Radar on Drug Benefits

The Cigna Group and Cigna Health & Life Insurance Company last month joined a lawsuit against the Minnesota Dept. of Commerce, claiming the state’s PBM reform law violates a legal concept known as ERISA pre-emption. And it isn’t the only state-level PBM law that the ERISA Industry Committee (ERIC) is targeting for possible legal challenges, the powerful employer group tells AIS Health. 

Cigna, ERIC and the National Labor Alliance of Health Care Coalitions filed the complaint in federal court on Dec. 27, alleging the law dictates the design of health plans, including self-insured plans that fall under the jurisdiction of the federal Employee Retirement Income Security Act of 1974 (ERISA). 

In a move endorsed by its new chairman, the Federal Trade Commission (FTC) on Jan. 14 issued its second interim staff report on PBMs, this time finding that the country’s three largest firms significantly marked up specialty generic drugs dispensed by their affiliated pharmacies.  

The PBM industry’s main trade group, the Pharmaceutical Care Management Association (PCMA), says the FTC’s report is making “sweeping assertions about the role of PBMs disconnected from a full appreciation of their critical cost-saving role for employers, unions, taxpayers, and patients.”  

Yet one equities analyst who focuses on the health care industry recently suggested to investors that the FTC may very well be onto something. 

The popular blockbuster diabetes and weight loss drugs — Ozempic and Wegovy — are among the 15 drugs selected for the second round of Medicare drug price negotiations as part of the Inflation Reduction Act, according to CMS. The negotiated prices will go into effect in 2027.

The 15 selected drugs were used by more than 5.2 million Medicare Part D beneficiaries and accounted for about $40.7 billion in total Medicare Part D gross spending between Nov. 1, 2023, and Oct. 31, 2024. Combined with the first 10 drugs already negotiated by Medicare, they represent over a third of total gross spending under Medicare Part D, CMS reported.

In one of its final days in office, Joe Biden’s administration announced the next 15 drugs selected for Medicare drug price negotiations. By June 1, 2025, CMS will submit the maximum fair price of each newly selected drug to the drug manufacturer, and the companies will have 30 days to respond to the initial offer by accepting it or providing a counteroffer.

For this second round of price negotiations authorized by the Inflation Reduction Act, CMS tweaked the rules guiding negotiations, offering manufacturers earlier meetings to discuss pricing offers and adding more opportunities for patients, advocacy groups and caregivers to provide input.

It is still unclear whether President Donald Trump will seek to stop the program or change the drugs selected.

Payers expect to face higher medication costs in the coming years with the increased adoption of GLP-1 agonists, cell and gene therapies, and other expensive drugs, according to Mary Beth Erwin, chief pharmacy officer at Blue Cross Blue Shield of Massachusetts. However, Erwin acknowledged during a recent webinar sponsored by the National Institute for Health Care Management (NIHCM) that traditional tools to manage costs are “increasingly the target of scrutiny and reform at all levels.”  

Erwin, who is responsible for BCBS of Massachusetts’ medication management strategies, mentioned that the insurer has implemented several ways to rein in costs, including formulary and utilization management “to ensure cost-effective and clinically appropriate access to medications while also maintaining quality of care.”