Radar on Drug Benefits
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Study Estimates Which Drugs Will Be in Medicare’s Price-Negotiation Crosshairs From 2026-2028
Medicare will likely focus on 38 Part D and two Part B drugs in the first three years of Medicare drug price negotiation — a provision of the Inflation Reduction Act — and these drugs combined accounted for $67.4 billion in gross Medicare spending in 2020, according to a study published in the Journal of Managed Care & Specialty Pharmacy. The authors identified 40 drugs expected to be negotiated by CMS for 2026-2028 based on “drug age, drug or biologic status, orphan drug status, Part B and Part D gross spending in 2020, and estimates of when a drug will be subject to generic or biosimilar competition.”
The 10 drugs likely to be selected for negotiation in 2026, which include several anticoagulants and cancer therapies, accounted for $33.7 billion of Medicare Part D gross spending as of 2020. The majority of insured people under Medicare formularies have plans that put these drugs under the preferred/preferred (prior authorization and/or step therapy) tier and covered/covered (PA/ST) tiers, according to data from MMIT Analytics. (MMIT is AIS Health’s parent company.) Biden administration officials said that the first 10 drugs selected for negotiation will officially be announced on Sept. 1, 2023.
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News Briefs: Covis Pharma to Pull Makena
Covis Pharma Group said on March 7 that it will voluntarily stop selling Makena (hydroxyprogesterone caproate), a drug that aims to reduce preterm births and that has become a flashpoint in the debate over the FDA’s accelerated approval pathway. Makena was granted accelerated approval in 2011, but subsequent clinical trials failed to demonstrate its effectiveness, leading FDA advisers last fall to recommend withdrawing the drug from the market. “While we stand by Makena’s favorable benefit-risk profile, including its efficacy in women at highest risk of preterm birth, we are seeking to voluntarily withdraw the product and work with the FDA to effectuate an orderly wind-down,” Covis Chief Innovation Officer Raghav Chari, Ph.D., said in a statement. The move comes ahead of an anticipated final decision on Makena’s status by FDA Commissioner Robert Califf and Chief Scientist Namandjé Bumpus.
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Senate Hearing Continues Government Focus on PBM Industry
During a recent hearing held by a U.S. Senate committee, a variety of witnesses took the stand who nearly all had one message in common: criticizing the role PBMs play in increasing medication costs for consumers. The hearing — which is just the latest indication lawmakers are more closely monitoring PBMs — occurred less than three weeks after Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) introduced the Pharmacy Benefit Manager Transparency Act of 2023 to the Senate floor.
Ryan Urgo, managing director of health policy at Avalere Health, tells AIS Health that the hearing and bill are part of “a broader effort by lawmakers right now to apply more scrutiny to the PBM business model and certain PBM business practices that lawmakers feel are either anticompetitive or contribute to the broader growth of drug prices.”
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HHS Floats Trio of Drug Pricing Models, Some More Ambitious Than Others
In response to an executive order issued last fall, HHS recently unveiled three new prescription drug pricing models that it wants the CMS Innovation Center to test. The models — which target low-cost generics, cell and gene therapies and drugs that received accelerated approval — are likely to diverge considerably when it comes to industry reception and likelihood of speedy implementation, experts say.
“One of the things I really like about the three models that have been proposed is that they touch on really different aspects of affordability and access, and different programs that CMS oversees,” says Stacie Dusetzina, Ph.D., a health policy professor at the Vanderbilt University School of Medicine. “So it was encouraging to me to see, for example, a model that was focused on gene and cell therapies and Medicaid programs, in addition to two very different groups within the Medicare programs: one being high-cost drugs approved through accelerated approval, and the other being drugs that we typically think of as being low-cost, but that maybe we could be...making more affordable to seniors — including high-value generic drugs offered on Part D.”
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UnitedHealth, Cigna, CVS Tout Strong Selling Seasons for PBM Segments
During their recent fourth-quarter and full-year 2022 earnings calls, the companies that own the country’s largest PBMs all said they expect that part of their business to gain momentum this year thanks to successful selling seasons in which their increasingly diversified offerings resonated with clients.
In 2022, “Optum Rx revenues grew 9%, approaching $100 billion for the year, driven by continued strong sales and the expansion of our pharmacy services businesses,” UnitedHealth Group Executive Vice President and Chief Financial Officer John Rex said during the company’s Jan. 13 conference call to discuss financial results. “Both customer retention and new customer wins were among the highest Optum Rx has ever delivered, laying a strong foundation for continued market-leading growth,” he added.
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