the governor’s decision, arguing price controls would have protected vulnerable consumers, and that the program would be paid for by fees assessed to drugmakers, PBMs and insurance companies, according to an article from Stat. Read Hogan’s letter to legislators at https://bit.ly/2T1VdjQ and the Stat article at https://bit.ly/2YZ0DQt.
Promising “extraordinary prescription savings for extraordinary times,” Express Scripts on May 7 unveiled a new program that offers medication discounts for Americans who lose their health coverage amid the economic damage wrought by the COVID-19 pandemic. The discounted prices — $25 for a 30-day supply of generics and $75 for a 30-day supply of select brand-name medications — are available to former Express Scripts members and eligible non-members alike, either through mail order or at more than 50,000 participating pharmacies.
The concept of offering discount drugs to the general public isn’t exactly new, observes Ashraf Shehata, KPMG’s national sector leader for health care and life sciences. After all, “the old $5 generics and other programs like that were quite popular” at retail chains, he tells AIS Health. Companies such as CVS Health Corp. and Walgreen Co. also found success with retail pharmacy discount card programs, he points out.
Industry experts expect the COVID-19 pandemic and related economic crisis, in addition to the trend of vertical integration in the PBM sector, will increase those companies’ direct interaction with consumers. The crisis has so far spared the margins of insurance companies, but it has forced patients to change their behavior toward medicine as jobs are lost and quarantine becomes a way of life.
The recent wave of payer acquisitions of PBMs has kept the latter on strong footing despite the crisis. CVS Health Corp.’s Caremark, UnitedHealth Group’s OptumRx and Cigna Corp.’s Express Scripts control approximately 74% of the market, according to a January 2020 estimate by Drug Channels Institute CEO Adam Fein, Ph.D. Each parent company posted strong first-quarter 2020 results and maintained its earnings guidance through the rest of the year.
Serving just 6.2 million members, Navitus Health Solutions — a PBM owned by St. Louis, Mo.-based integrated health system SSM Health — is hardly one of the industry’s major players. But given that it features a “pass-through” business model in an era when opaque PBM structures are facing scrutiny, and Costco Wholesale Corp. recently purchased a minority stake in the firm (RDB 3/12/20, p. 3), Navitus may be poised for a bigger spotlight.
Just ask David Fields, who in late April was named the PBM’s new CEO after serving on an interim basis after Navitus’ former chief executive stepped down due to health issues. Fields — who joined SSM Health in 2018 as president of its Dean Health Plan and has held leadership roles at Blue Shield of California and Aetna Inc. — tells AIS Health that what he likes best about Navitus is how it differs from some of its peers.
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