Radar on Drug Benefits

In the year ahead, the three main “developments to watch” in the branded pharmaceuticals sector will include COVID-19 vaccine scale-up and distribution, continued legislative and regulatory pushback against high drug prices, and robust levels of merger and acquisition activity. That’s according to a new report from Moody’s Investors Service, which characterizes the vaccine race as generally helpful for drugmakers but political drug-pricing moves as an overall negative catalyst for the industry.

Regarding vaccines, Moody’s noted that Moderna Inc. as well as Pfizer Inc. and its partner BioNTech will continue to ramp up production of their COVID-19 vaccines and distribute them widely throughout 2021. “This will enhance revenue as well as social opportunities under our ESG [environmental, social and governance] framework,” the credit rating firm stated.

On Jan. 19, the last full day of the Trump administration, CMS finalized a grab-bag rule that includes several drug pricing components. Experts tell AIS Health that the rule could tie the Biden administration to aspects of the Trump administration’s drug pricing agenda.

One requires Medicare Part D plans to offer a consumer-facing real-time benefit tool (RTBT) that grants enrollees instant formulary and benefit information, including an accurate estimate of their point-of-sale cost sharing. Another allows Part D plan sponsors to implement a second formulary tier for specialty drugs with a lower cost-sharing amount than their existing specialty tier beginning Jan. 1, 2022. The regulation also requires plans to report their internal, qualitative pharmacy evaluation data to CMS. Other notable elements of the rule include new requirements to address opioid overprescribing and misuse.

As one of its last actions under the Trump administration, CMS said it would give plan sponsors participating in its Medicare Part D Payment Modernization model more flexibility to slim down their formularies, even for protected classes of drugs. The changes to the model — which were included in the demo’s 2022 request for applications issued Jan. 19 — will also eliminate downside financial risk for plan sponsors, although that risk would return in 2023.

It’s unclear what effect these changes would have, since there’s currently been very low uptake of this voluntary model from the CMS Center for Medicare & Medicaid Innovation, with only two plans participating nationwide.

Beginning in April, California and New York will join a growing list of states that have opted to carve out prescription drug benefits from their Medicaid contracts with insurers, wagering that the state can do a better job at negotiating drug prices with manufacturers than managed care organizations and their contracted PBMs.

While it remains hotly debated whether such moves offer a net benefit for states and their Medicaid enrollees, health policy experts tell AIS Health that MCOs should be prepared for the carveout trend to continue.

✦ The Trump administration is shifting gears with its COVID-19 vaccine rollout strategy amid increasing frustration over the slow pace of vaccine distribution, multiple news outlets reported. HHS Secretary Alex Azar told reporters during a press briefing on Jan. 12 that the administration now plans to allocate vaccine doses to states based on how quickly they can administer the shots, rather than their population, according to The Hill. The administration is also pushing states to administer vaccines to anyone aged 65 or over and anyone with an underlying health condition, the news outlet said. However, public health experts who spoke to Politico suggested that the allocation strategy shift won’t fix the problems that have so far beset the vaccine rollout, such as low uptake in underprivileged communities. Read more at https://bit.ly/3oI85cV and https://politi.co/38Eauzx.

✦ In a deal unveiled on Jan. 6, AmerisourceBergen Corp. plans to acquire the majority of Walgreens Boots Alliance, Inc.’s wholesale drug distribution businesses — called Alliance Healthcare — for approximately $6.5 billion. The move will allow Walgreens “to increase its focus on growing and transforming its core retail pharmacy and healthcare businesses, facilitate higher growth investments and accelerate its strategic goals,” while allowing AmeriSourceBergen to expand its presence in Europe, where Alliance Healthcare is one of the largest pharmaceutical wholesalers, the companies said. The two firms also agreed to extend their U.S. strategic partnership through 2029. Read more at https://bit.ly/3nHzQ3K.