Radar on Drug Benefits

Colorado, Louisiana, New Hampshire and Minnesota have joined New Jersey in requiring PBMs to participate in a reverse auction bidding process to administer the pharmacy benefit for their state employee health plans (SEHPs). Experts say the laws are a useful tool in the larger trend of states trying to control health care costs, though they add that it can’t be the only solution used to tackle to the problem of high drug prices.

Traditionally, when states are looking for a PBM to manage pharmacy benefits for their public employees, they field complex requests for proposals (RFPs) that can be difficult to compare to one another. A reverse auction, on the other hand, requires bidding PBMs to offer the same contract terms — set forth in a drug benefit plan proposed by the state — and to compete solely on price. In 2016, New Jersey was the first state to pass a reverse auction model for its SEHP, and the program launched in 2017.

Mere days after the top PBM trade group filed suit against a regulation requiring PBMs to report historical net prices of prescription drugs, the Biden administration issued guidance that effectively says that provision won’t be enforced anytime soon.

Still, it’s not yet certain what the Pharmaceutical Care Management Association (PCMA) or the U.S. Chamber of Commerce — which filed a similar suit against the so-called “transparency in coverage” rule — plan to do regarding their litigation. And one health plan trade group wants the administration to do more to address its concerns about the price transparency regulation.

✦ The HHS Office of Inspector General on Aug. 4 revealed that it will investigate the how the FDA implements its accelerated approval pathway in the wake of the agency approving the controversial Alzheimer’s drug Aduhelm (aducanumab). FDA Acting Commissioner Janet Woodcock, M.D. — who was not involved in the decision to approve Aduhelm — had asked the OIG to investigate the approval process for the drug, citing concerns raised about “contacts between representatives from Biogen and FDA during the review process.” In its announcement, the OIG said it will review “interactions between the FDA and outside parties as well as other aspects of the [accelerated approval] process, such as deciding on this pathway and scientific disputes,” and that it will make recommendations based on a sample of drugs using the pathway, including Aduhelm.

✦ A new lawsuit filed by Kaiser Foundation Health Plan accuses drugmaker Merck & Co. of conspiring with Indian pharmaceutical manufacturer Glenmark Pharmaceuticals in a “pay-for-delay” scheme to prevent generic versions of cholesterol medications Vytorin and Zetia from entering the market, Modern Healthcare reported. The lawsuit, filed in the U.S. District Court of Northern California on July 16, alleges that the drugmakers reached a “quid pro quo” agreement in which Glenmark agreed to drop a patent challenge against Merck and Merck promised not to launch a generic competitor during Glenmark’s 180-day drug exclusivity period — resulting in Kaiser overpaying by “hundreds of millions” of dollars for the drugs. The suit accuses Merck of breaking antitrust laws in California, Washington D.C., Hawaii and Oregon.

Prescription drug utilization management and moves to counteract it introduce billions in costs to payers, providers, manufacturers and consumers alike, a new report suggests. The report, published in the journal Health Affairs by researchers from the University of California, Berkeley and Novartis Pharmaceuticals Corp., argues that such practices inflate already-too-high drug prices — though one outside expert says she is skeptical about some aspects of the study.

The research article concludes that utilization management practices could introduce as much as $93.3 billion to the U.S. health care system annually. Some of the cost drivers identified in the article include, for payers, “cost of administering prior authorizations”; for manufacturers, the cost of “administrative support programs,” “direct financial payments to assist commercially insured patients” and providing insured patients with free medications; for physicians, the “cost of physician practices’ time interacting with payers over prior authorization”; and for patients, “spending on branded drug cost sharing.”

With President Joe Biden starting to stake out his preferred strategy to lower drug prices, Washington, D.C. insiders say that policies allowing the importation of drugs from Canada and pegging Medicare drug prices to an index of international pharma costs are still under consideration by Congress. However, the experts add that both measures face long odds of making their way through the Senate.

The concept of an international drug pricing index is tied to a policy that would see Medicare negotiate the reimbursement rate of drugs with manufacturers. The international pricing index — which would likely see HHS aggregate price data from other developed countries, particularly those with Most Favored Nation trade status — would serve as the basis for the drug prices HHS negotiates with pharma. The Trump administration in December 2020 unveiled a mandatory demonstration of a most-favored-nation model that was blocked by a federal court in January. The rule was under review by the Biden administration until Aug. 6, when Biden’s HHS issued a proposed rule that would cancel the demonstration. But that draft regulation left the door open for a similar policy to be implemented later.