Radar on Drug Benefits

On Nov. 20, HHS finalized a once-tabled regulation that would revamp the Medicare prescription drug rebate system. While that may seem to be unwelcome news to the health insurers and PBMs that have vocally opposed the so-called rebate rule, it is not at all certain that this version will survive amid likely legal challenges and the upcoming transfer of power in the White House.

HHS first introduced the rebate rule in January 2019 in a notice of proposed rulemaking (NPRM), which aimed to remove safe-harbor protections under the federal Anti-Kickback Statute for rebates that drug manufacturers provide to Medicare Part D plans, PBMs and Medicaid managed care organizations (RDB 2/14/19, p. 1). The goal, HHS Secretary Alex Azar said at the time, was to prevent situations in which patients “pay more than they need to for their prescription drugs because of a hidden system of kickbacks to middlemen.”

✦ Pfizer Inc. and BioNTech SE’s coronavirus vaccine candidate has demonstrated 90% efficacy against COVID-19 in patients that have not had the disease, according to company researchers. The announcement was met with great fanfare, and Pfizer’s stock price rose quickly with the news. In July, HHS struck a nearly $2 billion deal with the company that guarantees the U.S. 100 million doses of a potential vaccine, with an option for 500 million additional doses. Pfizer CEO Albert Bourla rose eyebrows when he sold over 60% of his holdings of the company’s stock near the time the results were announced, according to news reports. Read more at https://bit.ly/2GQmLWz and https://bit.ly/35mbSW8.

✦ The FDA issued an emergency use authorization for Eli Lilly & Co.’s bamlanivimab, allowing the antibody therapy to be used to treat patients with mild to moderate COVID-19 cases. In addition, HHS announced plans to distribute 300,000 doses of the treatment to states and territories. A Nov. 9 FDA press release emphasized that the drug “is not authorized for patients who are hospitalized due to COVID-19,” as it hasn’t been shown to offer any benefit and since similar treatments “may be associated with worse clinical outcomes when administered to hospitalized patients with COVID-19 requiring high flow oxygen or mechanical ventilation.” Read the FDA release at https://bit.ly/36vs0nD and an HHS release at https://bit.ly/32AyeS1.

Specialty drugs accounted for 37.7% of retail and mail-order prescription spending, net of rebates, in 2016 and 2017, according to a recent study published in Health Affairs. Average annual net spending on retail specialty drugs for Medicare Part D beneficiaries rose from $11.3 billion in 2010-2011 to $35.4 billion in 2016-2017. For private insurance enrollees, net spending increased from $24.6 billion to $57.6 billion during that time period. The growth in spending was partially driven by the increased use of retail specialty drugs — the proportion of people who obtained at least one specialty drug was 5.0% in 2016-2017, more than doubling the rate observed in 2010-2011. Meanwhile, the trend in Medicaid net spending was relatively flat.

Judging by executives’ comments during its third-quarter 2020 earnings conference call, Humana Inc. is finding it difficult to stand out in the fiercely competitive market for stand-alone Medicare Prescription Drug Plans (PDPs).

Humana President and CEO Bruce Broussard, in his prepared remarks on Nov. 3, explained that the Medicare-focused insurer made major changes to its PDP portfolio for 2020 after experiencing “meaningful PDP membership losses in 2019.” The company combined two plans “to create space” to offer a new low-premium plan co-branded with Walmart, which became the most competitively priced offering in the majority of regions where Humana competes and thus “grew substantially by adding almost 1 million members,” Broussard said.

Large insurer-affiliated PBMs saw strong results for the third quarter of 2020, in several cases driving revenues for parent companies that are grappling with various disruptive effects of the coronavirus pandemic.

In earnings conference calls over the last month, company executives from CVS Health Corp., Cigna Corp. and Anthem, Inc., generally touted performance from their PBMs. Both Cigna and CVS credited their PBM business segments with driving strong third-quarter earnings for their companies. UnitedHealth Group, however, reported a 2% year-over-year decline in PBM earnings, which the company attributed to a pandemic-related drop-off in prescription volume.