Radar on Drug Benefits

List prices for the 25 branded drugs associated with the highest Medicare Part D spending in 2021 have increased by an average of 226% since they first entered the market, according to a recent report from AARP’s Public Policy Institute. These drugs were responsible for $80.9 billion in total Medicare Part D spending in 2021.

Overall, lifetime price increases among the 25 drugs ranged from 20% to 739%, with all but one of them greatly exceeding the annual rate of inflation over the same period. The list price of Enbrel (etanercept), a treatment for rheumatoid arthritis and psoriatic arthritis, skyrocketed by 701% since entering the market in 1998.

Blue Shield of California will shift from a traditional PBM contract with CVS Health Corp.’s Caremark to a pharmacy benefits model that uses five different vendors to fulfill the discrete functions that Caremark previously managed all at once, the nonprofit carrier said Aug. 15. Managed care and pharmacy insiders say the move is just the latest sign that employers and regional carriers are dissatisfied with the services large PBMs provide, and they suggest that more plans could follow Blue Shield’s example if the model is successful.

According to Blue Shield of California Chief Operating Officer Sandra Clarke, when the insurer’s Caremark contract lapses at the end of this plan year, the Blues affiliate will begin agreements with five different firms to manage its various pharmacy benefit operations:

A federal appeals court on Aug. 16 delivered a significant victory for the under-fire PBM industry, ruling that an Oklahoma law regulating PBMs is preempted by federal statutes. Officials at lobbying groups that are closely watching the case say that the dispute may wind up before the Supreme Court — and if that occurs, employer plan sponsors will arguably have more at stake than PBMs themselves.

“I think it is highly likely to be appealed and to be pursued further,” says Dillon Clair, director of state advocacy and litigation at the ERISA Industry Committee (ERIC), which represents the employee-benefits interests of large employers. “This is a big case, not just for Oklahoma and their law and the employers that are going to have to comply with that, but for all the other state laws that have [been] enacted” and for states looking to follow suit.

More than half of the drugs that could be subject to Medicare price negotiations in 2026 already have net prices that are lower than the minimum discounted price established by the Inflation Reduction Act (IRA), according to an analysis published this month in the Journal of Managed Care + Specialty Pharmacy. The findings come as multiple pharmaceutical manufacturers file lawsuits challenging the IRA and as CMS is set to announce by Sept. 1 the 10 drugs that Medicare will negotiate prices for starting in 2026.

The IRA stipulates that until 2030 the negotiated price will be capped at the greater of the net price after rebates or a maximum percentage of the drug’s list price based on how long it has been on the market. Specifically, that maximum will be 75% of the average manufacturer price (or a minimum 25% discount) for drugs that have been marketed between nine and 16 years and 40% of the average manufacturer price (or a minimum 60% discount) for drugs that have been on the market for more than 16 years.