Radar on Drug Benefits

As PBMs continue to face an onslaught of regulatory scrutiny, their main trade group — the Pharmaceutical Care Management Association (PCMA) — has been arguing that attempts to alter the industry’s dominant business practices would do nothing but hand Big Pharma a victory and erode PBMs’ ability to bring down drug prices.

Now, however, a new coalition of smaller PBMs that promote a “transparent” business model has entered the scene and is aligning itself not with PCMA, but with attempts to overhaul the PBM industry.

PBMs are increasingly deriving profits from collecting fees and from their specialty pharmacies as opposed to manufacturer rebates and spread pricing, according to an analysis published on Sept. 18 from Nephron Research. Eric Percher, the report’s author and a Nephron research analyst, tells AIS Health, a division of MMIT, that the findings suggest PBMs have shifted their business model in recent years even as they receive scrutiny from state and federal government officials for old tactics.

Nephron received compensation for the survey design and independent data analysis from the Pharmaceutical Research and Manufacturers of America (PhRMA), the leading trade group for drug manufacturers. Percher maintains that Nephron had full editorial control of the report.

Mark Cuban Cost Plus Drug Co. and Select Health, the managed care arm of Utah-based nonprofit health system Intermountain Health, on Sept. 19 struck a deal to provide Select Health members with what a press release called “direct access” to Cost Plus’ online generics pharmacy. Select Health tells AIS Health, a division of MMIT, that members’ level of access to Cost Plus depends on their plan design and plan sponsor: Some members may be able to count any purchases made through Cost Plus toward their annual deductible and out-of-pocket maximum.

Intermountain, which owns its own PBM, Scripius, is just the latest notable regional player to partner with Cost Plus on generics. The deal comes shortly after the much discussed move by Blue Shield of California to unbundle its PBM contracts. (As part of Blue Shield’s new strategy, Cost Plus will manage retail pharmacy pricing and payment for the insurer.)

This summer, Opill (norgestrel) became the first over-the-counter (OTC) daily contraceptive pill approved by the FDA, and it’s slated to hit the U.S. market in early 2024. However, Opill’s OTC designation — which on the surface would seem to increase access to birth control — may have the opposite effect for patients seeking reimbursement from their health plans, experts said during a recent KFF web event.

“Having over-the-counter contraceptives is definitely a positive step,” said Christine Gilroy, M.D., chief medical officer of The Cigna Group’s PBM, Express Scripts. “I am concerned, though, that while it removes the barrier of needing to pay for a physician visit and get a prescription from the physician…in order to be processed against a pharmacy benefit, it does need to be entered into a system that essentially turns it into a prescription.”

Retail prescription drug spending is expected to grow moderately throughout the next decade. But per capita out-of-pocket retail drug costs may decrease starting in 2024 due to the Inflation Reduction Act (IRA), a recent Peterson-KFF Health System Tracker study predicted.

Using National Health Expenditures Accounts historical and projection data from 2021, researchers found that per capita spending on retail prescription drugs has skyrocketed over the past three decades— from $101 in 1960 to $1,147 in 2021. Meanwhile, out-of-pocket prescription drug spending has been declining since the mid-2000s and is anticipated to drop by 8% by 2031.