RADAR on Drug Benefits

  • As States Carve Out Medicaid Drug Benefits, MCOs Push Back

    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.

  • News Briefs

     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.

  • Hike in Drug List Prices Has Downstream Effect on Patient, Payer Costs

    Even though drug manufacturer discounts and rebates have been rising, when wholesale list prices for prescription drugs more than doubled over a period of seven years, that still triggered large increases in patient out-of-pocket costs and insurer payments, according to a recent study published in JAMA Network Open. The researchers analyzed pharmacy claims for five patent-protected specialty drugs and nine brand-name drugs associated with the highest total expenditures by commercial insurers in 2014, and found that their average wholesale price (AWP) increased by 129% from 2010 to 2016. Median insurer expenditures on the 14 drugs analyzed grew 64%, while median patient out-of-pocket costs went up 53% during that time.
  • Prices for COVID-19 Vaccines, Drugs Could Consider Value

    Payers shouldn’t write off the idea of value-based pricing for COVID-19 vaccines and therapeutics, even though the ongoing coronavirus pandemic makes it imperative to develop and release those products as quickly as possible, four Tufts Medical Center researchers say.

    The researchers, writing in the January edition of Health Affairs, say payers should consider value from both a health system and a societal perspective.

  • Centene Expands Further Into Pharmacy With Magellan Deal

    In addition to creating “one of the nation’s largest behavioral health platforms,” Centene Corp. will add another pharmacy-related asset to its portfolio with its recently announced $2.2 billion proposed purchase of Magellan Health, Inc.

    The deal, unveiled on Jan. 4, will deliver 2 million PBM members and 16 million medical pharmacy lives to Centene, which already has a variety of internal and external PBM relationships. And while those pharmacy lives are just a slice of the transaction compared with the behavioral health and specialty health assets that Centene will get by purchasing Magellan, they are a key part of the strategic rationale for the deal.

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