Radar on Drug Benefits

Now that Medicare can negotiate the price of prescription drugs it purchases, the Biden administration needs to figure out how it will hash out deals with drugmakers. Experts tell AIS Health, a division of MMIT, that implementation of the long-sought negotiation program will come with plenty of challenges and pitfalls.  

The administration will have to issue new regulations, hire hundreds of staff, determine which drug prices will be negotiated first and design the criteria that will select drugs for negotiation in the future.  

The manufacturers of many drugs granted accelerated approval by the FDA do not complete timely confirmatory trials of the drugs’ efficacy, according to a recent study published in the journal Health Affairs — meaning that the pricing for many accelerated approval drugs has nothing to do with their clinical efficacy. The study’s author tells AIS Health, a division of MMIT, that “the market doesn’t work very well” for drugs that have received accelerated approval, and “what it leads us to is overpaying at the beginning and underpaying, potentially, later.” 

After a drug is granted accelerated approval, the FDA mandates that the drug be evaluated using confirmatory clinical trials. The accelerated approval designation is given to new, unproven drugs that could potentially meet a dire need for a new or more effective therapy to treat a terminal disease. The intention behind the confirmatory trial system is to make sure that the drug actually does what its developer says it will. 

Walgreens Boots Alliance, Inc. (WBA) will assume full control of specialty pharmacy Shields Health Solutions for approximately $1.37 billion cash, the firm said Tuesday. Walgreens already controlled the pharmacy, holding 71% of the company’s stock thanks to a $970 million deal that closed last year. WBA CEO Roz Brewer said in a press release that the deal will allow “further progress on our strategy through Shields’ integrated model, increasing our value to health systems, expanding access to payor partners and supporting improved outcomes and lower costs.” 

Centene Corp. agreed to pay $165.6 million to the state of Texas over the state's contention that the insurer overcharged the state's Medicaid program for PBM services, according to legal documents obtained by Kaiser Health News (KHN). The settlement is the largest of a series of settlements from at least a dozen states over similar charges. The Texas settlement is the largest such arrangement, with Centene paying out at least $475 million so far to the states of Arkansas, Illinois, Kansas, Mississippi, New Hampshire, New Mexico, Ohio, Texas, and Washington; three other states have not released the value of their settlements with the Medicaid-focused insurer, per KHN. Centene has divested most of its PBM assets over the past year, and told investors in 2021 that it set aside $1.25 billion to wind down its liability to states in this area.

In a newly filed lawsuit, three patient groups are challenging a federal regulation that allows what they call an “evil money grab” by health insurers and PBMs: copay accumulator adjustment programs. The lawsuit contends that the rule violates both the Affordable Care Act and the Administrative Procedure Act, and legal experts tell AIS Health that it’s still an open question whether those claims will prevail. 

The rule in question is the 2021 Notice of Benefit and Payment Parameters (NBPP), an omnibus regulation issued annually that chiefly sets ground rules for the ACA marketplaces. It drew the ire of groups that represent patients with chronic conditions by allowing individual and group health plans to implement copay accumulator adjustment programs, which prevent patients from counting the value of drug manufacturer coupons toward their deductibles or out-of-pocket payment limits. Drugmakers often offer coupons for pricey branded drugs — a practice that they say helps increase access to vital medications. But insurers contend that such coupons push consumers toward high-priced medicines, forcing health plans to raise premiums across the board to compensate.